Pierce Property Tax Valuations Up 22%
Proving that it is indeed possible to write a story about home price increases without resorting to overly enthusiastic quotes real estate cheerleaders and/or government beneficiaries, the Tacoma News Tribune reports on the 22% increased property tax valuations being mailed out to Pierce County residents this week:
This week, the Pierce County Assessor-Treasurer's Office will mail the annual "Value Change Notice" postcards to owners of 246,754 residential properties.It will be interesting to see if the property tax valuations actually decrease if/when the bubble busts and the price of real estate in the area goes down. If anything is "sticky on the way down," I'll bet it's property tax valuations.
The 22.2 percent increase in average house values is based on data from 2005, when the real estate market was rolling like a freight train. This year, the housing market is cooling off, partly because of a slight increase in interest rates, experts say.
...
The county's biggest cities, including Tacoma, Lakewood and Puyallup, all saw increases in average house values of up to 22 percent. In Tacoma, for example, home values jumped from $188,293 in 2005 to $228,652 in 2006 – a 21.4 percent increase.
But smaller cities saw bigger increases.
...
Zenker described those smaller cities as "sleeper towns" where "people just want to be there." Pacific, for example, has offered affordable housing for people who commute north for jobs in Seattle and elsewhere in King County, Zenker said. But the big jump in values in Pacific (35.3%) indicate its role as an island of affordability is "pretty much done."
(Aaron Corvin, Tacoma News Tribune, 06.11.2006)
38 comments:
I lived in an area where property values were going down, and the property taxes actually went up. This was to cover the shrinking tax base.
I filed a protest, but it didn't matter.
In Snohomish Co, I received my new valuation last week. Went up and my payments are going up accordingly.
Ladies and gentleman, welcome to the oft forgotten about "NEW ADJUSTABLE RATE."
Time to take out a HELOC to pay for taxes.
Harvard's The State of the Nation's Housing 2006 is available to the public.
This article sums up the findings: Housing boom will not end in a crash, says Harvard
The long period of stagnation forecast by the survey would disappoint home-owners who expect big price rises but also those who missed the boat and have been hoping for a crash.
The strongest underlying support for the market comes from accelerating household formation. Demand is being driven not only by population growth but by household fragmentation, as couples divorce or children leave home.
The Harvard study also argues that there are fewer points of vulnerability than during previous housing market downturns. The macroeconomic outlook for the US is uncertain but no mainstream economists are predicting the kind of surge in unemployment or leap in interest rates that would prick the housing bubble. In spite of the shift towards flexible rate mortgages, 75 per cent of mortgage holders have 30-year fixed rate loans and are therefore largely invulnerable to rising rates. A third of households own their homes outright.
PLUNGING STOCK MARKETS, HIGHER INFLATION COOLING REAL ESTATE MARKET FASTER, PROPERT TAX DECREASES??
I heard a joke today, a local politician promised Puget Sound homeowners lower taxes and honesty. They named her/him "WALKING EAGLE", so full of _hit, they can't fly anymore...
I was reading a Realitor article that spoke truth, "to get the real news on real estate look around your neighborhood and see if sales aren't going through".
I've been doing just that and asking other neighbors if for sale signs are pulled down after a failure to get "asking price" and a month later, the old owner is mowing the lawn.
Seattle area sellers are especially stubburn and don't like "price decreases", which explains illegal tax assessments to some degree too.
Sooner or later though, "they have to sell", like job lay-off or retirement.
But what of the effect on the plunging world stock market today, here's a good article from Realty Times:
How Will The Stock Market Plunge Impact Real Estate
by Peter G. Miller
The great ride on Wall Street is over, at least for the time being and perhaps for much longer. In the past year, says The New York Times, shareholder equity has fallen by an estimated $2.7 trillion, a big number by any standard and one which will undoubtedly influence the sale and financing of real estate in 2001. (See: "Stocks Are Lower on The Final Day of a Brutal Year," Dec. 30, 2000)
Stocks, bonds, and real estate are sometimes seen as competing investment mediums, but the reality is that they are all tied together. If you like real estate as an investment option, you want folks on Wall Street -- and millions of investors and pension holders nationwide -- to do well because rising values benefit everyone.
