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Archive for Tuesday, February 21, 2012

Property values decline for most homeowners in Douglas County

February 21, 2012

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New numbers suggest 2012 is the year the bursting of the housing bubble finally will start showing up on Douglas County property tax bills.

Nearly seven out of every 10 residential properties in the county are expected to see a decline in their fair market values, according to new numbers by the Douglas County Appraiser’s office.

“I have always felt like our real estate market has lagged behind the national scene by as much as two years,” said County Appraiser Steve Miles. “I think that is what’s happening. Hopefully that means we have hit the bottom, but I can’t say that with any certainty.”

Each year Miles’ office is tasked with determining the fair market value, which is the price a piece of property likely would sell for on the open market, for every real estate parcel in the county. The fair market value is then used to compute property tax bills.

Over the last two years, many values have held steady or slightly declined, despite national reports of a major drop in real estate activity. But Miles’ new report indicates 67 percent of all residential parcels of property in the county will have their tax value decline in 2012.

The new report found:

• 10 percent of residential properties will have a decline in value of 5 percent or more.

• 27 percent will have a decline in value of 2 percent to 4.99 percent.

• 30 percent will have a decline in value of less than 2 percent.

• 9 percent will experience no change in value.

• The remaining 24 percent will see an increase in their property values, often because the property had been remodeled or improved in some way.

Property owners will receive a change of value notice in the mail around March 1, Miles said. Property owners then will have 30 days to request a hearing to present information to the appraiser’s office, if they think their value is wrong.

Miles’ office monitors sales throughout the county to come up with fair market values for properties. Miles said sales activity seemed to slow down significantly in the last half of 2011, which made his job more difficult.

Miles also said the growing number of distressed sales — everything from foreclosures to property owners selling their homes at a loss to get out from underneath a mortgage — had made the process even more challenging. Miles said he still is not considering most foreclosure sales as indicative of fair market value because banks are unloading the properties quickly to get the properties off their books.

“But the number of those sales are starting to make me a little bit nervous,” Miles said. “They are approaching that point where they could be considered the market in some areas, but not all.”

Numbers on foreclosures for the year weren’t available Monday.

In terms of geographical differences, Eudora and Baldwin City were the hardest hit in declining values. Miles said Baldwin City saw a median decline of 1.62 percent, Eudora a decline of 1.31 percent, while Lawrence declined 1.23 percent. Lecompton and the unincorporated parts of the county basically held steady. All those figures include both residential and commercial properties. Miles said commercial real estate prices generally fared better than residential values.

The declining property values weren’t a surprise to Douglas County Administrator Craig Weinaug. He is estimating the county will have $2 million to $3 million less in revenue for the 2013 budget — unless commissioners decide to increase taxes — in large part because of the declining property values. But Weinaug said he was keeping the decline in perspective.

“Given what has happened in the rest of the country, I would say real estate values have held up remarkably well here,” he said.

Weinaug said he expects county commissioners to discuss cutting the current 2012 budget in order to give the county more of a cushion heading into the 2013 budget.

Comments

Richard Heckler 2 years, 10 months ago

Market value in Lawrence has been down for at least 2-3 years in spite of county values. We know of a friend who had their house on the market almost two years. When it finally sold two years ago they still had to kick in $30,000 just to cover the mortgage balance.

I say Lawrence,Kansas inflates property values to keep up with new debt that comes with over building the local markets. The over built Lawrence markets have not been paying their own way.

Can we sat that our municipality is over extended in tax dollar debt? With Lawrence,Kansas and Topeka Kansas laying people off this matter will not get better soon. Be thankful for KU.

There are a lot empty homes and rental properties in Lawrence,Kansas therefore I predict more loss in property values as people will want to locate where the good jobs are. Gasoline getting more expensive may put this bedroom community in a dim light.

More new bedrooms downtown will need to feed off existing people supply which will create more empty bedrooms throughout the community. Supply is far greater than demand across the board = irresponsible management of urban economics.

KU_cynic 2 years, 10 months ago

The local property-tax-supported government entities have had their heads in the sand for the past several years, but anyone with a half-a-brain can see that the decline and stagnation of home values and the property tax base has been inevitable.

Going forward, will the city/county/school district get realistic about how much tax base they can count on?

Mortgage rates are as low as they're ever likely to be, and the fundamental drivers of home values going forward will be personal income growth and employment. Where is an expansion of employment in Lawrence going to come from? What jobs in our government-dominated employment base (KU, USD 497, city, county) are going to experience wage and salary growth? Employing more barristas and retail clerks is not going to boost home prices.

I await the inevitable "we have to raise the mill rates because we're too soft-headed to cut government expenditures" hand-wringing by government officials.

headdoctor 2 years, 10 months ago

Of course. That is how the system of property tax smoke and mirrors work. The leaders come up with a budget and they are going to make that budget regardless. If the tax base goes down the mill levy goes up. It is a good thing there is a cap on mill increases in some taxing authorities. At least for now until Brownback screws that up. Assuming he gets his way.

headdoctor 2 years, 10 months ago

Wow, I didn't know Steve Miles was in complete control of the Douglas County. Do you not realize that he has Superiors to answer to as well as State Laws and rules that he must go by? There certainly have been some funny business going on with property values and the taxes but it was not just Steve Miles that had his finger into it. I believe that much of the valuation outrage is partly because many property tax payers don't even understand how the system works.

Where was all the out rage when the economy first tanked and the various Government departments lost much of the tax money for that year and previous years surpluses playing in the stock market with it?

Jimo 2 years, 10 months ago

I would note that much of the outrage on many topics comes from people who "don't even understand how the system works."

