What is a declining market - and how does it affect my taxes?
Today, so much attention is being directed toward declining real estate values and their impact on one of the publics' biggest investments - their home. In a variety of markets across the nation, there have been downturns in what homes are selling for. Adding foreclosure activity and short sells to the mix continues to create concerns on what is the true market value for a property today.
It is also generating the question, "where will my property value be tomorrow?". It has become evident that taxing authorities across the nation are starting to recognize that in some counties - those values are rapidly decreasing. Auditors and assessors are in some cases making blanket reductions across entire counties to acknowledge declines.
Assesment being derived from mass appraisal or the valuation of a group or data set of properties, has always been been based on uniform valuation techniques across neighborhoods to establish fair and equitable treatment of establishing property taxes. Typically, that estimate of value on your property was conservative. Mostly, because it had to be and "true" market values across the residential market have been steadily increasing.
What does this massive decline mean:
- Taxing Authorities are going to have to manage their property portfolios at a more granular level
- Auditors/assessors are going to be burdened with identifying and measuring declines within pocket markets and adjusting for them
- Assessment practices are going to require more resources and specific analytics than employed in the past
- Re-Assessments of markets are going to have to acknowledge across the board. It is just starting - but taxing authorities are going to have to make adjustments
- Appeals and Inquiries are going to increase - that are going to need to be well-supported by the assessor's offices
So - you can see that even as the auditors/assessors adjust to these changing market conditions, they really can only address the mass. They might reduce taxes, but isn't that just stating that yes, property values have declined below assessment levels. For each taxpayer it should bring forth the question - I am glad it has been reduced - but is it accurate for my particular property? And unfortunately, is it valid for the future?
At TaxPeel we are concerned with the market, the individual property owner and understanding what is the "appropriate" tax valuation. We rely on market indices and professional services - to provide a credible estimate of each property - one at a time.