It didn’t magically skip over your house…

The local Spinal Column Newspaper had an article in this week’s issue that was all about the dramatic drop in property assessments in 2009 in our little corner of the Michigan market. In the article it put the overall average for the communities that it was focused upon at about 16%, with the high at a little above 23% and the low at 12.8%. The table below shows the average percentage declines for the various communities that the article covered.

City/Village/TWP...................... 2009 % decline

Orchard Lake................................... 15.35
Wixom............................................... 15.53
Wolverine Lake................................ 14.22
Waterford Twp................................. 23.05
Walled Lake...................................... 16.93
Commerce Twp................................ 12.80
West Bloomfield Twp....................... 18.20
Milford Twp...................................... 18.00
White Lake Twp............................... 20.63
Highland Twp.................................... 13.90

Overall for area................................. 16.00

Nowhere in the article was there any mention of there being specific neighborhoods or homes that were somehow miraculously passed over in these declines. So, one may assume that if you live in these areas your home was impacted at or near the level that was reported. Snce these are the averages, they give a good idea of where the assessors are in establishing neighborhood values.

I continue to run into homeowners who are somehow convinced that their home was spared – that somehow the poor Joes down the block got hit with value losses, but that their home is still at the value that they had it appraised at 3-4 years ago, when they last refinanced. It just ain’t so, folks. These numbers represent only the 2008-2009 assessed value declines. The drop in home values is now in it’s third year, with each year at or near double digit declines.

This is why I tell people who ask me for Comparative Market Analyses that their homes have dropped anywhere from 30-40% in assessed value (and market value) over that period (more in some communities and over 50% in Detroit itself). If anything, the assessors lagged the drop in market value by at least a year, as communities tried stubbornly to hold their assessed values up. Now they are catching up (or down) to the market.

The only good news from the article was when it pointed out that due to these drops in the assessed State Equalized Value (SEV) most Michigan homeowners are now in sync between their Taxable Value and the SEV. Due to an anomaly in Michigan’s property tax laws (The Headlee Amendment) it was possible that one’s home could appreciate rapidly, in terms of its assessed value, but the Headlee Amendment limited the amount of annual rise in the value that could be taxed to 5% or the rate of inflation, whichever was less.

During the real estate bubble run up many homes had big jumps in their SEV’s but were thankfully only taxed on amounts that were limited to a 5% growth per year – their Taxable Values. When the bubble initially burst and SEVs stabilized or started down, the Taxable Value on many homes still had lots of room to grow, before it was re-synced with the SEV; so it was possible that your SEV could be dropping while your Taxable Value and your taxes were still going up.

Now those two numbers have re-synced and values as well as taxes will rise or fall with the rise or fall in the rate of inflation. This year (for next year’s taxes) that means they fell by the percentages listed above. So, the good news, if you’re a homeowner, is that your taxes are going down. The bad news is that your house is worth less than it was a few years ago.