We hear that there will likely be a Taxpayer Clinic on Sunday in Meridian Kessler. Stay tuned. We will publish details as soon as we have them. --HFFT
INDIANAPOLIS STAR REPORTS:
A sluggish housing market is eroding Marion County home values even as the state is calculating higher values for tax purposes, squeezing thousands of homeowners and tipping some toward bankruptcy.
Worst hit: Center Township, where the housing slump slashed property values 28.8 percent from 2005 to 2007, according to an Indianapolis Star analysis of home sales data.
Despite that dramatic fall in home prices, the taxes on many of those homes will rise as the state attempts to bring assessed values in line with market values.
The median assessment on 2,900 homes sold in Center Township last year was $49,600, whereas the median sales price for the same group of homes was only $39,900, a difference of 24 percent.
The disparity does not appear to result from assessment errors so much as the fact that assessed values for 2007 were based on 2005 sales data, and real estate values have fallen since then. A rash of mortgage fraud schemes also may have contributed to it by falsely inflating values during 2005.
For many, it all adds up to a problem.
tax bills went out last year, some homeowners were floored.
Indianapolis bankruptcy attorney Mark Zuckerberg said hundreds of calls came into his office from beleaguered homeowners squeezed by higher taxes, falling property values and adjustable rate mortgages automatically resetting to higher payments.
"They were already getting adjustments going up on their ARMs, and then the property taxes came in on top of it,'' Zuckerberg said. "It was like a double whammy. They were using credit cards to keep afloat in hopes of refinancing their loans, and then when it turned out the homes were losing value, they found the banks didn't want to make new loans on their homes."
A property reassessment ordered last year and completed this spring should lower many tax bills below those issued last year, which were based on flawed assessments. But most of the new 2007 bills to appear in mailboxes later this year will still be higher than those paid in 2006, the last valid assessment.
Houses across the county are vulnerable to the same forces. A review of data on the sales of 28,500 homes in Marion County found the median sales price dropped by 3 percent, from $100,000 in 2005 to $97,000 in 2007.
But the crumbling housing market is hitting Center Township much harder than other parts of the county, despite a push by the city to transform Downtown, Fountain Square, Fall Creek Place and other neighborhoods.
The review revealed the median sales price in Center Township dropped from $56,000 in 2005 to $39,900 last year, a percentage decline three times larger than in any of Marion County's eight other townships.
Values based on 2005 sales
Home values reflected in the new assessments may seem high to many owners because of the recent declines in the real estate market, Marion County Assessor Greg Bowes said.
He said the recently redone tax assessments represent the market value of a property as of Jan. 1, 2005. That's because of a time lag built into the property tax system. That lag is necessary to collect and analyze sales data, update values and then calculate and distribute tax bills.
"In that three years, we know there's been some change in the housing market," Bowes said. "But because we are so late (in getting the county's 2007 property tax assessment done), we're having trouble catching up."
Assessments for 2008 tax bills, for example, will be adjusted to reflect market values as of Jan. 1, 2006.
But for homeowners already hit by rising gasoline and food costs, the timing of the current reassessment couldn't be worse.
Douglas and Sharon Purdy are considering appealing their home assessment after learning the house they purchased in the 1900 block of Prospect Avenue last year for $8,500 is assessed at $74,100.
"When we bought this house, it wasn't livable. It had been empty and deteriorating for years," Sharon Purdy said. "There's no way it was worth $74,000 in 2005, and it sure isn't worth that today."
Disabled and living on fixed incomes, the Purdys bought the house hoping to fix it up as a way to escape rent payments that contributed to their living "check-to-check," she said. But now, they can't even get a bank to lend them the money to make needed repairs, Sharon Purdy said.
"We thought we would buy this place, fix it up and spend the rest of our lives here," she said. "Now, we may not even be able to afford the taxes."
Rosie Jefferies is in a similar situation: The rundown home she bought last year in the 2900 block of Baltimore Avenue for $7,000 is assessed at $53,500.
Jefferies, 64, said she doubts the house is worth that much today, even though she has replaced the wiring, drywall and carpet, added insulation and updated the kitchen.
"It had been vacant for a couple of years," she said, "and before that, the people had really let it go downhill."
Even with the repairs and a fresh coat of paint, Jefferies says, "it's about the worst-looking house on the block."
Official "very happy"
Jeff Tracy, director of assessment for the Marion County assessor, said Center Township homes were the most difficult in the county to accurately assess. The township has the county's oldest housing stock, and its urban character and diversity put low- and high-priced homes near each other and make it tough to set their taxable values, he said.
That also makes it difficult to gauge the accuracy of the township's assessed values by comparing them with sales prices, he said.
"To just take a raw set of data and try to do any kind of analysis is brutal," he said.
Tracy, who did much of the reassessment work for Center Township, said he is "very happy" with the overall results.
"For the data that we have and the numbers we used, I am pretty confident" in the accuracy of the taxable values, he said. "The appeals process will help sort it out even better."
As of early April, more than 8,000 homeowners and businesses in the county had filed appeals of their new assessments.
Foreclosures and fraud
Other possible factors in the disparity between sales prices and assessed values might stem from the city's high foreclosure rate and mortgage fraud cases.
While no one tracks the number of homes involved in the fraud cases, as many as 1,000 homes that went into foreclosure in recent years were at the center of illicit real estate deals, conducted especially in the older neighborhoods around Downtown, real estate experts say.
But the number could be much higher, with perhaps 10,000 homes in Center Township financed, bought or resold, sometimes multiple times, by companies and investors now implicated in fraudulent loan or investment schemes, estimates Frank Corsaro, supervisor of the real estate division in the Center Township assessor's office.
Last fall, the metro-area ranked 24th in the nation with 6,600 homes in foreclosures, down from first place in early 2006. In a sample of 75 homes across the county known to be involved in fraud cases, The Star found at least seven were used as comparison sale in the last reassessment.
Bowes, Marion County's assessor, said he thinks his staff was able to identify most home sales that were out of whack with market prices, including many of those involved in the fraud cases, and exclude those sales from assessment calculations.
"We threw out a whole bunch of sales," many because they were connected with companies or investors known to be involved in fraudulent mortgage schemes, he said.
"I can't give you an assurance that mortgage fraud didn't have an improper effect on the results. There were too many (fraud-related sales) to deal with . . . for us to have caught all of them."
Steve Minton, a Realtor with the Steve Minton Group at Keller Williams Realtors in Indianapolis, said the number of homes on the market is at a record high and is expected to increase as more homes caught up in the subprime mortgage collapse are offered for sale over the next few years.
"The ripple effect in the water for real estate is that more inventory can make values fall," he said.
Minton said the glut may not clear the market until 2012 or later at which time, barring unforeseen economic problems, property owners can hope to again see moderate appreciation in home values.
Call Star reporter Tim Evans at (317) 444-6204.
Thursday, May 1, 2008
Posted by M Theory at Thursday, May 01, 2008