More on sales data and the "bubble"...

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Author Message   Jspjnc Posted on Monday, January 29, 2001 - 12:20 am:        [Disclaimer: I live on Roosevelt Rd. and will face at least a 30 % increase. The CVI number seemed close to the crazy numbers we all heard last summer, and now has come down from that some. For me to feel that my new tax was my fair share I needed to see if the assessments town-wide were reasonably close to recent market levels, so I downloaded the spread sheet and crunched some numbers. This analysis differs from Gerry Ryan's in that I have grouped the VCS categories into crude "zones" -- I'm not sure that my groupings are the best ones -- comments welcome -- also, apologies for formatting problems, the tables are messed up by the bulletin board software -- xls available on request. Jonathan Poor] ------------ A concern of home owners facing large increases is that even if assessments in their part of town are accurate, if assessments are relatively low in other parts of town, the overall tax rate applied to everyone would be unfairly high. Citizens have related anecdotal evidence suggesting that houses that sold in 2000 in the middle or east of town have new assessment values that are less than the sale price. One way to test this would be to check the actual sale prices of houses that sold in the year 2000 against the assessments derived by Certified. The database has the sale price and date of the last sale of properties, back to 1992 or so. So it is possible to compare the actual sale price to Certifiedâs number. The following charts display summaries of comparisons of sale price to new assessed value for residential sales in different ranges of time. The charts include all class 2 sales for the listed years, excluding the sale of two adjacent properties on Valley St. which were extreme outliers (the sale price was 20 % of the assessed value.!??) Sales of condominiums were also left out. Definitions: zones: description/Vcs 1 west of ridgewood AC01,AC02,AC03,AC04,AC05 2 west of maplewood av. AC06,AC07,AC08,AC09,AC42 3 "middle" of town AC10,AC11,AC12,AC18,AC19,AC20, AC21,AC23,AC24,AC25,AC40 4 "east" of town AC13,AC14,AC15,AC16,AC17,AC22, AC26,AC27,AC28 av diff = average of (new assessment - sale price) av pcnt diff = average of (difference / new assessment)*100 2000 sales zone n av sale av assm av diff av pctdiff -------------------------------------------------- 1 68 474784 450090 -24694 -5.96 2 19 426463 388000 -38463 -8.30 3 148 302033 298509 -3524 -1.22 4 142 178934 176397 -2537 -1.28 377 As can be seen, the middle and east of town are not under assessed relative to the west. It also appears that the corrections made to land values on the west side have dropped the assessed values to below the peak sales of the summer of 2000. 1999 and 2000 sales (2 years) zone n av sale av assm av diff av pctdiff -------------------------------------------------- 1 131 440857 452010 11153 2.23 2 34 371421 375626 4206 2.89 3 291 273346 293057 19710 6.85 4 342 163427 172214 8787 5.12 798 Here, using two years of sales data, the differences between the zones has evened out some. Assessed values in the ãwestä (zones 1 & 2) are closer to sale prices than in the middle or east, but the amount of variation is probably insignificant. 1998, 1999 and 2000 sales (3 years) zone n av sale av assm av diff av pctdiff -------------------------------------------------- 1 218 388492 446539 58047 12.84 2 64 321218 373834 52616 14.27 3 457 246888 290659 43771 14.97 4 523 159516 175239 15723 8.55 1262 Here, with three years of sales considered, the average percentage differences between assessed value and sale price for middle and west are very close, while the east (zone 4) is much smaller. This shows that the east of town hasnât participated in the recent real-estate boom that has affected the rest of town. It also shows that 1998 data wasnât much of a factor in the formulas used by Certified. Conclusions: 1. The ãwestä is not over assessed relative to the rest of town. 2. Adjustments have been made (either by Certified or by Mr. Galante) to reduce assessments on the west side to below the levels of the ãbubbleä of 2000. 3. The assessed values that Certified/Galante came up with are relatively balanced across zones of town when comparing them to two years of sales data (1999 and 2000). 