Property values, taxes going down again next year
December 08, 2010 - The good news is most everyone's property tax bills are once again going to decrease next year.
The bad news is it's not because government got more efficient or cut spending; it's because their property's assessed value is continuing to decline.
According to "tentative" data provided by the Oakland County Equalization Division, the State Equalized Value (SEV) of residential properties in Oxford Township decreased by an average of 2.5 to 3 percent for the 2011 assessment notices, which will be mailed out in February. In neighboring Addison Township, SEVs fell by 7.5 to 8 percent on average.
Countywide, the SEV for residential properties decreased by an average of about 8 percent.
SEV is equal to 50 percent of a property's fair market value.
As always, Equalization Manager Dave Hieber noted the averages reported here are for the entire community, not individual properties, which can vary from neighborhood to neighborhood.
The new SEVs are based on residential home sales that took place between Oct. 1, 2009 and Sept. 30, 2010.
"We look at the sales that happen within that time frame and make the comparison to the SEVs," Hieber said. "We're seeing an increased number of sales in most communities. The number of sales has picked up."
As a result of this drop in SEV, Hieber noted that when commercial and industrial properties are factored in, the county is expecting taxable values in Oxford Township to drop by an estimated average of 3 to 5 percent and by an estimated 5.5 to 7 percent in Addison.
Countywide, taxable values are estimated to fall by an average of around 10 percent.
A property's taxable value is the amount against which local millages are levied and property tax bills are calculated.
Hieber noted the taxable value dip in Oxford and countywide is estimated to be greater than the SEV dip because "commercial and industrial (properties) are dropping more" than residential.
Unless a community voted in a millage increase or someone put a physical addition on their home, Hieber estimated "90 percent" of property owners can expect to see lower tax bills in July and December of 2011.
The question on everyone's mind, both homeowners and government officials alike, is when is the freefall going to end?
"We're hoping that things are starting to hit bottom now, so 2012's reductions, if any, won't be nearly as drastic," Hieber said. "But again we've only got a couple months of sales data that we're starting to review to try to look ahead to 2012. We've got October (2010) and part of November's sales transactions, which isn't enough to make a real call on what's going on for 2012."
In Hieber's opinion, the county won't experience double-digit percentage drops in the SEV averages like it did for 2010.
"I personally don't think we're going to have double-digit decreases for 2012 on (all properties) across the county," he said. "It's possible some communities will still have that happen, but that's not what we're expecting; that's not what we've built our planning, relative to budgets, around. We have estimated modest decreases on a countywide basis relative to residential value. And hopefully, we've estimated worse that what they're actually going to be."
What could seriously affect the 2012 values is the record number of foreclosures the county is facing this year.
"We're still on track for around 9,500 to 10,000 foreclosures in Oakland County for calendar year 2010," Hieber said. "That's what makes it so difficult to predict. What's going to happen with (home prices) when we're going to have our worst year ever for foreclosures? Is it plausible for price to flatten out when these properties are theoretically for sale by the banks in 2011 or sometime within that time frame?"
Having all these foreclosed homes on the market could "very well" cause the SEVs to drop by larger amounts next year.
CJ Carnacchio is editor for The Oxford Leader. He lives in the Village of Oxford with his wife Connie and daughter Larissa. When he's not busy working on the newspaper, he enjoys cigars/pipes, Martinis/Scotch, hunting and fishing.