CAAR Blog

We had heard of potential large drops in Albemarle assessments, but most areas saw only moderate decreases.  The average decrease in residential assessments was 2.55%.  This was a difficult year to be an assessor, so don’t be surprised if your assessment is off from what the market says your home is worth.  This was the first year Albemarle did a one year assessment (with basically the same amount of staff who completed the process in two years) and on top of that, the rapidly changing market made finding comps difficult.  Some of the largest drops in assessed value were seen in areas like Glenmore and Old Trail where there are a large number of homes for sale.  Those “on the market” properties gave assessors plenty of data to help them determine the approximate fair market value (assessed value).  Other areas had very few comparable recent sales on active listings to help the assessor.

Land values went up as did commercial property.  These increases offset the drop in residential and helped avoid the first overall decrease in Albemarle assessments.

So what should you do if you think your property assessed too low?  Nothing, unless you want to pay more taxes, or you are concerned that the low assessment will hurt your ability to sell at real market value.  And if your assessment is too high?  Here is what the assessor’s office suggests you do if you want to challenge your assessment:

“We strongly urge property owners as a first step to contact our office and speak to the appraiser who did the valuation. That way the appraiser can verify the basic information in  our records and explain the basis for any change. Should the owner not obtain satisfaction during the phone conversation or visit to our office, this step enables the appraiser to revisit the property, review the appraisal of the land and do an inspection of the improvements, which is often helpful in understanding the concerns of the owner.

There are not many folks in Richmond other than the REALTOR Lobbyist fighting to protect the right of home buyers. Last year I posted on the Girlymen in our legislature that are so scared to tell us they are raising our taxes that they try to find places to tax us where we won’t see it coming until it hits us in the face.  Most people do not even know what the Grantor’s Tax is much less how much it costs homebuyers.  When you buy a home, you are taxed 10 cents for every $100.  The Girlymen want to take it to 30 cents and triple that tax on buying a home.  Why?  Because most people don’t think of this type of tax applying to them, so they won’t get mad.  Instead, it just makes homes less affordable.  REALTORS are fighting hard for homebuyers and you should call your legislator and let ‘em know that someday you’ll buy a home and you’d appreciate it if they didn’t triple your tax.  Tell them to stop sneaking in hidden taxes on unsuspecting homebuyers and look for broad base funding options that are fair to everyone.

You can expect your assessment in the mail later this week if you live in Albemarle County.  We have been predicting a drop in residential assessments, but it is likely that assessments will provide various results based on the area you live.  Frankly, the assessor’s office is going to have the same difficulty that REALTORS have - lack of good comparibles.  Some areas will likely see a rise in their home price while others will see a 5 to 10% drop.  Remember, assessments are not about the price of your property on the market.  They are an attempt to establish a reasonable ball park value on a property so you can be taxed. 

The average annual increase over the last 25 years has been just under 7%.  The average over the past 6 years has been 12.6%.  The smallest 2-year increase in the last 25 years (note:2008 is the first 1-year assessment) was 2.26 in 1997 and the largest was in 2007 at 29.8%.  There has not been an overall price decrease in the past 25 years.  Although it is not fair to say that the actual value of your home has increased 7% each year for the past 25 years, the assessments do provide further evidence that owning a home is a great investment.

Annual Assessments for the past 25 years:

Year      % increase

1983     16.71

1985     13.29

1987     10.69

1989     13.15

1991     22.48

1993     11.17

1995     5.24

1997     2.26

1999     3.51

2001     12.79

2003     18.74

2005     27.21

2007     29.80

2008       .14

 

I ran a few numbers just to see what the MLS system had for rental properties.  I found 91 properties for rent with 2 or 3 bedrooms and less than 1500 square feet.  The average price of those rentals (detached and attached alike) was $1203 per month. 