4. Comparing assessed values to three years of sales data reveals a split between the east and the rest of town. If 1998 sales were weighted more heavily, assessments in the middle and west of town would be lower. Jonathan Poor 1/28/01   Nakaille Posted on Monday, January 29, 2001 - 1:01 am:        Thanks, Jonathan. Your analysis confirms what many of us knew/suspected: the "west" is NOT overassessed relative to the rest of the town. The amazing rise in home values was real for part of town and virtually non-existent for part of town over the past three years. Bacata   Melidere Posted on Monday, January 29, 2001 - 9:01 am:        I'm not sure i'm reading your work correctly. It looks to me like the data prove the opposite of the conventional wisdon....the 'west' side HAS been adjusted from the peak values in 2000 ( by 6% and 8% below sales prices) while the middle and east sides have NOT had such an adjustment (only assessed at 1.2% below sales prices). To paraphrase someone, a percent here and a percent there and pretty soon you are talking about real money). Remember, in addition, that the absolute prices on the west side are a lot higher...so a percentage drop is a bigger dollar amount. Adding in 1999 confirms the trend, with west side houses only up between 2-3% and middle/east side houses up 5-6%. How come the 'bubble' is 'real' for the east side but not the west?   Melidere Posted on Monday, January 29, 2001 - 9:07 am:        Also, i am not sure your data supports your conclusion about whether or not the west side taxes if three years were used. The highest assessments over sales prices in 98 were in that huge 'middle' (14.97%) which may well be a big enough dollar amount to wipe out any gains made by going back to that point. The analysis based on 'percentages' is hiding dollar amounts. The assessments might be lower, but the mil rate might be higher. Does that make sense?   John Posted on Monday, January 29, 2001 - 9:19 am:        Does anyone know what a house that sold for 189,000 in 1987 and then for 320,000 in 2000 (only difference is a new bathroom)would be assessed at? How does this affect the homes in that neighborhood?   Waynecaviness Posted on Monday, January 29, 2001 - 10:23 am:        Jonathan: Whew! Thats a lot of crunching! It will take a bit to digest, but whether one ultimately agrees with your interpretation or not, thanks very much for sharing your work! Wayne Caviness   Melidere Posted on Monday, January 29, 2001 - 11:03 am:        Let's make this as clear as i can. Let's take the 98-99-00 numbers. using today's mil rate of .0275, and assuming there are only 4 houses in town, one of each...the tax assessed under the sales prices (lower than assessed prices) would be $10,695 on zone one and $12,279 as they currently stand assessed. But if you add the total tax collected at that rate at the old sales prices and the new assessed price...you see that the old sales price only raises 30,000 vs. 35,000 as currently assessed. That shortfall of 5,000 has to be made up in the mil rate. In order to collect the same number of dollars at the old sales price that you are collecting under the new assessed price...the mil rate would have to be raised to .0315. (.0315 times the sum of the value of all four houses at the sale price or $1,116,114..roughly) Using the new mil rate to the old sales price on zone 1 (.0315 times $388,492) gives you a tax of 12,237, or a difference of about $40. Now let's take the situation conversely...assuming everyone were taxed at the 2000 sales price rate. Using your numbers..and again assuming only 4 houses...the total tax collected under the assessed price would be 36,000, and using the .0275 mil rate the total tax collected on the sales price assessment would be 38,000. so the mil rate would be adjusted downward to make the total tax collected the same, down to roughly .026. That would make the tax on the zone 1 house (.026 474484 $12,336 or a difference of $27. The numbers used aren't making a lot of diffence in the actual taxes paid on the high end...although the difference make a pretty serious difference in the 'percentage rise/lowering' of taxes in the low end. My conclusion: The actual assessed price relative to market is not going to make an appreciable difference in taxes incurred on any particular house. The relative taxes remain the same.   