Conversely, when stock values fall, investors and equity holders in other areas need to consider how they will be impacted.
As stock prices rose during the past decade investors gained two advantages: They could sell for cash or hold. In the first case bank accounts swelled, big downpayments became easy, more people competed for a limited stock of properties, and the result was higher prices generally and vastly higher prices in places such as Silicon Valley and Seattle.
Investors who held as stock values rose became richer and richer -- on paper. Since lenders like to see a big net worth and lots of assets, those who held rising stocks had little trouble getting either more credit or big mortgages.
But in the past year -- and especially in the past few months -- many stocks have seen plunging values. Even real companies with substantial businesses and believable prospects for the future have been hit. USA Today, for example, looked at the yearly highs for given stocks and compared those prices with the daily close as of December 20th. They calculated that lost equity for many leading companies topped $100 billion. As examples, three companies saw combined equity reductions of more than $1 trillion from yearly highs: Microsoft was down $418 billion, Cisco was off $327 billion, and Intel was down $295 billion. (See: "Nasdaq trading shakes, rattles investors," December 21, 2000).
What does this mean in terms of real estate?
When stocks become over-priced, investors seek safer options for their money. Bonds and other fixed-income investments are typical choices and the result is that additional money ultimately flows into real estate in the form of more mortgage money. More financing dollars, in turn, will likely lead to lower interest rates and reduced mortgage costs, each of which can help stimulate home sales.
Reduced stock prices will mean less cash at closing for many buyers, not a big issue in the sense that loans with little or nothing down are increasingly available. With a reduced net worth, however, some prospective buyers may elect to stay out of the market, thus reducing demand. Also, with a lower net worth, lenders will look harder at loan applications. Some loan applications which would have sailed through a year ago may now be tough to close.
Sale volume, which is expected to include a little more than 5 million existing homes in the past year according to the National Association of Realtors -- plus more than 900,000 new units according to the National Association of Home Builders -- is likely to continue at strong levels, in part because of lower interest rates, a growing population, continued job mobility, and high levels of employment. Healthy unit sales, in turn, are good news for homesellers, real estate brokers, builders, and mortgage lenders.
While broad national trends are important and likely to impact loan rates (because money can go anywhere), real estate itself remains a localized commodity. Prices down the street are impacted by such factors as nearby schools, the local job market, population growth, and the opening -- or closing -- of a nearby mall.
In effect we have a market with two levels to watch. Mortgage rates reflect national trends and are strongly influenced by events on Wall Street, while home prices are a by-product of local economics. Because mortgage are important it's wise to keep an eye on Wall Street -- and another eye the on local marketplace to track home pricing trends.
My property tax valuation went up 2%. There's some consolation for not taking out a HELOC for sprucing up the home.
Meshugy,
That Harvard "report" you reference was funded by the following companies:
Andersen Windows
Armstrong Holdings, Inc.
Beazer Homes USA
Black & Decker
Boral Industries
The Bozzuto Group
Bradco Supply Corporation
Builders FirstSource
Building Materials Holding Corporation
Canfor Corporation
Cendant Corporation
Centex Corporation
CertainTeed Corporation
Champion Enterprises
Countrywide Financial Corporation
Crosswinds Communities
Fannie Mae
Fannie Mae Foundation
Federal Home Loan Bank of Boston
Fortune Brands - Home and Hardware
Freddie Mac
GAF Materials Corporation
Georgia-Pacific Corporation
Hanley Wood, LLC
Hearthstone
Home Depot
HomeStore, Inc
Hovnanian Enterprises
Huttig Building Products
James Hardie Industries NV
Jeld-Wen
Johns Manville Corporation
KB Home
Kimball Hill Homes
Kohler Company
Lafarge North America
Lanoga Corporation
Lennar Corporation
Louisiana-Pacific Corporation
Marvin Windows and Doors
Masco Corporation
Masonite International Corporation
McGraw-Hill Construction
MI Windows and Doors, Inc.
