Sunday, February 05, 2012

Digging into the numbers

So I lied. I did. But don’t expect much more this week.

Anyway we are getting there..  albeit slowly.  Read the PG piece today carefully please: Allegheny County reassessment favors properties with higher prices, review finds…. and the penultimate comment. :-0 Seriously though, I would concur with and beyond what the PG is observing in their ward by ward level analysis. In fact the regressivity of property assessments is a bit starker than you can see when looking ward by ward as they do. Ward by ward tend to even out what is clearly true that the new assessment values are progressively more under assessed (or is the semantics better described as regressively more) for higher valued properties. By the time you get to $300K properties it becomes undeniable yet those are some of the angriest people out there.. at least from whom I hear from directly.

BTW.. note also relevant PG letter to the editor today on topic.

This is entirely an artifact of self-selection, but it is remarkable how many home owners in Shadyside and Squirrel Hill or environs have talked to me about how their own properties were overassesed. Look at the Post Gazette numbers and you begin to see what is incontrovertible that pretty much everything valued over 150K (I would put the point lower actually) is under assessed. As you get into higher valuations the level of underassessment can be quite large. You can go back and look at my own graphing of sales value to new assessment numbers and for properties valued over 100K or so there just are very very few sales in 2010 that came in at values below new asseessment values.  Virtually all sales transactions are coming in above the new assesment values and far above the old assesment values. 

Just a point in passing, but note the clear PG point: "properties that recently sold for between $100,000 and $150,000 were, on average, accurate."
What the PG analysis does not get into at all is how under assessed the higher valuations are in the current assessments. I think equally incontrovertible is the observation that the base-year assessments currently in use higher valued properties are far more under assessed than in the new numbers. I wish they dug into the comparison of old assessment values to current market values which they mostly skipped in the piece today. But I suspect they will be at this for some time. I do with they did this separately for residential and commercial parcels, but that is more judgment call than anything else. Just lots of different things going on in commercial markets than residential markets in the region.

A point in there is what we should all be focusing on. There is no doubt that the county’s preferred method of ‘fixing’ assessment values though the appeals process is just not a fair way to fix more than extreme cases. If there are systematic problems you want to do it uniformly because the access to quality appeals is going to be highly self-selected with income. I hope someone tracks the appeals process to see if any value changes make the inequity issues being observed better.. or if things wind up worse in the end.   

Also with appeals there is a bigger deal. One of the big problems with the political rhetoric of late is that I am speculating most school districts and municipalities are being spooked out of doing their own fiduciary responsibility and appealing the obviously low valued assessments. Just as individuals will appeal their own valuations to get a fair assessment.. if no taxing body appeals the obvious underassessments there are significant tax revenues being left on the table. But I bet the political climate prevents that routine administrative action from taking place. How big a deal could it be? Well.. just looking at the Post Gazette’s own data.. just looking at the 14th ward alone it says the average underassessment to market is 9% on an average market value of 287K. I’ll add a number that there are 10,718 parcels in the 14thWard… so you can do the multiplication of what the total value lost to tax revenues is notionally if you want. That is just one ward mind you. Someone should do the calculation of what the tax revenue lost in the current base year assessments is for the same set of properties which is going to be a much bigger number.   Maybe the county should be assisting local school districts in identifying potentially over assessed parcels and assisting with those appeals. Probably not. 

Which gets to my comment in that. Property per property the underassessment of the higher valued homes has a far bigger impact on tax revenues at the end of the day. So even fixing half of that underassessment will result in millage adjustments that will in the end benefit lower valued homes that I bet are proportionally higher to lower valued parcels.  

and at the end of the day we just miss the forest for the trees.  Set aside the level of accuracy in the assessments, new or old, take a look at that table and the average sales value of poroperty in Knoxville!   Isn't that the story here in the big picture.

For the folks really parsing this.  I like the fact the PG looked at the most recent sales, though I wold prefer folks parse commerical and residential parcels separately. There just are some very different things going on in commercial markets here than in a lot of our residential neighborhoods.  Also from what I read in the court filings the cutoff of sales data for this assessment happened early in 2011 and more reflects valuations from 2010 or before.  Given there is little dispute some neighborhoods are seeing appreciation in the most recent years, it begs a situation where some folks might really want this assessment to conclude quickly.  If we do this next year again those in appreciating neighborhoods may see even bigger changes than they are seeing now.  At least that is what the PG's version of this all is saying to me.

and for thos really wondering..  it's Newark airport.. what else am I supposed to do? Those who have been here understand. Though I have to say it is a far nicer terminal than when I first flew through 30 years ago flying Peoples Express and buying the ticket on the plane.  Can you imagine what TSA would say if someone tried to restart that business model?!


Blogger Jimbo640 said...

Chris -

One puzzle for me: in looking at two sets of residential properties in very stable neighborhoods within the 14th Ward and the change in land/building values from previous assessments, in 8 of the 9 properties, land values were increased by a factor of 2-3 and building values were decreased. The net increase was 20%.

Is this pattern apparent elsewhere. If so, how to explain?

Jim Burnham

Wednesday, February 08, 2012 4:52:00 PM  
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