Sales

Value of Tax Value

The City of Charlottesville released their 2013 tax assessments this week. Mailings have been sent to home owners, and the web site has been updated to reflect the changes.

Assessments cause all kinds of a ruckus. There is an erroneous perception that prices should instantly adjust to match these new numbers. Nothing could be further from the truth. Reality is, this is the City’s best effort to meet state requirements to estimate the values of the parcels in the city. No one in the assessors office would argue they are perfect. I won’t go so far as to say they are even close in many cases.

There are, however, certain times when assessments should be darn easy. Like the day a home sells. If a home sells for $745,000 after being offered on the open market, and the transaction is indeed an arms length transaction, it makes total sense that the City would be able to assess that house without really thinking about it. The value at which a seller is willing to sell and a buyer is willing to buy is $745,000. That is the definition of market value. And that’s why it’s truly bizarre to see the assessment today on this house at $381,000. (Assessing this home at 51.2% of its market value.)

From the City assessors web site:

Real Estate Assessments are required by the Codes of Virginia and the City of Charlottesville to be at 100% of fair market value.  Assessments are made each year by the City Assessor’s Office and are effective January 1.

and

As required, the City’s assessment is an estimate of fair market value as of January 1 each year, based on property sales for the previous calendar year.

The City breaks down the city into neighborhoods and then samples that neighborhood to determine what is happening price wise over the course of the year. Then, barring changes to a home, they apply a % change to all the houses in that neighborhood. There are certainly some places where there is more specific work being done, but in general, this is the practice. I pulled up a sampling of 10 homes in the neighborhood that is bounded by Rugby Road, Emmett Street, Westview Road, and Wayside Place. The tax assessments I pulled changed from -4.68% to -4.7%. You can’t tell me that is an accident. So, the question is, how accurate is this practice. I would say we can bicker about whether -4.7% is the correct amount, but in general, I agree with the practice. If my neighbor’s home goes up 5% or down 3%, it is fairly accurate to say mine did too — UNLESS one of us has done improvements or allowed our house to waste away, in which case, they certainly change at different rates.

So, I focused on this one neighborhood and pulled every house that sold in 2012 to see if the new 2013 assessments were accurate for these homes. Nine homes total ranging in sales price from $367,000 to $1,250,000. How’d they do? Mixed Bag.

  • 938 Rosser Lane – Sold for $367,500 – Assessed for $443,600 – 121% of Sale Price
  • 901 Rosser Lane – Sold for $450,000 – Assessed for $449,200 – Spot On.
  • 1865 Field Road – Sold for $469,000 – Assessed for $511,900 – 109% of Sale Price
  • 1825 Edgewood Lane – Sold for $530,000 – Assessed for $734,100 – 139% of Sale Price — (NOTE: On the market for nearly a year)
  • 1859 Wayside Place – Sold for $706,000 – Assessed for $590,000 – 84% of Sale Price
  • 1863 Wayside Place – Sold for $745,000 – Assessed for $381,600 – 51% of Sale Price
  • 920 Rosser Lane – Sold for $753,000 – Assessed for $735,000 – 98% of Sale Price
  • 1872 Edgewood Lane – Sold for 890,000 – Assessed for $778,800 – 88% of Sale Price
  • 1820 Edgewood Lane – Sold for $1,250,000 – Assessed for $993,000 – 79% of Sale Price

Don’t get me wrong, I totally respect the fact that assessing homes that the City has likely never been in is extremely hard. And I respect the fact that the city has a good process. But no one can argue that a group of nine homes that all sold in the past year, arguably the easiest homes to assess, range in values compared to their sale price from 51% to 139% all in the same neighborhood is anything close to useful, valuable, or accurate.

My point here is not to say that all assessments are bad, or that we should be challenging every one. What I want people to realize is that basing listing and offering prices on City (or County) assessments is dangerous. While it can be a guide, and certainly should be considered, it has to be a single tool of many in pricing a home. We look at comps all day long. And the price you paid four years ago for your home will affect its sale price far more than the new City assessments. Prices in the Venable neighborhood did not go down 4.7% this week with the new assessments. The only thing that changed is that the taxes these home owners will pay went down by 4.7%.

 

 

Twelve Straight

February 1. Our January stats are far from being updated. We likely won’t have complete numbers for at least another week. But I had to peak anyway. And the numbers are remarkably positive so far. Keeping in mind that in the first week after a month, sales continue to be entered, and thus numbers only improve, we still have good and happy graphs to push out there.

Jan_2013_S_and_InvAbove are the sales and inventory numbers for Feb 2011 through Jan 2013. What this marks is the first time in a long time that we have seen 12 straight months of increased year-over-year sales growth and inventory reduction. While the January chart may look like sales are slightly down, that is a graphical anomaly I blame on shading. As of today, we have one more sale in detached homes in Jan 2013 than in Jan 2012. (Small, yes… but still growth.)