National Gypsum Company
Oldcastle Building Products, Inc.
Owens Corning
Pacific Coast Building Products
Pella Corporation
Pulte Homes
Reed Business Information
Rinker Materials
The Ryland Group
S&B Industrial Materials S.A.
The Sherwin-Williams Company
Stock Building Supply
The Strober Organization
Temple-Inland
UBS Investment Bank
WeyerhaeuserWhirlpool Corporation
I couldn't find that list. This one was in the report though.
Principal funding for this report was provided by the Ford Foundation
and the Policy Advisory Board of the Joint Center for Housing Studies.
Additional support was provided by:
Fannie Mae Foundation
Federal Home Loan Banks
Freddie Mac
Housing Assistance Council
National Association of Affordable Housing Lenders
National Association of Home Builders
National Association of Housing and Redevelopment Officials
National Association of Local Housing Finance Agencies
National Association of Realtors®
National Council of State Housing Agencies
National Housing Conference
National Housing Endowment
National League of Cities
National Low Income Housing Coalition
National Multi Housing Council
Research Institute for Housing America
We already know this...but it's nice to be reminded once and a while:
America’s smartest cities
As far as I can tell, this new "study" is indistinguishable from the "most educated" study that came out in April. Except that it throws in the conceited presumption that educated==smart.
They remark that:
The rankings reflect each community's collective brainpower, which is tied to its residents' abilities to innovate, create, compete -- and make money.
A worker with a graduate degree earns 45 percent more, on average, than a colleague with a bachelor's degree, and 167 percent more than someone who never went beyond high school, according to figures released last year by the Census Bureau.
Which explains:
Miami lags in brainpower rankings
The city of Miami has the lowest brainpower rating of any large community in America. Two-thirds of its adults never went to college. Nearly half -- 47 percent -- didn’t even graduate from high school.
You also see a similar divide in the real estate fortunes of Seattle vs. Miami
No one that I know tries to argue against the fact that more education leads to higher pay. I take issue with the arrogant assumption that more education == more "brainpower."
Here's the methodology of their study:
Scoring: Bizjournals.com has assigned point totals to six levels of educational attainment, as follows:
* Not a high school graduate (0 points)
* High school graduate (20 points)
* Attended some college, but no degree (40 points)
* Associate degree (60 points)
* Bachelor's degree (80 points)
* Graduate or professional degree (100 points)
Formula: Each adult is assigned points, based on his or her highest level of educational attainment. Points for all adults in a given community are averaged, yielding a score on a 100-point scale. The higher the score, the higher the brainpower rating. The median score for the study pool of 15,596 U.S. communities is 33.84.
Like I said, indistinguishable from the "most educated" study back in April. But hey, it makes us feel superior, so party on.
M-
Could Miami's lack of brainpower have to do with the high number of retired folks who didn't complete college, let alone a graduate degree? College wasn't a necessity back in the days...
Have ya'll seen this: http://www.cepr.net/calculators/hb/hcc.html. Kinda fun.
You're right, Meshugy. I don't know why I never thought of it before...it's all brainpower!
Seattle became unbelievably smart in the last three years, causing its home valuations to skyrocket. In fact, we're nearly 30% smarter than we were three years ago. That explains why our home prices are 30% above their historical mean valuations.
Interest rates? Easy money? Bah. Those have nothing to do with it. It's all about the brains people. Braiiins. Juicy braiiiins. Mmmmm....
Gag. Don't you have a job, Meshugy?
No one that I know tries to argue against the fact that more education leads to higher pay. I take issue with the arrogant assumption that more education == more "brainpower."