The same search run for homes for sale generated 786 homes with an average price of $232,645 (median price was $205,900).  Assuming 6% financing for 30 years and nothing down, the average monthly payment would be $1394.  Add in the tax benefits and equity build-up and in the long run you will be much better off buying.  There are also lots of good programs for first time buyer that can help with downpayments and financing.  Mortgage rates change, but you can likely do much better than my example.  With just a little better deal on the financing (5.75% and 10% down), your monthly payment goes to $1219.

I consider myself and environmentalist - and a defender of property rights. You could argue that a true environmentalist can not also be a defender of property rights because the two are often conflicting beliefs. I disagree - I think they are both correct beliefs and anyone who can not look for a balance between the two is in conflict between right and wrong. We should all be disturbed when politicians and pundents forget that BOTH the environment AND property rights are critical to our society.

I hope the “new” Albemarle Board of Supervisors will try to maintain a balance. The upcoming railroading of so-called environmental ordinances scheduled this week provides us with unclear evidence as to how this Board will balance these important issues. On one hand, the new versions of these ordinances have removed many of the out-of-balance and controversial policies. On the other hand, the family division ordinance is still an afront on property rights with little or no environmental benefit. The new ordinance is better than the one that failed to get approval a few months ago, but it is still an attempt to fix a problem that does not exist and it still takes away significant property rights from land owners.

Simply put, there is NO EVIDENCE that the current family division policy is being abused. In addition, there is VERY LITTLE environmental benefit to this policy. So why do people support this policy? I think there is something other than the “environment” that is driving this policy.

I see the family division ordinance (which has mellowed after election politics were finished) as a simple anti-growth policy. People who are against ANY growth often use the environment to make their argument, but that is often disingenuous. Since there is no environmental benefit to this proposed ordinance, we can only assume that it is simply anti-growth. That scares me because anti-growth advocates are willing to take away property rights for their own benefit (i.e., I don’t want you to build that because I don’t want to look at it). Unfortunately, it is not generally this easy to distinguish between real environmental policy and anti-growth selfishness.

So, what sold in 2007?  The hottest market segment was the $300K to $350K, but other areas did well too.  Note: the numbers below do not include the top and the bottom of the market where the number of sales was insignifcant.

 Price Range    #sales  DOM   % of sales

$100,000	- $109,999	17		77		0.48%
$110,000	- $119,999	24		83		0.67%
$120,000	- $129,999	36		106		1.01%
$130,000	- $139,999	49		68		1.37%
$140,000	- $149,999	64		89		1.79%
$150,000	- $159,999	86		77		2.41%
$160,000	- $169,999	101		84		2.83%
$170,000	- $179,999	104		68		2.91%
$180,000	- $189,999	124		76		3.47%
$190,000	- $199,999	159		97		4.45%
$200,000	- $219,999	229		84		6.41%
$220,000	- $239,999	301		86		8.43%
$240,000	- $259,999	244		86		6.83%
$260,000	- $279,999	219		96		6.13%
$280,000	- $299,999	243		96		6.80%
$300,000	- $349,999	393		103		11.01%
$350,000	- $399,999	314		101		8.79%
$400,000	- $449,999	181		107		5.07%
$450,000	- $499,999	148		115		4.14%
$500,000	- $549,999	88		94		2.46%
$550,000	- $599,999	72		135		2.02%
$600,000	- $649,999	68		128		1.90%
$650,000	- $699,999	49		131		1.37%
$700,000	- $749,999	44		101		1.23%
$750,000	- $799,999	38		72		1.06%
$800,000	- $849,999	14		185		0.39%
$850,000	- $899,999	19		113		0.53%
$900,000	- $949,999	15		173		0.42%
$950,000	- $999,999	6		40		0.17%

Over the past 5 years, the Charlottesville real estate market has grown geographically.  10 years ago, the market was just the city and Albemarle with a few sales in Fluvanna, Greene and Nelson.  About 8 years ago, Fluvanna, Greene, and Nelson exploded.  Then, a few years ago, we added Waynesboro, Louisa, Stanton, Augusta, Buckingham, Culpeper and Orange to the mix.