It didn't take long to find out that the entire Tea Party silliness, focused on budgets and taxes, didn't understand even at a superficial level how much money is spent where and where that money comes from from.

A brief acquaintance with "social conservatives" (or should it be anti-social conservatives) presents difficult to refute conclusions that they are ignorant of basic science and most particularly biology.

You hardly have to be prescient to realize that those who revere most "the Constitution" lack considerable knowledge about that document, its meaning and principles, and often wish to re-debate turning points in its evolution (no small number of which occurred within the lifetime of the original framers!).

And on and on. Outrage built on what sound gadfly said on hate radio to people who aren't in on the joke.

cato_the_elder 2 years, 10 months ago

The above comment was brought to you by gadfly Jimo, who has previously said on this forum, "The only feudalism we have in America is the concentration of the nation's wealth in the hands of a few."

Craig Weinaug 2 years, 10 months ago

No tax money has been used to 'play the stock market'. State law does not permit it, and it has not been done. In addition the ending fund balances of the county have remained remarkably stable throughout the recent recession and they remain stable today. This is precisely because the County Commissioners have been very careful to make adjustments in the expenditure levels of the county to match the available revenues without going into fund balances. The County has also not been a recipient of federal stimulus dollars so we have not had to go through the fiscal crisis of adjusting to the loss of federal dollars that we never received in the first place.

headdoctor 2 years, 10 months ago

Oh really, Perhaps I should have used a different name than the stock market. What state law says and what is actually done is two different things. If this link works correctly read the top paragraph. If not Google it yourself.

http://lawrenceks.org/finance/invpolicy

You will find Douglas County did the same thing.

headdoctor 2 years, 10 months ago

I might add that the only difference between the City of Lawrence and Douglas county is at least the City has a financial manager. I often wondered back then why in the world an elected official like the County Treasurer would be allowed to play with public money with out any formal training in investments.

JackMcKee 2 years, 10 months ago

Another good reason Brownback's tax proposal is a horrible idea. Kansas doesn't have an income tax problem, it has a property tax problem.

jafs 2 years, 10 months ago

It's funny - there was a time when property values at the county level were quite a bit lower than actual market value - of course, you didn't hear any complaints then.

I don't really understand how they determine them, and perhaps there are problems there, because many people feel they couldn't sell their house and get the county valuation.

Shane Garrett 2 years, 10 months ago

Don't forget to throw real estate agents under the bus as well. They too have helped to over inflate home prices. Then the appraiser has to go by what the home sold for in a "fair" market value.

sherbert 2 years, 10 months ago

The appraiser "has to go by what the home sold for in a 'fair' market value" because THAT is what determines value, whatever a buyer is willing to pay in a fair market.

Xwards 2 years, 10 months ago

.....and a seller is willing to accept in an open market without any party acting under undue duress and both parties being knowledgeable.

headdoctor 2 years, 10 months ago

Your a piece.....of work. Freezing the price of a home will not maintain property tax at a constant level. Not only was your comment stupid it was well below your colorful ability at trolling. -10 chump.

RoeDapple 2 years, 10 months ago

No worry. Whatever the value of your home there is only one direction your taxes will take.

blindrabbit 2 years, 10 months ago

Chad: What happened to the monthly real estate transactions information the JW was posting? I saw it for a couple of months and thought that was going to be a continuing feature! Have I missed something?

Chad Lawhorn 2 years, 10 months ago

Actually, I post it weekly. It is in my Town Talk column. The latest installment is in today's column. In addition, each month we write about the real estate sales totals (number of sales and average selling price, etc.) from the Lawrence Board of Realtors. Thanks, Chad

George Lippencott 2 years, 10 months ago

Property values are declining but can you sell your home at those values. Taxes, of course are not declining. Mil rate increases by they county, the city, and to a lesser extent by the district are restoring that which was lost and then some.

If there is to be any correlation between services received and taxes paid it is rapidly being lost. Property taxes are just one more vast income transfer program .

George Lippencott 2 years, 10 months ago

Wonderful statistic. How about personal experience?? Conservative jurisdictions have cut costs -liberal jurisdictions like Lawrence have increased taxes Truth depends where you are.

Richard Heckler 2 years, 10 months ago

The county value does not need to reflect inflated market value. Market value could plunge tomorrow....again. From time to time people employed by the county would be looking at our property to increase the value based on what a similar house a few blocks away sold for. That always left me scratching my head.

Some folks likely would get excited with county assessment value repeatedly increasing however that was just another tax increase coming through the back door..... or in the mail.

In the past 31 years a market pattern has developed that knocks the hell out of property values which has substantial long term impact attached:

ENTITLEMENT - Bailing out The Reagan/Bush Savings and Loan Heist aka home loan scandal sent the economy out the window costing taxpayers many many $$ trillions (Cost taxpayers $1.4 trillion), Plus millions of jobs, loss of retirement plans and loss of medical insurance. http://rationalrevolution0.tripod.com/war/bush_family_and_the_s.htm

ENTITLEMENT - Bailing out the Bush/Cheney Home Loan Wall Street Bank Fraud cost consumers $ trillions, millions of jobs, loss of retirement plans and loss of medical insurance. Exactly like the Reagan/Bush home loan scam. Déjà vu can we say. Yep seems to be a pattern. http://www.dollarsandsense.org/archives/2009/0709macewan.html

Flap Doodle 2 years, 10 months ago

Wow, haven't seen those links in at least a week, merrill.

George Lippencott 2 years, 10 months ago

merrill, What does your post have to do with property taxes???

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