Archive for Tuesday, October 13, 2009

Defying predictions, homes are expected to regain value

Revised estimates have implications for taxpayers

Paul Bittinger frames a home Monday at 317 Carver Lane. Just weeks ago, Bittinger couldn’t find work in construction, but a turn in the economy has put him back in business. Some think the local market has been helped significantly by the federal government’s $8,000 first-time homebuyers’ credit.

Paul Bittinger frames a home Monday at 317 Carver Lane. Just weeks ago, Bittinger couldn’t find work in construction, but a turn in the economy has put him back in business. Some think the local market has been helped significantly by the federal government’s $8,000 first-time homebuyers’ credit.

October 13, 2009

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Paul Bittinger frames a home Monday at 317 Carver Lane. Just weeks ago, Bittinger couldn’t find work in construction, but a turn in the economy has put him back in business. Some think the local market has been helped significantly by the federal government’s $8,000 first-time homebuyers’ credit.

Paul Bittinger frames a home Monday at 317 Carver Lane. Just weeks ago, Bittinger couldn’t find work in construction, but a turn in the economy has put him back in business. Some think the local market has been helped significantly by the federal government’s $8,000 first-time homebuyers’ credit.

Lawrence’s housing bubble perhaps just fizzled instead of popped.

According to a recently released report from the Douglas County appraiser, the office is now predicting that by the end of the year many homes in the county will have regained most of the value that they lost earlier in 2009.

That’s a far cry from earlier predictions that home values in 2009 would end the year 7 percent to 8 percent below year-ago totals.

“The numbers did surprise me a bit,” County Appraiser Steve Miles said of the rebound in local housing prices. “I was expecting that it wasn’t going to look real pretty.”

The revised estimates, which Miles stressed still are based on preliminary analyses, could have major implications for both taxpayers and government budget-makers.

When housing values were expected to be down about 8 percent, many homeowners would have been in line for a lower property tax bill in 2010 — unless local elected officials took the unpopular step of increasing property tax rates.

But with Miles now projecting that housing values will be “relatively flat” for 2010, city, county and school district leaders may not have nearly the budget shortfall that they were expecting when they begin building budgets next summer.

“I’m fairly confident now that we’re not going to see the 7 to 8 percent declines in assessed valuation that I was fearing,” said Douglas County Administrator Craig Weinaug. “But it is still going to be a challenging year next year.”

That’s because total assessed valuation — or in other words, the county’s total tax base — still likely will decline some when the value is set for Jan. 1, 2010. Home values make up a large portion of the overall tax base, but values for commercial properties and personal property also play a role. When it is all added up, Weinaug said he still expects to see a decline of about 2 percent in the overall tax base. That would be the largest decline in the tax base in at least 20 years.

But a 2 percent decline would be a much easier pill for local governments to swallow. For example, a 2 percent drop in assessed valuation would mean the city of Lawrence would take in about $400,000 less in property taxes in 2010, assuming that the city’s mill levy was not increased. If assessed value dropped by 8 percent, the shortfall would be about $1.5 million. The numbers for Douglas County and the school districts are more dramatic because they rely more heavily on property taxes than the city does.

“Certainly, if we don’t see that type of decline it will be positive,” Mayor Rob Chestnut said. “It may show that the economy is starting to stabilize, but I’ll want to wait until the numbers are finalized.”

Once the numbers are final, homeowners may still have a hard time believing them. National headlines have been declaring that housing values across the country have taken a beating. That was true to a degree in Lawrence, Miles said. He said during the summer, selling prices of homes indicated that housing values had fallen, on average, by 6.5 percent.

But for taxation purposes, the state requires the county appraiser to determine what the value of a home is on Jan. 1 each year. Miles said his data, which consist of selling prices of every home sold in the county, indicate that there has been a run-up in prices since July of this year.

Some private real estate experts agree.

“Our firm was kind of slow in August, but then in September it picked up, and October has been gangbusters so far,” said Greg Moore, a private appraiser for Lawrence-based Moore Valuation.

Moore said he thought the local market had been helped significantly by the federal government’s $8,000 first-time homebuyers’ credit. Buyers eager to get that tax credit perhaps have been willing to pay more for homes in the last half of the year, he said. Lawrence may also have benefited from the tax credit — set to expire at the end of November — more than other communities because of the number of young people it has.

Doug Stephens, an owner of Lawrence-based Stephens Real Estate, said business from first-time homebuyers has been brisk, but he wasn’t sure that meant home prices for the entire market had been rising.

“My heart hopes that we’ve reached a bottom, but the data I’m seeing doesn’t allow me to say that yet,” Stephens said.

Comments

in123 5 years, 5 months ago

The appraisal office is keeping the tax base up while living in denial.

Steve Jacob 5 years, 5 months ago

Don't forget the 8K tax credit moved along many home sales. Lower priced homes moved, the homes that required "jumbo" loans did not.

slaboribs 5 years, 5 months ago

Greed, irresponsibility, and excessiveness got us into this mess. Greed, irresponsibility, and excessiveness will keep us in it.

ssakcaj 5 years, 5 months ago

I pulled three points from the above article:

Point one - "The revised estimates, which Miles stressed still are based on preliminary analyses, could have major implications for both taxpayers and government budget-makers."