Here are the 11 top sub-markets in the greater Charlottesville real estate market area in terms of properties currently listed for sale in the CAAR MLS:

1. Albemarle (844)
2. Charlottesville (339)
3. Nelson (296)
4. Fluvanna (295)
5. Louisa (264)
6. Augusta (209)
7. Greene (202)
8. Orange (142)
9. Waynesboro (79)
10. Culpeper (69)
11. Staunton (65)

It is worth noting that the “valley” has become a major player here.  There are 353 homes listed for sale on the “other side of the hill.”  That’s more homes than we have listed in Charlottesville.  In the next week or so, I’ll break down each of the sub-markets to give us a better understanding of this ever changing real estate market. 

I was snooping on the Albemarle web site and found the Assessor’s information.  If you’ve never been there, it is a little scary to see your personal information there.  I was hoping to find my 2008 assessment, but only the 2007 data is available.  I was a little creeped-out by the personal information on the site, but I was also curious.  I decided to peak at the assessed value of the property owned by well-know local celebs.

One of the great things about our community is that we leave our celebrities alone, so I will not mention the name.  It really does not matter who this is, but I found the assessment to be a bit off.  The property was a large, old home on nearly 200 acres.  The assessed value of the house (and other improvements) was substantial, but the assessed value of the nearly 200 acres was only $236,000.  The land was listed as being in a conservation easement, so I would expect that the price be below normal land prices, but under $1500 per acre sounds VERY low.

There was an interesting article in the paper today about the Nelson assessments going UP. After reading the headline, I was baffled, but once I read the story and found that they do 5 year assessments, things made sense. The last assessment was in 2003 – the year before the big price run-up and a year into the price drop. Although prices have gone up since 2003, Nelson landowners are lucky that assessments did not come due in 2005 when the market was at the peak.
 

Other counties do assessments every one or two years. Albemarle has just moved to an every year assessment which should cause fewer problems than the last assessment.  The last assessment in Albemarle used data from the later half of 2006 just before the market started to decline. This year they will use data from the later part of 2007 when the market was very soft. Average assessments are expected to go down 5 to 10%. 
 

No matter what county you live in, it is important to know the rules for assessments.  First, under current state law, assessors must try to determine the actual market value of a home. If you think that the assessed price is lower than the market price, be thankful. If, on the other hand, the price is much higher than you think it is worth, you may challenge the assessment. Just contact your local assessor’s office to learn the details about challenges.

I started thinking over the weekend that it might be a good time to refinance my current mortgage, buy a new home, or even consider an investment property.  I had heard that interest rates were very good right now, so I got a quote.  How does 5.5% with one point sound?  That is scary good.  With housing prices coming back to earth, interest rates this low and the inventory of homes so high, it’s time to do something.  I’m not sure what makes sense, do you?  Here are a few thoughts to help with your decision:

1. Refinancing - This choice will depend on how long you want to stay in your current home.  If you are going to stay put for 3 to 5 years and can drop a point in interest rate, refinancing should work for you.
2. Buying a new Home - This is a life choice.  Has you family expanded or contrated and you need more or less space?  Has your income level changed?  It is recommended that you spend up to 30% of your monthly income on shelter.  See where your spending falls and consider a re-adjustment. 
3. Investment properties - This one is a bit tricky.  Prices are lower than they were a year ago (maybe two), but are they low enough to make the numbers work?  If you are going to rent a property, you may find that rents are low right now relative to prices.  However, rents will likely head upward soon as will home prices.  Is it a good time to invest?  I follow the buy low sell high theory.  Right now prices are lower than the peak prices of 2005, so it is a better time to invest in real estate than it was 2 years ago.  It may or may not be the “best” time to invest, but timing the market is almost impossible.  It probably comes down to personal situation - if you need to diversify, or have a long term horizon, investing in real estate is probably a good choice.