I'm with you on that...the advisors on my PhD committee were some the biggest morons I've ever dealt with. The Peruvian guy who does my gardening is sharper (no pun intended).
Education has more to do with privilege then intelligence.
Re the Harvard Study: Based on the funding sources there is obviously a pro-real-estate bias.
And think about the statement: "Demand is being driven not only by population growth but by household fragmentation, as couples divorce or children leave home. Divorced households end up each being poorer - or one significantly poorer and the other the same or better off. That is hardly a formula for home-buying demand.
Rely on this info and suffer the consequences.
Once again folks, to filter the 'Shugy remarks, click the 'said...', minimize and ignore...
Whoever took the time to provide the long list of sponsors for the Harvard study- Thankyou!
Let's see... property appreciation growth slowing down, flattening off, and probably declining plus increasing property taxes plus increasing home insurance costs (due to higher home prices) - gee, I just want to run out and buy a house!
One more factor to consider that I'm not reading much about in the press - there's an impending insurance crunch coming which may impact property values - many of the major insurers (ie, State Farm, Allstate, etc) are just flat backing out of issuing hurricane and earthquake insurance. If any remain, they will be hiking premiums through the roof. What is the value of a property when you can't insure it against catastrophic loss and you're leveraged to the hilt? There is a real possibility that the risk premium will impact house values. Granted, hurricane insurance will impact the east coast but earthquake insurance will impact the whole west coast including here in WA.
The Haaahhvad study has some interesting numbers, even if you don't (or I don't, but perhaps shug-miester does) agree with it's conclusions
I wouldn't take the Harvard report too seriously...they're obviously in bed with the Real Estate industry.
you can, in most instances, only obtain earthquake insurance if you have a retrofitted house, a process that can be prohibitively expensive. most people do not carry earthquake insurance because it is already expensive. now, for condo complexes, that becomes an interesting question.
the net effect, i would think, would be that overbuilding on sites that are in danger zones would be a guaranteed diminished return. the alternative is that there would be standards put into place like there were after Andrew that require certain building standards. these costs are, as always, passed onto the end user.
Meshugy is just a complete asshole, plain and simple. His disgustingly smug remarks about how high and mighty we all are up here make me sick.
I have a Masters degree, big freakin deal! Does that make me better than someone else? NO! Does it make my real estate value go up? NO!
Tim, this guy is just a jerkoff, PERIOD!
For the most part, earthquake insurance is a ruse. The deductibles are so high that it is rare the damage would exceed the deductible amount. Plus ones premium basically doubles (at least when I checked a few years ago). And for homes that are retrofitted, the risk of getting really serious damage is markedly reduced. I just don't think it's a good buy.
p.s. billruben -- thanks for your review of some of the report data.
MeshugyClause talks with the confidence of one who is at the height of his own self defined bubble world.
Just like the folks once did in San Diego, Phoenix, Miami, Northern VA, Vegas and I could go on and on. It also reminds me of the jerks who never thought tech stocks would go down. Remember those assholes, there were plenty of them up here.
His arrogance, and disgustingness are truly a sight to behold.
Hey Meshugy, if the Harvard report is "obviously in bed with the real estate industry" as you say...then why did you take the time to post it?
Just like when you had your panties all in a bunch about the Microsoft hiring article. You are worthless.
In some places they do increase property taxes as values fall in an effort to make up the difference.
It's a great way to empty the neighborhood. See all of Upstate NY as an example.
Thanks for the post Meshugy regarding the Harvard study. What I don't understand from the study is how they can conclude with a positive outlook on housing given the report's contents. I find it hard that other readers could conclude positively based on the information contained.
Most of their conclusions are based on the possibility of interest rates staying low and people having the ability to keep borrowing and spending, thus keeping the economy going.
The reality is that the Fed will most likely continue raising rates (with occasional future pauses) until they feel inflation is roughly under control (I could go on for hours on this one).
Rising interest rates will have a negative effect on the stock market. This will reduce the wealth affect associated with the stock market. Consumer confidence will stumble and consumer discretionary spending will decrease.