Over the last twelve months, the increase in sales reflects a more than 20% increase for City and Albemarle. A shift from 1002 to 1214 sales.

Compared that with the attached home market, where the twelve months ending yesterday look promising with a total increase in sales in the City and Albemarle of  roughly 9.7%. But that doesn’t really tell the whole story. When you look at month by month movement for the last 12 months, you find only 8 periods of year-over-year growth. In general, the overall trend is positive, but the trajectory is not nearly as clear. Additionally, the attached home inventory is 5% higher than it was at this time last year, and that brought the months of inventory up by a month and a half to 13.9 months.

The condo market moved similarly to the attached home market. Total sales over the year were up 14.9%, but that reflected only 8 months of year-over-year growth. (The condo market, however, is very small and thus new projects, lower prices on existing projects, etc… can sway the numbers months to month greatly.)

As a final quick note, Contract Written. In Jan 2011, we saw 71 contracts written on detached homes. In 2012, that number jumped to 102. This past month, we have records of 98 thus far. This is a big jump. The reason for this is that the way in which our MLS keeps records, many properties are Contingent for more than 2 weeks before they are moved to the Pending status. It is not until that time that they get a Contract Written Date that we can track. If you figure the average closing is 45 days, and 15 of those days are not accounted for, that is as much as 30% of deals. So, it is possibile that our 98 may go up to 120-130 before all is said an done. Of course it could go up to only 110… we can’t know. There are currently 126 properties under contract that do not have Contract Written dates. Not all from January to be sure.

No matter how you look at it, our numbers are still looking very strong, and the anecdotal evidence seen by real estate professionals supports that this is not likely to change in the short run.

Quick Look Back

New Year, New Plan…

I have found over the last year since I studied and wrote consistently that I have really missed it. I have missed the conversation. I have missed the structure. But I have genuinely missed just digging into data. I am going to do my best to get back to a schedule that is doable and valuable. While I have continued to stay on top of numbers, probably not as much as I should have, and certainly not as much as I used to. Time to get back to that.

Looking at 2012 is a tough thing to do at this date. While all the closings that will happen in 2012 have indeed happened. It is not true that all those closings have been entered into our MLS and thus the data is not right. But, what we do know is that all the data is too conservative. Very little probability that closings will disappear. Very high probability that two weeks from now a good number of new deals will be in the MLS changing our data and making the year look even better. So where are we right now?

City2012

To the left are some brief numbers on the Charlottesville City market. Sheer number of closings are up 23.4% from year prior and 31.6% from two years ago. Total volume is up an even more impressive 26.8% from year prior. And shockingly, the median price, which fell $15,000 from 2010 to 2011, rose $5,000 to $235,000 in 2012. Still down fairly significantly from the 2007 peak of $280,000 in 2007, this is showing a positive trend that we did not expect to see until we had a more sustained recovery.

County 2012

For Albemarle County, numbers are similar, although not quick quite as significant. Closings are up 12.6% from year prior and 16.4% from two years prior. The median prices in 2012 exceeded both 2010 and 2011, by reaching $292,000. For the county, this is the highest median price since 2008, when the number was $320,000, and takes us back to a pre-bubble median price from 2005 when the median price reached $289,000.

Median PricesKeep in mind that for all these prices and sales figures, while we are showing extrememly positive trends (escpecially in the City), these numbers are to date, incomplete. We anticipate a good number of transactions to be reflected by the MLS in the next two weeks that are still not showing today. We will update them in the near future as they are recorded. In the last 48 hours, we have had 9 closings updated in the MLS going back as far as Dec. 14. It will be likely 10 more days until we have accurate 2012 total data.

RiverBluff – In the Residents’ Own Words

At Nest we represent a lot of different clients in different types of projects. I have been honored to be a part of a great project in RiverBluff. Comprised of nearly 19 acres along the banks and bluffs of the Rivanna River, RiverBluff is only a mile from the Downtown Mall and part of the nearly 20 mile trail that surrounds the whole city, meaning that biking and walking is convenient. And of the 19 acres, only about three acres is actually built on, leaving the remaining space as common land.

Hear what our residents have to say about living at RiverBluff and why the chose to live there.

I am Such a Geek

OK, so I admit that I’m a geek. I embrace it. This is not quite what I had in mind in terms of time, but hey, it’s my first shot at a video data analysis, so cut me a little slack. I’ll get the time down and break it into smaller segments, but either way, its good info in the video.. Make sure you blow it up to full page to actually view much of the data.

Enjoy.
Keith


2009 03 21 from Keith Davis on Vimeo.

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