So he is touting the revised estimates based on a preliminary analyses... Well, as long as he has solid evidence. Pretty flimsy in my opinion. Why don't you get back to us when you have the final determination based on a completed analyses. Oh heck, why don't you just give us the data?

Point two - “Our firm was kind of slow in August, but then in September it picked up, and October has been gangbusters so far,” said Greg Moore, a private appraiser for Lawrence-based Moore Valuation."

The appraiser makes no mention of values, he only talks about their volume of busines. This a supporting quote which doesn't really support the appraisers premise.

Point three - “My heart hopes that we’ve reached a bottom, but the data I’m seeing doesn’t allow me to say that yet,” Stephens said."

Doug Stephens quote does more to discredit the County Appraiser's statements than any other information provided. The appraiser spoke about volume, and appraisers are paid a set fee. Volume for appraisers means income. Relators on the other hand make their money based on price. Volume also figures into it, but realtors want house prices to go up. The fact that the realtor is concerned tells me that the County Appraiser is engaged in some wishful thinking with his revised estimates based on a preliminary analyses.

KU_cynic 5 years, 5 months ago

More whistling past the graveyard by property-tax supported government entities....

avoice 5 years, 5 months ago

This is the county's notice to taxpayers that the county intends to increase your home's value next year. Not because home values are actually up, but because our government representatives from Parkinson down to local mayors are pressuring every agency to find ways to justify keeping established taxes (and "fees") as high as possible so they can look like they've held taxes "down" so they can all get re-elected.

Stuart Evans 5 years, 5 months ago

I think home sales would be through the roof if someone built a bunch of $50k-$60k starter homes in/around this town. of course, that cost isn't high enough to reap major taxes from, so the plans to do such are likely not going to be approved by the county. Of course, if they did, there would be all kinds of stipulations that you can't make more than $20k per year or something, because everyone should be forced to spend 1/2 of their salary on a home.

pace 5 years, 5 months ago

Wherer have you heard of a $60, 000 starter home being built. I am serious. Lots start at $40,000

Kryptenx 5 years, 5 months ago

While a good idea, that's like saying that $80,000 starter homes would sell like hotcakes in Cali. It's not ever going to happen. Lawrence is a desirable place to live and home values reflect that. Homes are only worth what people are willing to pay for them, and while yes, $50-60k homes would be amazing, the market would quickly bring the prices up to the bottom of the market - around $100k.

Jimo 5 years, 5 months ago

"Houses do not go up in value, what is happening is that the dollar goes down in value."

sigh

Strange how housing values increase whether there's a "strong" or a "weak" dollar. It is in fact rare for housing prices to decrease ever and even rarer to do so nationally rather than regionally (which self-disproves the "dollar theory".) Indeed, what does the value of a U.S. dollar versus a ruble, yen, or lira have to do with a house constructed in Lawrence, Kansas, using material and labor that are all 100% American? If anything, a "weak" dollar would attract foreign investors to snatch up relatively bargain-priced U.S. real estate (although I doubt many such investors would move far outside NYC, Miami, or LA, which they famously did during the last "weak" dollar period).

ASBESTOS 5 years, 5 months ago

"According to a recently released report from the Douglas County appraiser, the office is now predicting that by the end of the year many homes in the county will have regained most of the value that they lost earlier in 2009."

So the media again anre not disputing what a taxing agency is saying about the values of the taxes they assess???? Are you freaking kidding me???

Of course they will say that, when in fact the prices are "stabilizing" for now, and in a weakened dollar world, there is only one direction for these values to go,... still lower with huge interest rates that goes along with that wonderful inflation.

"""""""""""""""""""""""""""""' "“Certainly, if we don’t see that type of decline it will be positive,” Mayor Rob Chestnut said."

Gee ya think so Mr. Wizard??? Is this the intellectual level of our elected politicians these days???

This is BS story from front to finish and the LJWorld out to call it just that. What a vaccous bunch of tripe.

The reality is that the revenues across the country are down and way down, The IRS just annonced today that the total tax revenue from corporate and income taxes will be 25% less this year. The State budgets also state a reduction in their revenues in similar levels. And we are to believe this report,(Probably not peer reviewed) is factually correct.

Where is the "journalism" and fact checking. I am doing this part time and can find out this stuff, where is the "investigative reporting"?

Says a lot about the Treasurers office, but is speaks volumes on the LJWorld to accept this tripe at face value.

BigPrune 5 years, 5 months ago

1 out 3 home loans is denied. New homes are being fire sale'd right here in Lawrence, but homes are expected to regain value?

B.S.

notajayhawk 5 years, 5 months ago

A prediction defies predictions? Great headline, LJW.

Just to clarify - the County Treasurer's office is saying they were wrong about their earlier predictions, and their evidence for that is their new prediction. So - if they were wrong before, we should believe them this time why, again?


Jimo (Anonymous) says…

"Strange how housing values increase whether there's a “strong” or a “weak” dollar."

[Sigh]

Perhaps if you tried not confusing price and value? Someone could offer you a thousand dollars for that pile of dog cr*p in your front yard, that doesn't really increase its value much.

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