Reval On Steroids
Most homeowners got a major jolt in the mail this week when they received property revaluation notices from the county. The average single-family house or townhome increased about 15 percent since the county’s last capture the value campaign in 2003, according to the uptown paper. About 63 percent of homes saw their values increase, some skyrocketing by eye-popping levels upwards of 80 percent. At the other end of the spectrum, about 37 percent of homes returned values equal to or lower than 2003 levels.
No real surprises there, given the volatile market over the last several years; and one would expect some value movement over an eight-year period, recession or not. Also not surprising, the areas that showed the biggest increases in home values – 25 percent or higher – were grouped largely in suburban south Charlotte and parts of suburban north Mecklenburg.
But here’s where it gets interesting. While you wouldn’t necessarily be surprised seeing wide fluctuations from 2003 levels, how about from 2010 levels? Say by as much as 54 percent and 17 percent spikes from one quarter to the next?
That’s what caught the eye of Mecklenburg Commissioner Bill James, a Republican, who is raising questions of whether the county is purposefully turbo-charging some values in a push to capture more tax dollars.
Specifically, James questions the rollercoaster median sale price of homes in some parts of west Charlotte and south Mecklenburg. In a quadrant of west Charlotte, for example, median sale price was pegged at $72,000 in 2003, $79,000 in 2008 and $85,000 in 2009. But watch what happens in 2010, when median sale price is pegged at $82,000 for the second and third quarters, only to suddenly balloon to $126,000 in the fourth quarter, the one used by the county for revaluation.
A similar pattern exists in parts of the Ballantyne/Matthews area, where the median sale price is set at $204,000 in 2003, $260,000 in 2008 and $248,000 in 2009. Again, watch what happens for 2010, where median sale price is $240,000 for the second quarter and $255,000 for the third quarter, but jumps to $298,000 for the fourth quarter. This from James:
My concerns are that values were jacked up during the 4th quarter and are way out of whack compared to the trends presented by the tax assessor’s office through the 3rd quarter of 2010. This could mean that the value on your [revaluation notice] letter could also be inflated if those increased values in the 4th quarter were used over the previous quarters.
I can think of no rational reason why the median value of homes would jump 20% to 50% in one quarter.
Because the Democrats do not want to cut the tax ‘rate’ I will play devil’s advocate and suggest (as it has occurred in the past) that one reason for inflating the Quarter 4 values is that it would allow the values to be sufficiently greater than the last revaluation date in order to generate additional hidden revenue (keep the tax rate the same while generating more revenue claiming that ‘taxes didn’t go up’).
Not to say this is behind this but to note it has happened in the past in prior revaluations. The trends of falling real estate values prepared by the tax office shown above indicate an expected steady fall or flat values until the amazing numbers of Q4 of 2010.
The trends are consistent and understandable until Q4 of 2010 (the only value that really matters) and then there is a huge spike. I asked what that was about and the tax office said that they had final numbers coming out. I asked if the Q4 was absent foreclosures (thinking they were inflated for Q4) and they said that ALL the numbers were ABSENT FORECLOSURES (e.g. they are apples to apples yet Q4 is way higher than what one would expect in this economic environment).
Why is this? Why would prices fall during the Great Recession (economists say that they will continue to fall in certain parts of Mecklenburg through 2011) yet the median values go up in one quarter on the Westside by 50%?
James said the explanation he received from county tax assessor Garrett Alexander left him flat, that a paucity of fourth-quarter home sales in the west and south Charlotte areas skewed the median sale price. Also, distressed sales weren’t factored into the median price, as they were for individual revaluations delivered to homeowners. The median sale price, in other words, doesn’t necessarily directly relate to the individual revaluations people received.
Still, with a majority of those values up across the board, James said most homeowners would likely end up taking a hit to the wallet unless the county board adopts a revenue negative tax rate, which would see the county take in less loot than this year. A revenue neutral rate, where the county would capture the same amount as this year, won’t cut it, James said.
“When you say revenue neutral, to me it’s a misnomer,” James said during a revaluation presentation at last week’s commissioners meeting. “It’s revenue neutral to the county, but it’s nowhere near revenue neutral for most homeowners. Most homeowners are going to get this thing and say, ‘Oh, they’re going to set a revenue neutral rate, isn’t that great.’ But it might not be so great, and I think we have an obligation to disclose that.”
If a homeowner had a revaluation increase by 20 percent or more, James said, they’re likely to see their tax bill increase regardless of a revenue neutral rate set by the county board.
“The only way to avoid catastrophic impact on thousands of homeowners is if we adopt a revenue negative rate,” he said.
Commissioners could even legitimately claim a tax cut and homeowners could still see their tax bills increase. If a decrease of, say, 12 percent of the current rate ends up being what’s required to maintain revenue neutral, commissioners could trim the rate by 6 percent, simultaneously bringing in more revenue while thumping their chests for “cutting” taxes.
For now, given the questions swirling around the capture the revenue mailings this week, the best bet for homeowners is to do their own research and file a revaluation appeal if they think it’s warranted.
More than 100 appeals have already been filed, and county officials are predicting to receive about 400,000 this year. Historically, one out of five appeals are successful. Homeowners have 30 days to file an appeal. Here’s the link for the county’s webpage explaining the process. The clock is ticking.
We need your help! If you like PunditHouse, please consider donating to us. Even $5 a month can make a difference!
Short URL: https://pundithouse.com/?p=5119
