In an effort to predict what’s up for property taxes in the new year, we had a chat about home values with the guy everyone loves to hate, Ada County Assessor Bob McQuade. Tuesday he offered some caution about predicting home values for 2009.
The valuations which we all get in the mail around Memorial Day in May are based on values as of December 31. The housing market is in the dumper, the economy sucks, the weather is cold, but depending on your perspective McQuade offers a ray of hope.
Overall he sees very little change in value for MOST property owners.
“Some values will drop by 40% and a few might actually go up. We use the MEDIAN value, rather than the AVERAGE value because it is less subject to wild swings,” explained McQuade.
The realtor folks will show an AVERAGE 13% drop in overall sales prices for November 2008 compared to November 2007. McQuade says the MEDIAN price is off only 4% on existing home sales while the MEDIAN price is off 38% on new home sales. He correctly notes there are a lot more existing homes than new homes, hence the wisdom of using MEDIAN values instead of AVERAGES.
Unfortunately this exercise has little effect on property taxes. Local governments ranging from cities and counties to library and mosquito abatement districts use the value to calculate the annual tax levy–the percent of value to extract from us each year. Lower value usually means higher levy.
These local governments are allowed to raise their BUDGET by 3% and increase levies to meet the budget. Budget approval comes BEFORE levies are calculated, but few governments lower their annual budget due to inflation, salary contract obligations etc.
In the past, local governments crowed they were “not increasing taxes.” Truth was, taxes did indeed increase. Because of rampant growth the LEVIES didn’t increase.
Now, like that giant Ponzi scheme on Wall Street which always paid dividends–until it came time to collect the money–local Idaho property owners will probably see increased levies and tax hikes to pay for all the growth (roads, schools, unemployment, etc.) which simply does NOT pay for itself.
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