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.
Not sure what your point is. I've lived here all my life (longer than I would like to admit). I wasn't aware that the maximum property tax was $25 per $1,000. Kind of moot though, since there isn't a town in Massachusets with a tax rate approaching that amount. Mine is about $10 per thousand, and it's a tony town on the south shore.
Wow. I remember when a co-worker bought a house in NOVA for $70,000 and didn't have any furniture because she was over-extended.
I left DC about 5 years ago and have an idea of what kind of money regular white collar, nice job, people make. How the heck are they affording $400K?
> Prop 2 1/2 is a cap on the "increase" allowed EVERY YEAR. And...it can be over-ridden by a town vote. <
Friends in Massachusetts worked a few months ago to get their town's voters to approve just such an over-ride. They and the other "school supporters" succeeded. Whoopee!
And now they wonder why their large, beautiful house is still unsold -- after being on the market for many months. Cosmic justice?
I am moving to Iowa (new job) in December. I will be able to buy a nice 3 bedroom house for about $150,000; I could get a duplex or condo for even less. This will be my first house and I'll be able to afford it and live the life of Riley. I keep trying to convince some of my DC relatives to come join me - lotsa jobs, low cost of living - but they can't tear themselves away from the pleasuredome that is DC.
Sounds like the current owners should go back to their tax offices and demand refunds if this is the case.
Welcome to Iowa! A great state to live in. What area of the state are you moving to?
Iowa City. I'll be a professor at UI.
> I left DC about 5 years ago and have an idea of what kind of money regular white collar, nice job, people make. How the heck are they affording $400K? <
Easy. Take for example a typical two-income Civil Service couple, say a young lawyer GS-15 married to a young scientist GS-14. Their combined income is probably over $200K per annum. So the monthly payments on a one-million dollar mortage at 6.5% are probably around one-third of their monthly income.
Presto: The million dollar suburban detached house becomes almost the norm inside the Beltway, at least in the "most desirable" and close-in neighborhoods.
And as the whole DC-area housing market is inevitably pulled upwards by such forces, the $400K townhouse becomes common beyond the Beltway out to Manassas or Woodbridge, where for example a military non-com married to a Civil Service secretary might have a combined family income approaching $100K -- the latter putting their mortage into the affordable range.
I'll give you One Million pennies for the condo...
what did you buy at?
You just told ClearCase_guy he was wrong, then corrected him by repeating exactly what he had posted.
Which proves the point, the g-d damn tax assessors are wily bastards and should be driven out of town!
NJ is going thru NJ Supreme Court ordered reassessments from 2005 to 2008. It is cheaper (and a better investment) to rent in some towns now than own.
In a few years there wont be any brokers left. They are totally obsolete.
Everyone has been waiting for 18 months for NYC to implode, many renting for 2 years in hopes of buying better deals, but prices remain as high as ever. Will that change? Or will NYC be one of the last to fall?
Iowa City is a nice place even if it is full of nutty libs. North East Iowa is beautiful, with nice rolling hills and bluffs. Go much further West than Iowa City, though, and you might as well be in Nebraska.
It is also good to know that the University of Iowa will have at least one professor that is conservative. :)
I'm hoping there will be more than one. : ) When I interviewed, it was Ash Weds. I was gratified to see ashes on foreheads all over campus, including staff. I did a little social interviewing with some people in another department and they were quick to ask me where I went to church so they could hook me up with the right place. After a little prodding, they said they'd be shocked if a professor said anything negative to a class about someone's religion, etc.
So, while every college town has its loonies, I think IC will be ok. I'm not Christian, but I think that if it's hard for Christians to do their thing, it's going to be even harder for me to do mine - black, jewish, conservative.
If your rate is fixed you might be better off renting for a couple years and sit out the current environment. Lots of inventory right now. The tax deduction is good and property values will increase over time just look at history. If your rate is adjustible low 6 fixed rates are still available.
Yap good properties are a great investment over time period. Cash always depreciates and rent is not deductible.
And as the whole DC-area housing market is inevitably pulled upwards by such forces, the $400K townhouse becomes common beyond the Beltway out to Manassas or Woodbridge, where for example a military non-com married to a Civil Service secretary might have a combined family income approaching $100K -- the latter putting their mortage into the affordable range.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
This is the part that I have a hard time understanding, you are calling a house that costs four years income "affordable". I remember the days when that would have been called, at best, "house poor". That is what we used to call someone who had a big house but lacked the money to live the lifestyle that seems appropriate for the house. Then there were some at the other extreme, they lived in a shack but drove a huge new luxury car.
The general rule I heard quoted then was no more than two years income should be the limit on the price of a house.
(No more Olmert! No more Kadima! No more Oslo! )
(No more Olmert! No more Kadima! No more Oslo! )
(No more Olmert! No more Kadima! No more Oslo! )
Breaking News: Some Properties are Over-Assessed!!!!!!
Tax Tribunals To Face Petitions for Re-Assessment!!!!
Stop the Presses!!!!!!!!!!!!
More than anything else, the value of NYC real estate is correlated to the stock market. If one goes up, so does the other. what interest rates do doesn't have the same effect here because so many buyers have their income tied to the profitability of their employers, and their employers are banks who's profitability is increased by higher interest rates. the lower end of the market might see a slight slump, but in Manhattan, mortgage rates won't effect the market too terribly much.
Recently somebody posted a national map of median income trends over the past ten years.
On that map, MD, DC and VA stood out as the most stable.
Proximity of the federal govt ?
BUMP
I guess thats why the NYC market dumped after the 1987 crash. Thanks for your info.
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