Property assessments in a down market

All counties in Georgia are subject to the same state laws regarding property assessments for taxes. Although this story in today’s news from coastal Georgia is about Glynn County, the article does a good job of explaining why county assessments in Georgia may not capture the full decline in a property’s fair market values even when real estate is weak.

“Property tax digest may see little change”

4/19/2010

By NEVIN BATIWALLA The Brunswick News

Some homeowners hoping for property tax relief may be in for a rude awakening next month when Glynn County releases new property valuations.

While a small number of homes will drop in value, resulting in lower tax bills for owners, thousands of parcels won't dip in value at all.

How can that be when it seems almost everyone's house has lost value in an unprecedented nationwide real estate meltdown?

To determine what a house is worth, the county uses a complex mathematical system based heavily on sale prices of other houses in a neighborhood.

In years with a lot of sales, it works well because appraisers have more data from which to calculate a more accurate value for similar houses.

But when houses are not selling, as in today's weak housing market, it becomes more difficult to determine a true value.

"Our system doesn't work as well in low sales," County Chief Appraiser Bobby Gerhardt said.

As a result, homeowners in neighborhoods in which no houses have been sold will likely see no change in their values, he said.

A tide of foreclosures rolling over the area - which real estate agents say subsequently account for a significant number of sales at bargain prices - likely will have no effect on surrounding values.

In most cases, foreclosures in a neighborhood are not factored in when the county determines a value for a house.

The county considers a foreclosure to be an anomaly that doesn't reflect the true market of an area. Only when foreclosures make up all the sales in a neighborhood are they taken into consideration, Gerhardt said.

County Commissioner Don Hogan accepts Gerhardt's explanation, but said a lot of residents who are struggling during a weak economy won't understand why their property tax bills are not going to decline…

Read the rest of the article here. One thing that the story doesn’t mention is that SB 55 was passed by the Georgia General Assembly last year, which required county assessors to “consider” foreclosures when determining property values. SB 346, the property valuation bill before the General Assembly this year, would amend that language to say that assessors must use that criterion in the valuation process, not just “consider” it.

In Decatur, property values are overseen by the DeKalb County property appraisal department.