Posted on 09/07/2006 11:33:38 AM PDT by ex-Texan
Falling prices have created a new twist in the suburban Boston real estate market: More homes are selling for less than their assessed values.
Massachusetts house prices slumped 3.5 percent in July, the biggest monthly drop since 1993, as a slowdown in sales brought about by rising interest rates created a glut of homes on the market.
which are the estimated values communities place on homes to determine property taxes, their primary source of revenue.
State law requires communities to assess properties at ``full and fair cash value." * * * But for the past five years, most homes sold well above their assessed values because prices were rising faster than assessments, which typically are at least a year old.
In today's declining market, some homes are now selling for less than the assessed value in stable communities like Newton, where top-ranked schools and a short commute into Boston help homes hold their values, and in volatile markets such as Lowell, where professionals and foreign-born residents drove up real estate prices.
* * * Sellers pricing their homes below assessments can spur multiple bids from buyers protecting themselves against anticipated price declines. * * *
Under state law, assessments for fiscal year 2006, which ended June 30, were based on market prices as of Jan. 1, 2005. They reflected the 10.5 percent increase in 2004 in the median price of single-family homes. * * *
An analysis of Newton home sales showed 16.5 percent of homes sold below assessment between January and June, up from 10 percent the prior two years. * * *
If house prices continue falling, assessments eventually have to follow. But ``the taxes will always go up," said Richard D. Simmons Jr., the assessor for Belmont, a wealthy suburb northwest of Boston.
(Excerpt) Read more at boston.com ...
2 houses on our street (northern Virginia) on the market for months. They're now listed below are recently increased tax assessment.
Oh really! Freepmail me. I'd love to hear where.
42 Haxall Court, Sterling, Virginia
Started at $420k. Now lowered to $375k. 2006 Assessment is $378k. Not a big difference, but it is a bit unnerving if you live on that street and have seen several houses sit on the market.
But we're prepared to ride it out. We've only been in a year and planned being in around 5 years.
are = our
oops
I just saw a 4 bdrm 2 car garage SFH in Woodbridge for $350K. Must be super desperate ...
Nice attempt to hijack your own thread.
Florida = Gaining Population
Boston = Probably not, it's a cold misarable blue state.
Why don't you talk about Boston in a thread about Boston.
Public schools in MA are funded through property taxes, but to a large extent, a property tax increase cannot be approved if school want a funding boost. Taxes are maxed out and overrides are hard to come by. The way around that is to increase the assessment of the home values in a given town. This is one reason why assessments in MA are at or above any potential selling price.
I don't deny that prices are in decline, or that homes are staying on the market a bit longer -- but it is not shocking to me that homes are selling below assessment.
"We've only been in a year and planned being in around 5 years."
If you're paying down principal on the note, this is sufficient time to show a profit on the sale, even if the market remains flat (less 6% commission for the realtor). I don't think it'll be flat more than a year or two at worst though, myself. Assuming a very minimal 2% per year average appreciation, that $375,000 will be around $406,000 four years from now. I know when I bought my first house, 13 years ago, the conventional wisdom was that you had to stay put for at least two years to break even.
Thank for the tip. I'm really talking about national and regional trends. The article discussed Boston pretty well. Florida homeowners are discovering some local drawbacks. Hurricanes. Insurance. Property taxes. What about people paying much higher insurance rates only to discover that the insurer has denied the wind damage claim? Oh, well . . .
The taxes will always go up. How nice.
Correct. The $25 cap is on the Mass. excise tax on cars.
It's not about excise taxes for cars.
In a few years, he might not even have to pay 6% to a broker. The trend seems to be lower commissions or negotiated commissions.
Yes, I have. Prop 2 1/2 is a cap on the "increase" allowed EVERY YEAR. And...it can be over-ridden by a town vote. And it's not $25 per 1000. The $25 cap IS ABOUT CARS. Got anything else to add?
Property taxes in what was then known as "Taxachusetts" were 81 percent above the national average and went up 5-6 percent, and once even 12 percent, a year.
Politicians had long ago instituted a state income tax to replace some of the property tax burden. Then they said that if the taxpayers would allow a sales tax, they could cut the property tax. Then they instituted a state lottery to reduce the property tax, so by 1980 we had an income tax, a 5 percent sales tax, a state lottery, and the third highest property taxes in the nation.
Finally the voters took matters into their own hands, putting Prop 2½ on the 1980 ballot and passing it by 59-41-percent margin. The auto excise rate was cut by almost two-thirds, a rental deduction was created, and two state mandates were repealed while future unfunded mandates were forbidden. These reforms went into effect almost immediately.
The following July 1, the beginning of all communities' fiscal year, the levy limit went into effect. Property taxes in communities whose rate was higher than 2.5 percent of fair market value were cut 15 percent a year until they reached that maximum-allowable rate.
That's from Barbara Anderson. Read the last sentence. The maximum-allowable rate for property taxes (without an override) is 2.5 percent, or $25 per $1000 of fair market value.
Sadly, I can attest to the seriousness of the real estate slowdown. I have had a condominium on the market in the Charlestown section of Boston for several months. It's a great place with a garden and a deeded parking space right near Bunker Hill, Old Ironsides and the Freedom Trail, but no one is buying right now. Sigh.
That trend existed in a seller's market. When the agent really has to work to move the listing, they're not going to discount their commission.
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