Rising interest rates will also push mortgage rates up, and will further squeeze affordability, thus throttling demand.
Appreciation rates on homes will begin to slow and people won't feel as "rich" as they did in 2005. This will decrease the wealth affect associated with housing and will also decrease spending thus lowering GDP.
Since 70% of the US GDP is composed of consumer discretionary spending, there is a good possibility we will enter a recession beginning as early as '07, but most likely mid-year '07.
The combined effect of a recession coupled with stagnant later year '06 real estate gains will result in a real estate market without buyers that can afford property that are buying in a recession in a real estate market in which appreciation is stagnant. Many buyers will decide to ride out the storm. Sellers pinched by adjusting ARMs will have to make some tough decisions.
If the recession results in layoffs, then peoples' permanent income hypothesis will be thusly affected. Those who relied on their salaries to afford their second home may decide it was a bad idea. This will also be complicated by Baby Boomers counting on their housing equity for their retirement and want to lock in their gains.
This will also be complicated by the fact that average American savings rates have been negative for the past few years thus leaving few with cushions.
The only things that would be able to close this gap would be rising wages, which is difficult to do in a time when corporate profits are on the decline or significant inflation, which I don't think the Fed is going to be easy on. We simply can't afford the dollar to tank and be supplanted by the Euro or other as the oil currency of choice.
God, I hope I'm wrong about this one. It's going to be a painful correction cycle.
One other hugely important fact to remember is to not lose sight of the fact that the Fed is going to release very strict guidelines on interest only ARMS and negative amortization loans. This will be the final nail that pops the bubble. Bernanke is the high priest of price stability and will do everything in his power to stop inflation, hence the declining stock markets globally. The entire world is simultaneously reigning in liquidity to slow an overheated global economy. The outcome is painfully obvious...bye-bye housing market.
At this stage there is a stand-off between buyers and sellers across the country, the few who have the cajones to buy are either foolish or wealthy, and their purchases are pushing up medians, making it seem as if the bubble is still in full throttle, when in reality sales volume is slowing to a trickle.
Do you think realtors really want these high valuations and no sales commission, of course not, they're rooting for a collapse too so they can start selling houses and make money again.
I think I'm going to invest in Coleman: Lanterns, Tents, sleeping bags, folding chairs etc..
...Maybe even the companies that produce beans and hot dogs. I remember when my Dad was laid off at Boeing in the very early 80's. Our family diet changed. Looking back on it, it really sucked. I know I ate a lot of top ramen when I was a college dood.
:)
Hey Tim, did you catch this one (just out)...
http://seattlepi.nwsource.com/business/273888_downtown14.html
The sheeple-stampede continues...
Looks like the cooling housing market is finally effecting the local economy:
Unemployment up in state as economic growth slows
No matter how you slice the numbers, though, the state's economy appears to be growing more slowly. A big reason, economists suspect, is the cooling of the Northwest housing market.
Statewide, the housing market in the first quarter was "basically flat" compared with the same period in 2005, said Glenn Crellin, director of Washington State University's Center for Real Estate Research.
While the median price rose 17.1 percent, according to the center, resales were down 0.3 percent and building permits were off by nearly 4 percent.
Though complete data for the current quarter aren't yet available, Crellin said, "it's beginning to look like the second quarter is going to come in a little slower than the second quarter of 2005, but still very active by historical standards."
Good news is we're loosing consruction jobs and replacing them with real jobs:
The state's construction sector, which had added a revised 300 jobs in April and 8,500 jobs since the beginning of the year, lost 500 jobs last month — the first construction-jobs losses in a year.
Aerospace continued strong, adding 400 jobs last month and 6,600 over the past 12 months.
Boeing reported that its Washington employment grew by 371 jobs in May to 64,175; virtually all the growth was in the Renton-based commercial-airplanes division.
