From the Lafayette Journal and Courier:
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According to a Journal & Courier analysis of assessed values of 40,759 single-family houses, 25,002 — or 61 percent of the total single-family houses — went down in assessed value or stayed the same in 2012 compared with 2011.
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Larry DeBoer, Purdue University professor of agricultural economics, said decreases in overall assessed values after a general reassessment are rare and reflect trending.
A general reassessment is when assessors check each parcel to see if improvements have been made since the last general assessment, improvements that would significantly change the value of real estate for taxing purposes. In the past, such comprehensive assessments occurred once every 10 years, although that time period has been decreasing.
After general reassessments in 2003, 1996, 1990 and 1980, DeBoer pointed out, assessed values jumped dramatically because of the amount of time that lapsed between assessments without incremental adjustments in between, or trending.
Last year was the first general reassessment since 2003 and the first since Indiana assessors started using trending.
In trending, sales of a sample of homes are used to estimate how all parcels in the same neighborhood have changed in market value. Trending is used to estimate assessed values in years between general assessments.
If sale prices are trending downward, assessed values of all properties in the same neighborhood are adjusted downward proportionally. That appears to have been the case with a majority of single-family residential properties in 2012.
Phillips said the trending factors applied to assessed values in 2012 were based on sale prices in 2011 compared with previous years. Those prices reflected housing market weakness from the economic collapse of 2008.
“So no, I’m not at all surprised that there’s a slight decrease in residential,” Phillips said. “I think this is the last year that homeowners should expect very much decline. The numbers I’m seeing from the Lafayette Board of Realtors are 2012 sales show some increase, both in units and median sale price.”
The general downward trend in assessed values, however, does not include pockets of houses in which values rose, sometimes dramatically.
Average assessed values of the 275 homes in one neighborhood consisting of central Battle Ground and nearby surrounds, for example, jumped 45.2 percent. Overall, the 495 houses assessed in the incorporated limits of Battle Ground went up 13.1 percent.
Phillips said the trending had skewed assessed values in that area in previous years, mostly because all houses were lumped together instead of comparing sale prices of similar structures.
“We spent a lot of time on Battle Ground looking at each individual houses,” she said.
The trending problem in Battle Ground was caused by lumping turn-of-the-century cottages, older mansions and relatively newer homes constructed between 1950 and 1970 into the same neighborhood or “market,” Phillips said. This meant when a smaller cottage sold, it would drive trends down for homes that were dissimilar to the cottages. Assessors grouped homes in Battle Ground with similar homes, not necessarily the adjacent homes, to create similar “markets,” Phillips said.
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Barry Wood, director of the assessment division of the Department of Local Government Finance, suggested that homeowners gauge their assessed value based on the housing market where they live. If a homeowner believes the assessed value is significantly higher or lower than what the home would sell for, there might be an assessment glitch. As a rule of thumb, if the assessed value is within 10 percent of market value, the assessment is considered accurate.
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In theory, if everyone’s assessed values decreased the same amount, all tax rates would go up equally. And if, in theory, the revenue needed to pay for government services did not change, tax bills would be about the same from year to year.
In reality, many variables go into determining tax bills, including where the property is located, how much the assessed value changed compared to other parcels and how much revenue each individual government entity has been budgeted to spend.
In DeBoer’s opinion, given the overall decrease in assessed values, anyone whose assessed values increased significantly in 2012 is likely to pay higher property taxes this year.
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While Phillips said the assessor’s office staff is starting to work its way through the 2012 residential appeals, that process won’t be completed for a month or two, she said. In addition to 1,461 residential parcel appeals there were 607 nonresidential appeals filed after the 2012 general reassessment, she said.
See the full article here:
http://www.jconline.com/apps/pbcs.dll/article?AID=2013301040046
DATABASE: Tippecanoe County assessed home values 2012
