Thursday, October 23, 2008

Denver Assessor: Home Values Predicted to Fall $1,599,405,852 in 2009

101 High Street,Denver, CO 80218 $4,780,000, est. monthly payment: $22,926.81, 7 br, 8 full baths
One of the facts to come out of the presentation of the Denver Assessor’s Office at the City Council Finance Committee meeting of Oct. 15 was that the value of all of the single family homes in Denver, currently assessed at about $40 billion, will decrease by about $1.6 billion. That’s down about -4%, but when you add in the increase from new construction, that number falls to about -2.4%. Not bad. But what about condos? There is no number on the spreadsheet for the projected fall in the condo price. Further inquiry needed. From Department Head Paul Jacobs (prompt) email answer: “Regarding the missing Condominium number, my office has nine different valuation models (equations) that predict various price ranges and types of condominiums. In the current market higher-valued condos are pointing up while the values of entry-level condos are down. As a blended category, the net predicted change for 2009 is very close to zero change. I apologize that a “0” was inadvertently left off our chart. However, the subtotal for all residential properties remains the same (an overall decrease of 0.6% when compared to the City’s last Reassessment Program).” Answer: no change. And what about that nagging question I keep having: Is the valuation reset when a new owner takes over? Nope. Paul Jacobs answers: “…assessments city wide are adjusted to then-current market levels every two years using groups of sales and are not normally changed between Reassessment cycles. Any mid-cycle value change exceptions would only account for physical changes like demolition, construction, land subdivision or tax exemption changes. Although any group of sales in our analysis may include a sale of the subject (a single property being discussed or valued), the subject’s sale alone does not become its new assessment. This is standard appraisal practice and strives to set assessments in the middle of a range of similar properties and avoids undue influence of the highest, lowest or subject sale prices.” This seems weird to me – you just bought a house and the assessed value is based on comparables – other sales of similar properties – but not the value just determined by the marketplace – what you just paid. Oh well. “This is standard appraisal practice…”, and it renders my previous research moot. Given the two-year lag time built into the system, these effects won’t start showing up until 2010. Unless you appeal, that is. If and when you do that, remember that you’ll be looking at past history, not what is happening now. Good luck. (Ed. Note: The Assessor’s Office seems very cooperative – lo and behold, they even list their email addresses on their website, and their presentation to Council was very responsive. You may hate the results of what they do, but you have to respect their professionalism. Tip o’the hat to the Denver Assessor’s office, headed up by Paul Jacobs, and to the most responsive Councilwoman Jeanne Faatz.)

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