falling property values

The following note comes from a reader by the name of Rotus Jackson.

I’ve seen a couple of times in the past few months assertions by your commenters that Ypsi’s property values are dropping at a rate faster than anywhere else in the area. I kinda thought this was an exaggeration, but I did expect we’d be leading the drop by a little bit.

But – apparently not.

The average decline in property values in Ypsi City proper is slightly above what it is in the County, on par with Pittsfield Twp and Ypsi Twp, behind Saline City and Northfield Twp, and, holy cow, Ann Arbor Twp, which includes Barton Hills, the snobbiest of Ann Arbor snobsdivisions. Barton Hills saw a drop more than half again what Ypsi did.

Of course, A2 Twp probably had by far the fastest increase in assessments over the past decade, so they’ve probably got plenty of Prop A padding built up.

OK, I have one question. And it might be super dumb… As assessors calculate taxable value based on the purchase price of homes changing hands in a neighborhood, wouldn’t an area with no sales show no change in taxable value, even if several houses had been on the market for years? In other words, could our taxable value not be dropping as quickly due to the fact that houses just aren’t selling here? I’d prefer to think that our homes are retaining their value more than those in Ann Arbor Township, and that people are perhaps moving away from sprawling McMansion developments, but I’m dubious.

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9 Comments

  1. egpenet
    Posted February 19, 2008 at 10:58 pm | Permalink

    Gotta get to bed, BUT … I want to split hairs even further and haven’t had the time. Realtors tell me that homes in the Historic District of Ypsilanti are doing better at holding their value (provided they haven’t been “raped,” “stripped,” or “demolished by neglect” by our handful of notorious landlords) than other neighborhoods in the city.

    I sus[pect the Realtors are correct. BUT, their comments are anecdotal at this point. I need to talk with the assessors directly to prove/disprove the point.

    Another key pint is … don’t pasnic, anyone. Prices of all things go up and down all of the time. These are NOT good times, and they are sure to get worse as the credit crisis spreads. Kids trying to get college loans are being frozen out of the market as I write this, unless they are willing to pay higher market rates for their loans. Other sectors of the credit markets, like muni bonds are also getting killed at the moment.

    I wonder what Ypsi may have to pay in the coming months as taxpayers refuse new taxes and Ypsi has to pay higher auction rates for financing. QWe may be OK. We may not.

    For now the well is dry. Hence the decline in assessments.

    If Michigan goes to the Fair Tax (which is NOT as fair tax by any means) the property tax assessments will be moot. In the meantime, folks who think HOORAY my house is worth more are being mislead … it’s all inflation and a bubble on top of that! Value is in the eye of the beholder … and currently … the best minds on Wall Street are saying … SELL … take what you can get … just SELL.

    I smell a rip-off.

  2. Kirk
    Posted February 20, 2008 at 9:58 am | Permalink

    I thought the Fair Tax would replace the state income tax and state business taxes. How does it affect local property taxes?

  3. Posted February 20, 2008 at 1:03 pm | Permalink

    due to the fact that houses just aren’t selling here?

    Uh-oh. Am I going to spend my lunchtime data mining and fussing with Excel? Uh…yep. Can’t let that one go.

    Okay, so I’ll pull three years worth of sales from the City Assessor’s database. Take all those sales that are classified as “Homestead” (owner occupied) or “Condo unit” (assuming owner-occupancy), and eliminate any sales for $0-$1. (Usually marriage, divorce, estate, or other sales within a family.)

    Then cluster them by quarter, and count sales per quarter. Presented as number of sales for Q1, Q2, Q3, Q4 in that year:

    2005: 21, 71, 55, 6
    2006: 30, 47, 35, 9
    2007: 17, 34, 32, 2

    Definitely some downtrend in volume, but untrue that “people are not buying homes.” (I’m omitting considerations of sale price relative to hoped-for price or time on market at this point.) People are still buying homes in Ypsilanti.

    Looking more generally, all sales of residential properties, which will include rental residential and sales that aren’t registered as homestead at time of sale in addition to the ones above. Again, exclude $0-$1 sales, as well as foreclosures. Same presentation format:

    2005: 63, 110, 95, 19
    2006: 58, 87, 68, 17
    2007: 45, 55, 47, 16

    Again, there’s been a slip in volume – up t0 50% for Q2 and Q3 2005 to 2007. And I don’t have time to dig up data for other communities for comparison. But the purpose of this quick and dirty exercise is just intended to respond to the point “people just aren’t buying houses”, said in a manner that implies that you mean /nobody/ is buying houses.

    ps. “snobsdivisions”. Tee hee!

  4. Posted February 20, 2008 at 3:23 pm | Permalink

    Murph,

    Thanks for the helpful trend comparisons. Please explain what you mean by excluding foreclosures?

    Thanks in advance.

  5. Posted February 20, 2008 at 6:16 pm | Permalink

    Teaspout – I was trying to respond to the assertion that “houses just aren’t selling” in Ypsilanti.

    The dataset included foreclosures along with all other types of property transfer, but I don’t think it’s reasonable to say, “Sure, houses are selling – just look at all these banks that are buying houses!” So I filtered out all of those “sales” (transfers) so as to just look at actual “people buying houses”.

    Likewise, I excluded the zero and one dollar sales, because these are “Bob marries Sue; Sue adds Bob to the deed on her house,” or, “Bob transfers title to a house to an LLC that he owns,” and neither of these are “sales” in the sense I think Mark’s interested in.

  6. Posted February 20, 2008 at 6:20 pm | Permalink

    And, ps, Councilman Robb had mentioned that the Fire Dept’s new ladder truck had seen some action the other night, but he didn’t mention that he’s a hero. What a modest guy!

  7. mark
    Posted February 20, 2008 at 9:21 pm | Permalink

    Thanks for the info, Murph. I appreciate it.

    And that’s cool about Brian saving the city from burning down. If only there were a photo of him, covered in soot, carrying Theresa and five dogs out of the burning house on his back. He could run for Senate or something.

    Seriously, it’s really cool when neighbors look out for one another. That’s one of the great things about Ypsilanti.

  8. MaryD
    Posted February 20, 2008 at 9:37 pm | Permalink

    The senate sounds great for Brian. And yes houses are sitting and stagnating in the historic district.

  9. John on Forest
    Posted February 22, 2008 at 10:17 pm | Permalink

    Does that mean they are selling better in non-historic district parts of the city?

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