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be experiencing
difficulty in paying their
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may be help. Most cities
in the United States have
Property Tax Poverty
Exemption Policy and
Guidelines. You may be
eligible to waive your
annual property tax for
one year read more
Ways to Assess Home Altered
With foreclosures in state formula, some fear values could fall
By Chris Christoff and Emilia Askari
Until Wednesday, home foreclosures were considered an aberration not to be included by tax
assessors setting property assessments in their cities.
But a state panel changed the rules to allow sales of foreclosed homes -- usually at depressed
prices -- to be part of the mix in figuring assessments, a move that could help drive down property
assessments in some communities as much as 8%
The State Tax Commission also gave assessors authority to use sales studies based on just one
year, not two years, of sales.
Two-year sales studies tend to hold down property assessments during periods of sharp inflation
but exaggerate values in a declining market.
Wednesday's changes won't necessarily translate into lower taxes, especially for homeowners who
have lived in their homes at least a few years and have benefited from a law that doesn't permit
property taxes to rise faster than the rate of inflation.
Figuring in foreclosures and doing one-year sales studies beginning next year will mean that overall
residential assessments will fall even in wealthy Oakland County for the first time in at least four
decades, said Dave Hieber, the county's equalization manager.
He predicts 7,800 foreclosures in the county by year's end. That, combined with falling prices in
other home sales, will drive down property values an average of 5%, he said.
The decrease could be more like 8% in Pontiac, Southfield and Hazel Park -- communities with high
numbers of foreclosures.
"We have never had a year, as far back as our records go, when Oakland County had an actual
decrease in the value of real property," Hieber said.
Steve Mellen, director of Macomb County's equalization department, said that foreclosed properties
are selling for an average 20% less than their market value. In Clinton Township, he said, some
foreclosed properties have sold at half the market value estimated by assessors in 2007. He
expects to see about 5,000 foreclosures in the county this year, or about 100 a week.
That's about 10% of all property transfers in the county.
As a result of the rule changes the tax commission enacted Wednesday, Mellen expects property
assessments to fall about 5% county-wide and more in communities with high numbers of
foreclosures. In Eastpointe, for example, he's expecting a 10% slide.
The changes could affect actual home values, not taxable values, which are usually lower and are
used to figure property taxes. Under state law, taxable values can rise 5% or the rate of inflation,
whichever is less; actual values often have risen much faster.
As a result, some property owners will see their tax bills increase, even as the actual values drop.
Wayne County assessors have been counting foreclosed home sales for some time to establish
property values, said county spokesman Dennis Niemiec. So the county does not expect home
values to drop because of the new rules.
Still, county assessments could decrease because of falling home prices in general. Wayne County
officials do not yet have any estimates of 2008 assessments, Niemiec said.
The three-member tax commission approved revised guidelines at the urging of local assessors,
said commission Chairman Bob Naftaly.
He said including foreclosed property sales might or might not result in lower property values in
communities. But he said the large number of foreclosures indicates a changing marketplace.
"It's an attempt to give the tools to assessors they need to make sure they value property
correctly," Naftaly said.
Because foreclosed properties can sell for less than their former owners paid for them, a large
number of such sales could drag down property values. But not necessarily.
"Just because there's a repossession in your area doesn't mean your values will drop," Naftaly said.
"Other home values may have gone up."
The tax commission issued explicit guidelines for when foreclosed properties can and can't be used
to determine area property values. For example, sales between related people could indicate an
artificially low price was set, so those sales shouldn't be counted.
Also, one or two foreclosed home sales in an area might not justify using their prices to determine
surrounding home values. But many foreclosures could have a real impact.
Source: The Detroit Free Press August 16, 2007
With foreclosures in state formula, some fear values could fall
By Chris Christoff and Emilia Askari
Until Wednesday, home foreclosures were considered an aberration not to be included by tax
assessors setting property assessments in their cities.
But a state panel changed the rules to allow sales of foreclosed homes -- usually at depressed
prices -- to be part of the mix in figuring assessments, a move that could help drive down property
assessments in some communities as much as 8%
The State Tax Commission also gave assessors authority to use sales studies based on just one
year, not two years, of sales.
Two-year sales studies tend to hold down property assessments during periods of sharp inflation
but exaggerate values in a declining market.
Wednesday's changes won't necessarily translate into lower taxes, especially for homeowners who
have lived in their homes at least a few years and have benefited from a law that doesn't permit
property taxes to rise faster than the rate of inflation.
Figuring in foreclosures and doing one-year sales studies beginning next year will mean that overall
residential assessments will fall even in wealthy Oakland County for the first time in at least four
decades, said Dave Hieber, the county's equalization manager.
He predicts 7,800 foreclosures in the county by year's end. That, combined with falling prices in
other home sales, will drive down property values an average of 5%, he said.
The decrease could be more like 8% in Pontiac, Southfield and Hazel Park -- communities with high
numbers of foreclosures.
"We have never had a year, as far back as our records go, when Oakland County had an actual
decrease in the value of real property," Hieber said.
Steve Mellen, director of Macomb County's equalization department, said that foreclosed properties
are selling for an average 20% less than their market value. In Clinton Township, he said, some
foreclosed properties have sold at half the market value estimated by assessors in 2007. He
expects to see about 5,000 foreclosures in the county this year, or about 100 a week.
That's about 10% of all property transfers in the county.
As a result of the rule changes the tax commission enacted Wednesday, Mellen expects property
assessments to fall about 5% county-wide and more in communities with high numbers of
foreclosures. In Eastpointe, for example, he's expecting a 10% slide.
The changes could affect actual home values, not taxable values, which are usually lower and are
used to figure property taxes. Under state law, taxable values can rise 5% or the rate of inflation,
whichever is less; actual values often have risen much faster.
As a result, some property owners will see their tax bills increase, even as the actual values drop.
Wayne County assessors have been counting foreclosed home sales for some time to establish
property values, said county spokesman Dennis Niemiec. So the county does not expect home
values to drop because of the new rules.
Still, county assessments could decrease because of falling home prices in general. Wayne County
officials do not yet have any estimates of 2008 assessments, Niemiec said.
The three-member tax commission approved revised guidelines at the urging of local assessors,
said commission Chairman Bob Naftaly.
He said including foreclosed property sales might or might not result in lower property values in
communities. But he said the large number of foreclosures indicates a changing marketplace.
"It's an attempt to give the tools to assessors they need to make sure they value property
correctly," Naftaly said.
Because foreclosed properties can sell for less than their former owners paid for them, a large
number of such sales could drag down property values. But not necessarily.
"Just because there's a repossession in your area doesn't mean your values will drop," Naftaly said.
"Other home values may have gone up."
The tax commission issued explicit guidelines for when foreclosed properties can and can't be used
to determine area property values. For example, sales between related people could indicate an
artificially low price was set, so those sales shouldn't be counted.
Also, one or two foreclosed home sales in an area might not justify using their prices to determine
surrounding home values. But many foreclosures could have a real impact.
Source: The Detroit Free Press August 16, 2007
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