Jspjnc Posted on Monday, January 29, 2001 - 11:34 am:        In case people had difficulty reading my tables: Jonathan Poor year 2000 sales zone n av sale price av new assmt av difference av pcnt diff 1 68 474784 450090 -24694 -5.96 2 19 426463 388000 -38463 -8.30 3 148 302033 298509 -3524 -1.22 4 142 178934 176397 -2537 -1.28 377 1999 and 2000 sales (2 years) zone n av sale price av new assmt av difference av pcnt diff 1 131 440857 452010 11153 2.23 2 34 371421 375626 4206 2.89 3 291 273346 293057 19710 6.85 4 342 163427 172214 8787 5.12 798 1998, 1999 and 2000 sales (3 years) zone n av sale price av new assmt av difference av pcnt diff 1 218 388492 446539 58047 12.84 2 64 321218 373834 52616 14.27 3 457 246888 290659 43771 14.97 4 523 159516 175239 15723 8.55 1262   Jln Posted on Tuesday, January 30, 2001 - 1:45 am:        It's a nice piece of number crunching but here's the problem: Certified is well aware that their work is subject to criticism if there are large discrepancies between new assessed values and recent selling prices. They know that upon appeal, an assessed value significantly in excess of recent purchase price will not stand up. So before the numbers are finalized they make adjustments to those properties to effectively eliminate those discrepancies. We know anecdotally that there have been numerous instances of such discrepancies and that the homeowners have been able to negotiate adjustments to bring their values very closely in line with their purchase price. Unfortunately, the formulas used by Certified to derive assessed values for everyone else may not have been adjusted to the same degree. So if you bought your house 15 years ago you have no way of knowing whether the method yeilds a fair or reasonable result. It is incorrect to assume that just because the assessed values have been brought into line for properties which have recently been sold, that the same is true for all other residences. Too cynical? Give me a reason not to be cynical.   Townie Posted on Tuesday, January 30, 2001 - 7:44 am:        A really helpful contribution, Jonathan. Thanks for providing it.   Jspjnc Posted on Tuesday, January 30, 2001 - 3:41 pm:        jln: If I understand you correctly, you are saying that the assessments for properties that were not sold in the last three years might not look like those that were. I wondered about that, and got the average values for all properties in the 4 zones: Average new assessments for all of class 2 zone n av new assmt 1 1037 452060 2 444 384537 3 2228 293675 4 2693 175928 I think these numbers look very close to the averages of properties that were sold since 1998. See previous posts. Another question, of course, is what is the range of variation around the averages? I don't have these numbers yet, I have some idea that the varition is pretty high. This means that although the averages look good, individual properties are going to vary a lot (15-20%) away from the averages on either side. Remember, this exercise is to see if there is systematic bias from one part of town to another. Not the same question as "Is my house over assessed?" Jonathan Poor   Damellon Posted on Friday, February 2, 2001 - 1:50 pm:        Why in God's earth should we be spending all this time number crunching to make a point that's perfectly clear!! Let's all face it, the reason why we are in this mess is that the "TC" did a sloppy job with the reval. Apparently, it was nobody's job to oversee the process. This is unacceptable representation. How the members of the TC can go around all puffed up and full of themselves the way that they do is beyond me. I want them - out of my house, out of the pool, out of the library, out of the school district (especially!!!) - and out of town hall!!! I urge everyone to please consider taking a closer look at the other candidates that may represent us more appropriately during the next election! We need representative that are not overcommitted (and not spending extreme amounts of time posting on this board!!) - to be accountable and to do the job properly   Gerardryan Posted on Friday, February 2, 2001 - 2:47 pm:        Yes, by all means, Damellon, let's try not to have a fact-based discussion on the issues! Oops, was that puffed-up of me? :-)   Njjoseph Posted on Friday, February 2, 2001 - 3:31 pm:        Damellon, would you by any chance feel the TC did a sloppy job on the reval? How many times do you need to post the same message?   Teach66 Posted on Friday, February 2, 2001 - 4:18 pm:        I'm glad someone is finally calling it like it is - careless work. Thanks damellon!!   