Stop kicking assessment 'can' down the street

Should we keep our heads in the sand and kick the can down the street on assessed real estate values? Should current property owners, our kids, and people wanting to enjoy living in our neighborhoods pay the price if proper actions are not taken? Banks may label our areas as distressed if inflated assessed property values are not in line with what has and is happening in the real estate market.

There is no question the housing recession has taken its toll everywhere in the U.S. Home prices will continue to decline in all but 50 of the 384 largest metropolitan areas through the end of this year before they start improving according to the most creditable organization, Fiserv CaseShillers’ latest projections. Only nine cities are projected to grow more than 3 percent and 24/7 Wall Street reviewed its data to identify the reasons behind their success. These nine metropolitan areas, with only a few exceptions, according to David Stiff, chief economist at Fiserv Case-Shiller told Mike Sauter, 24/7 Wall Street, that the nation’s recovery is not expected to reach full swing until the end of next year — even in the areas that are currently leading the country in recovery.

We are fortunate to have Coeur d’Alene, with a population of more than 140,000 included in the nine. Mike Sauter indicates this area is projected to experience a substantial housing recovery over the next half-decade. Between the end of 2011 and the end of 2016, Fiserv estimates home prices will increase 4.5 percent. Wow! However, this projection is based on the fact that home prices in the region fell 27.1 percent during the recession from their peak in the third quarter of 2007 and in the last three years alone prices fell more than 8 percent each year.

Did assessed real estate values fall during this period? Did property taxes decline and are we going to have a major revolt if some manageable changes are not started soon?

Real estate appraisals, property valuation or land valuation is a process of valuing real property. The value usually sought is the property market value. Turnover in real estate transactions occur very infrequently. Furthermore, all properties differ from each other in their location — which is an important factor. There are three approaches to value: the cost approach, the sales comparison approach and the income approach. The recent trend in this business tends to be toward the use of a scientific methodology of appraisal which relies on the foundation of quantitative-data, risk, and geographical based approaches. Since 2007, the use of satellite images, electronic data bases on pricing, taxes, assessed evaluation, days on the market, risks, national and regional trends, and transactions have increased substantially allowing national Real Estate Companies and large mortgage financial institutions to use algorithms to describe best values sorted by zip code.

It is hard to believe, for example, that a broker can report, and a local newspaper can print “that their growth continues with a 17-percent increase in single family home sales and have an average price increase of 6 percent” while the most creditable sources in the United States say just the opposite. The broker did not say how many houses were in the pool, whether the data was statistically significant, or his report was just meant to hype his own office.

Needless to say our property taxes help pay for legitimate causes, but our assessed property values need to be adjusted for the recession. If adjusted tax revenue does not meet mandatory needs, taxpayers will need to agree to increase rates! Our county assessors and commissioners need to address this problem and not kick the can down the street! We do not need to be labeled as a depressed area because our property assessed values are not current with the market.

DAVID EMERY

Sagle