Gannon Member Username: Gannon
Post Number: 9854 Registered: 12-2003
| Posted on Thursday, August 16, 2007 - 10:35 am: | |
I really, truly cannot believe what I just read. Seems the state tax board has moved to allow property sold at distressed rates to LOWER tax assessments on adjacent and similar properties, and to allow for one-year price trends instead of the current two. HUGE deal, this will do more to allow correction in the inflated property values than anything else they could do...like opening a vent to let a little pressure out. Oddly, they say this will not immediately be the case...and prices are expected to drop by only 8% over a few years. I have a gut feeling it is much worse than that...someone recently said property values have traditionally trended with inflation, and that since 1997 they've skyrocketed...it should be relatively easy to do the math and see where prices SHOULD be on real property. I don't think anyone wants to see that truth. Cheers! |
Sstashmoo Member Username: Sstashmoo
Post Number: 268 Registered: 02-2007
| Posted on Thursday, August 16, 2007 - 1:24 pm: | |
"...it should be relatively easy to do the math and see where prices SHOULD be on real property. I don't think anyone wants to see that truth." I do, These houses are way over-valued for the area. With the job scene here and the economic outlook, real estate is way over inflated. By about 20 -30% at least. People wonder why houses arent selling, simple, they want more then they're worth. Doesn't the market set the price? It's not the buyers fault that some ARM'd their joints into oblivion. And they were naive to think that they could recoup the investment no matter what. |
Jiminnm Member Username: Jiminnm
Post Number: 1380 Registered: 02-2005
| Posted on Thursday, August 16, 2007 - 7:53 pm: | |
"I don't think anyone wants to see that truth." You're right Gannon, especially the taxing authorities. Many local governments have relied on increasing property values to escalate their revenue and spending. It will be interesting to see how they react - increased millage proposals or reduced spending? |
Novine Member Username: Novine
Post Number: 48 Registered: 07-2007
| Posted on Friday, August 17, 2007 - 12:11 am: | |
"Many local governments have relied on increasing property values to escalate their revenue and spending. It will be interesting to see how they react - increased millage proposals or reduced spending?" How do you figure? Since Prop A, revenue has been based on taxable value which can't increase more than 5% or the rate of inflation. So even if home values skyrocketed, that didn't translate into more revenues for local governments. Even when homes sold and popped-up in value, those pop-ups aren't exempt from the Headlee calculation so enough increase in value from pop-ups triggers Headlee rollbacks. |
Mikem Member Username: Mikem
Post Number: 3446 Registered: 10-2003
| Posted on Friday, August 17, 2007 - 12:41 am: | |
The State Tax Commission will now allow the use of foreclosed home values in assessments, but can a community still disregard them if it so chooses? The article makes it sound permissive, but not mandatory, to include foreclosures. |
Jiminnm Member Username: Jiminnm
Post Number: 1381 Registered: 02-2005
| Posted on Friday, August 17, 2007 - 12:08 pm: | |
Novine, how many homes in the metro area have sold and 'popped-up' in value over the last 5-7 years? How many new homes have been built in that time (and were assessed for the first time)? I haven't researched local government spending lately in Michigan, but here in NM (with a stricter restriction on annual assessment increases than Michigan), local government spending has increased at a rate exceeding 10%/year. With the Headlee limitations, there's no real incentive for a property owner to contest the assessment since the evaluation increase is limited (unless market declines have been more severe than currently are). When that property changes hands, the calculated increase that wasn't allowed usually becomes the new value (even if different than the price paid). Then, see the next paragraph. Mikem, I have contested assessments in Oakland county in the past and can tell you that it's difficult. If there are factual errors, such as size, type of construction, property impediments, etc., you had a decent chance of success. But, if the problem was purely valuation, I saw cases where the assessor chose to ignore the market and even prices recently paid in an arms length transactions, and was supported by the local appeals board. The only alternative at that point is tax court. |
Mikem Member Username: Mikem
Post Number: 3447 Registered: 10-2003
| Posted on Friday, August 17, 2007 - 12:39 pm: | |
Yes, I've tried and failed at that, but I'm supposedly in one of the worst communities (aren't they all?) for appealing assessments. I was surprised to read that the tax commission revised the guidelines "at the urging of local assessors". |
Craggy Member Username: Craggy
Post Number: 261 Registered: 10-2003
| Posted on Friday, August 17, 2007 - 1:08 pm: | |
Jim... In cities like Grosse Pointe, where empty nesters have owned places for 20 plus years, and now want to sell them, the pop-ups are huge. The tax difference is enough to increase a mortgage payment by several hundred dollars a month. High enough that many folks who otherwise would qualify for a mortgage in that price range have to reconsider. Its really hurting the market. If the state wanted to somehow jumpstart the real estate market, one thing the state might consider would be to cap the pop-ups somehow. I have no idea if its feasible...but its worth looking at. |
Novine Member Username: Novine
Post Number: 51 Registered: 07-2007
| Posted on Saturday, August 18, 2007 - 12:44 am: | |
I guess you didn't read what I posted. Even if property value pops-up when the property changes hand, the Headlee formula doesn't exempt that increase in value for calculating Headlee reductions (for comparison, new growth is exempt). So the more pop-ups a community has, the greater the Headlee reduction. So while an individual property may generate more tax revenue after pop-up, that's offset by Headlee reductions in all other properties so the local government doesn't see a significant increase in tax revenue. Over the past 5 years, increase in taxable value have been at the rate of inflation, which is much less than the maximum 5% allowed by law. At the same time, locals are dealing with skyrocketing health care, retiree costs, etc. on generally flat revenues. This pinch is hitting the communities that have passed the growth curve the hardest. In the growing suburbs, the new tax revenue from new development is tending to lessen the bite of Headlee rollbacks. |
Mcp001 Member Username: Mcp001
Post Number: 2912 Registered: 11-2003
| Posted on Sunday, August 19, 2007 - 11:41 am: | |
It's been my experience that governments spend money like a crack-head given carte blanche. Hopefully, this will put the brakes on that and compel them to live within their means like everyone else. |
Novine Member Username: Novine
Post Number: 55 Registered: 07-2007
| Posted on Sunday, August 19, 2007 - 11:34 pm: | |
"Hopefully, this will put the brakes on that and compel them to live within their means like everyone else." What makes you think they are going to get less money? Headlee already causes rollbacks when tax revenue exceeded the rate of inflation or 5%, whichever was less. In most communities, this won't have much effect on tax base or tax revenues. |