Originally Published February 8, 2009
OK, so I have continued playing with the City Assessment data and 2008 pricing… Read on for info on the ratio of assessments and sales prices. I had told a reporter that it was my gut belief that the majority of homes sold in 2008 in the city sold for less than assessed value. Well, I was wrong… but not by much…
Sales Prices to Tax Assessment
OK, here is what I really wanted to know when I started this. What percentage of homes sold for less than their assessed value in 2008?
First off, I had to take 10 of the 284 out of the study because they were assessed only on the land with no improvements, so they sold for more than their earlier assessments.
Of the 274 remaining city sales, 141 sold for more than assessment, 3 sold for assessment exactly, and the remaining 130 sales were below assessment.
Looking at those that sold below assessment. I fully expected to find a large number trading at a substantial discount to assessment; and I did. I found a total of 57 homes that sold at a discount of more than 10%. That represent nearly 20% of the city sales. A total of 91 homes sold at a discount of more than 5%, or 32% of the transactions.
Looking at those that sold above assessment, you find a similar curve. 63 homes (22%) sold for more than 110% of tax assessments, and 95 homes (33%) traded for more than 105% of assessments.
OK, here is the crazy part. When I then compare to 2009 numbers, There are 32 Homes that sold in 2008 whose 2009 Tax Assessment are MORE THAN $50,000 LESS than the sales price. Doesn’t it go to reason that if I pay $500,000 for a house, I believe its value to be …. $500,000… Apparently, the city does not think so. In fact, one home buyer from 2008, paid $705,000 for a home assessed at $470,300 in 2008 and his 2009 assessment did not go up a single penny. Quick math tells you that the city is missing more than $2,200 in tax revenue from that home owner alone.
If you take all the homes whose 2009 assessment is Less than the sales price minus $25,000 (55 homes) then you have a total loss of tax revenue to the city of over $36,450. This represents an average of more than $662 per home. Hmmm. You’d think the City would have figured this out.
And truth be told, while there were 141 homes that sold for more than assessment in 2008, by 2009, there were 146 homes whose assessments were less than sales price. Not sure how the City would respond to that.