Professional, scientific and technical services — a hodgepodge category that includes lawyers, accountants, architects and computer-systems administrators — added 1,400 jobs in May and 6,100 over the past 12 months.
Growth in that category, Tainer said, generally reflects the overall health of the state's economy.
And the Northwest's fundamentals remain strong, Mitchell said.
Biliruben-
Lived outside of Albany (Troy) and relatives in Syracuse, Utica, Schenectady.
Real estate is VERY cheap in the cities. Property taxes are through the roof.
As RE values have fallen, taxes have gone up. Every time there's another tax hike, more people leave the city. It's a huge downward spiral.
Schenectady is such a beautiful city. I almost bought there a couple years ago. Lovely wooden 3-story flats for 40K on tree-lined boulevards.
But the property taxes were unbelievably high and then, of course, there's the weather. I've been spoiled by 17 years in Seattle.
People from Upstate NY are the only people I know out here who do not complain about Seattle weather.
Buffalo flippers are crazy!!! Upstate NY flippers in general are nuts!! Even the ones who live 2 hrs.on the Amtrack to NYC. Way to get burned!
I know that Buffalo was/is big. It was all over Craigslist! Silly out of staters buying sight unseen. But I didn't know about the documentary. thanks for the link, I'll check it out.
Phew. That is one sad link Biliruben. Troy was the same. Too many out of town "investors" who basically abandon the property when they can't make it work. Then it goes on the auction block, 2 times a year at city hall. Thousands of properties each time.
When you see town after town of abandoned buildings, you know the "We're running out of land" thing is a crock.
There are whole cities in this country, infrastructure already in place, that are waiting to be reclaimed.
People from other country's see these abandoned cities and cannot believe it.
The good news is, the FHA is instituting the first anti-flipping regulations, beginning July 7.
They're not that stringent- yet. Hopefully it's a sign of more to come.
And they are rules, not suggestions.
Well Pepe and Bili, isn't this a fine coincidence.
Every now and again, I look around some of these fine Seattle in-city neighborhoods and envision them in a severe economic downturn. Easy enough to do once you've lived in the NE.
American propensity to hightail it to the burbs when the economy goes south.
There seemed to be a lot of money in the Albany area, most of it was just in the burbs it seemed.
Isn't Detroit the same? There's money and people there- they just don't live in the city anymore?
Once that happens, it's like pulling teeth to get Americans to move back in.
Have you seen Providence, RI? That city did a WAY better job than most of "reclaiming" itself in the 90's. But even there, huge areas are kind of a wasteland.
And then I think about the Seattle neighborhoods that, even in the greatest RE appreciation/scramble of all times, like Georgetown and Columbia City, they've been making a "comeback" now since '97 and still have not arrived. So where will they be when the US economy sours?
Too many questions! But I do wonder what Seattle will look like in 10 years.
One of my first jobs was working for a company with offices in Allentown and Scranton. Now that's a depressing set of places. Even where I lived outside Philly, which is a fairly nice city, there were miles and miles of urban blight. Detroit and Philly haven't really recovered from the "white flight" to the suburbs. Although there are pockets of the downtown core that are really upscale now.
I will say that there are lots of dying small towns littering Eastern Washington. It's just a matter of time before places like Garfield County become ghost towns.
Seattle doesn't have anything like that, and I'm not sure what would create that scenario (the urban blight).
The massive layoffs at Boeing caused big price drops in housing, but that was very short-term. The dot-com bust definitely hurt the economy and the state lost people for the first time in like 20 years, but that's recovered too. Microsoft laying off 10,000 people would have a huge negative local impact, but they're over in Redmond, and represent a far smaller percentage of actual population than Boeing workers did in the late 70s. The ripple effect would be pretty bad, though.
Downtown looks a lot nicer than it used to, and close-in neighborhoods that "used to be cheap" are all gentrifying. I bet if prices dropped 30%, even more people would move to the Central District, or older parts of Ravenna, etc. Georgetown? Not so much.
www.flippedmovie.com
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