Tracks Posted on Friday, February 2, 2001 - 4:29 pm:        Damellon, I miss your reasoning. The TC hired an outside consulting firm to do the job. Are you saying you would have preferred the town do the job? I could only imagine the mess that would have caused having an inside job done and the screams of favortism. Or are you saying the TC should have stepped in before Certified finished the job and accused them of doing lousy work? Then the town would be in an even worst position. There is something called an appeal process. It works. Try it instead of complaining.   Mem Posted on Friday, February 2, 2001 - 4:58 pm:        It's unfortunate that Certified has done such a bad job that many busy people have to spend valuable time rectifying mistakes. I am still unhappy with the fact that they thought I had a finished attic, that they are classifying a tiny concrete floored room in my basement as a den/other, and are taxing me for a "View" with a measurement of "115" (whatever that is). In addition, I feel my house is arbitrarily valued higher than relatives and friends in the same neighborhood with larger homes, more land and amenities, as well as possibly better "Views" (depending on whose opinion - ?) On top of that, I now understand that I have to be careful with my comparisons to Certified, so that they don't raise the values of my friends and relatives. This is taking up a lot of my time and scheduling, especially since I travel extensively on business. When this process started, I had no idea that this would be the outcome, and I feel I and many others have every right to complain.   Tracks Posted on Friday, February 2, 2001 - 5:13 pm:        Mem, you do have a right to complain. It just seems from what I hear that most of the valuations were correct or reasonably close. The appeal process is not that hard and does not take a lot of time. It is the fairest way to make sure your house is properly assesed. Relying on Certified is cleary useless.   Mem Posted on Friday, February 2, 2001 - 5:16 pm:        Thanks Tracks. I am starting the appeals process, I just hope it works...   Damellon Posted on Friday, February 2, 2001 - 7:10 pm:        No, what I am saying is that anytime a committee embarks on a project there is usually somebody to oversee it. Whether it be one person, a chairperson, or several, or the entire committee. I am surprised that the committe hired Certified and then they claimed - surprise, surprise - the shock of the assessments when they came in. I had imagined that the township, or the person overseeing the "project" would have checked in periodically to see how everything was coming along. I would also have imagined that there would have been some dialog between the committee and Certified on a pretty regular basis - so the committee could have advised Certified whether or not they were on track - or visa versa. Just the fact that the committee "hired" Certified does not let them off the hook and I do not feel that it should be each and every homeowners responsibility at this point to challenge the amounts or the process - A CONSTANT DIALOG SHOULD HAVE BEEN GOING ON - BY THE COMMITTEE - DURING THE PROCESS!! SOMEBODY SHOULD HAVE BEEN OVERSEEING THE ENTIRE PROJECT AS IT WAS A "TASK" OF THE COMMITTEE. (However, maybe they were overseeing it - and maybe they were in full agreement with the 6 month window of inflated values that were used.) It is already too late anyway - there is a bottom-line dollar amount that the town needs to come up with. We can challenge all we want - the real bottom line is that if the assessor lowers one house - he/she is going to raise another or raise the rate. Again, I feel the damage is already done - it was just a sloppy job!!   Jennie Posted on Sunday, February 4, 2001 - 4:14 pm:        Here's a question about sales data. The most recent sale on Walton Road from December 2000 was $196,000 (not a distress or family sale). The average land value for a house on the street as determined by Certified is around $250,000 (when you add together the $170,000 site value and acreage amount at $350,000 per acre). Why would a person pay less than the land value for the land and the house? Is there such a thing as a house worth negative $50,000 (and if so, how would that factor into the site value for the other homes)? Is this a mistake by Certified or by the buyer and seller? Would this be an indication that the methodology used by Certified is flawed (even though we don't know what the methodology was)? Seems like maybe they shot the arrow, then painted the target.