Traverse City Record-Eagle

Archive: Friday

February 27, 2009

Values, assessments can be out of sync

By BRIAN McGILLIVARY

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Home values mostly fall; Sixth St. goes up

TRAVERSE CITY -- Local home values plummeted 10 to 20 percent over the past couple years, area real estate agents say, but tax assessors contend the average home's assessed value fell by less than 5 percent in that stretch.

It's a maddening situation for some taxpayers, but those who study home values for a living said there's a method to their math.

"People need to understand assessments are not appraisals," said Peninsula Township Assessor Sally Akerley. "The purpose of (assessments) is to even out mad swings in the economy."

However slightly, the current housing downswing affects even affluent Old Mission Peninsula.

"We've only recently begun to see the strains of a depressed economy in Peninsula Township," Akerley said. "We're probably down 3 to 6 percent overall, and to me that doesn't scream a market downturn."

It's a starker story across the bay in Leelanau County's Elmwood Township, where property values clearly are falling, assessor Chris Krellwitz said.

In 2007, Krellwitz reduced assessments on 10 percent of the township's 3,000 parcels. In 2008, he cut assessments on 30 percent of the parcels and this year he reduced 2,600 of the 3,000 parcels by an average of 7.2 percent.

East of Traverse City, contract assessor Dawn Plude said a 2 percent loss in Acme Township represented the largest drop in residential assessments of any of the townships for which her company works, including Whitewater, Paradise and Fife Lake townships.

Meanwhile, residential assessments in Antrim County dropped an average of 4 percent, said Antrim County equalization Director Robert Englebrecht.

Homeowners wonder why their assessments don't drop in corresponding fashion when they read that the market dropped 20 percent. Sometimes such numbers reflect statewide statistics, not regional numbers, Plude said.

But she also noted that assessors "couldn't keep up with" market increases during boom years early this decade. Assessed values frequently lagged behind market values, she said.

Assessments are based on sales studies, comparisons of a property's sale price versus its current assessed value. That ratio, either positive or negative, is assigned to all similar properties in a neighborhood. It's a system Grand Traverse and Leelanau County equalization Director Laurie Spencer refers to as "mass appraisals.

"If you could do an individual appraisal on every parcel, people would probably be happy, but there's no way you can do that for thousands of parcels," Spencer said.

Past sales studies reflected a trailing two-year period. This year, though, townships were told to use a one-year study of sales ranging from Oct. 1, 2007, through Sept. 30, 2008. Townships were allowed to use two-year studies, from April 1, 2006, through March 31, 2008, only if results showed a greater drop in assessed values.

Garfield Township last year used the two-year study, which led to residential assessment increases of 2.5 percent in 2008. This year Garfield used a one-year study, and values dropped 0.6 percent, said Christopher Smith, the township's residential appraiser.

"It's a small percentage change, but still a loss of more than $12 million in residential property value for the township," Smith said.

Assessments by county

Proposed changes in residential property values by county. Individual property assessments will vary. Taxable values will increase 4.4 percent, but cannot rise above the assessed value.

 20082009 Taxable
Antrim:-1.5 %-4%+4.4%
Benzie:+0.4 %-1.6 %+4.4%
Grand Traverse +1.73 %-1.42%+4.4%
Kalkaska: +1.98 %-6.7%+4.4
Leelanau: +4.2 %-3.5+4.4%
Wexford: -1.0 %-1.3%+4.4%

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