Live at the Forum: Foreclosures and Property Taxes - Q&A with Susan Adams of ANDP

Replies to This Discussion

Permalink Reply by HousingPolicy.org team on December 16, 2009 at 8:52am

Can you provide a little background -- why haven't tax assessors included foreclosed and bank-owned sales in the valuation process?

Permalink Reply by Susan Adams on December 16, 2009 at 12:08pm

In years of steady appreciation, foreclosed and bank-owned sales were considered "outlying" sales and -- therefore--- not representative of the market. But, as a result of the housing crisis, foreclosures are the only market in many struggling neighborhoods. in the current climate, assessors cannot make accurate assessments without considering foreclosures and bank-owned sales in their valuation formulas.

Permalink Reply by Rebecca Cohen on December 16, 2009 at 12:06pm

In Monday's online Q&A with John O'Callaghan, he suggested that investors are starting to play a larger role and buying up more REO properties. How do you anticipate that this increased investor activity will impact property values and, accordingly, tax assessments, if at all?

Permalink Reply by Susan Adams on December 16, 2009 at 12:43pm

In the short-term, increased investor activity could provide a modest boost to market values. But ultimately, more investor-owned properties (and absentee landlords) will not contribute to the long-term stabilization of neighborhood property values and the tax digest.

Permalink Reply by Emily Salomon on December 16, 2009 at 12:07pm

In the podcast you mention that your report received significant media attention and support from County Commmissioners and other elected officials, and that a resolution was passed urging tax assessors to use innovative practices for property valuation in high-foreclosure neighborhoods. To your knowledge, have any changes been made? For advocates - what are next steps?

Permalink Reply by Susan Adams on December 16, 2009 at 12:32pm

The media attention (including seven front page articles in the AJC over eight months) helped to secure passage of a new state law (authored by Georgia state senator Chip Pearson) requiring tax assessors to include foreclosed and bank-owned sales in the valuation process. We do know that tax assessors reduced values on more than 350,000 residential parcels in Atlanta's five core counties. We have also estimated that values were reduced in SW Atlanta's Pittsburgh neighborhood (one of the hardest hit by foreclosure in the metro area) by an average of 27 percent, but despite this adjustment, neighborhood residents are still paying $1,300 more in taxes than they should. In short, while some progress was made, there is still a significant property tax disparity in low-income, high-foreclosure neighborhoods. Advocates need to continue to press this issue. We encourage housing leaders in other metro areas to examine and quantify the property tax disparities in their high-foreclosure communities.

Permalink Reply by Maya Brennan on December 16, 2009 at 12:13pm

What would you say in response to those who argue that the sale's price of a foreclosure-related property isn't comparable to the price you could expect at a truly voluntary sale & that including them would lead to a lower assessed value than is actually warranted?

Permalink Reply by Susan Adams on December 16, 2009 at 1:11pm

Our research only looked at arms-length transactions (multiple listing service (MLS) sales between a willing seller and a willing buyer); we did not include distressed auction sales on the courthouse steps in our analysis. Using FMLS data mitigates the extreme effect that auctioned sales could have on home sale values. It's also important to note that in many of the neighborhoods we analyzed, foreclosure-related sales are the only market.

Permalink Reply by Keith Wardrip on December 16, 2009 at 12:40pm

Susan, thanks for your time today. Can you share any initial results of the third phase of your research?

Permalink Reply by Susan Adams on December 16, 2009 at 1:20pm

The third phase of our research with RCLCO compares 2008 assessed values to 2009 assessed values to determine if (and by how much) property values were lowered in metro Atlanta's 15 highest-foreclosure zip codes. We found that values were lowered in these neighborhoods by an average of 11 percent across the five county area. While assessors did make progress in correcting property tax inequities, property taxes were still not lowered to the levels where they should be to accurately reflect current market values in high-foreclosure neighborhoods.

Permalink Reply by Ryan Sherriff on December 16, 2009 at 1:03pm

Do you have any recommendations for filling the gap in local coffers that may be left if property tax revenues are adjusted to reflect foreclosures and REO properties?

Permalink Reply by Susan Adams on December 16, 2009 at 1:26pm

It's the tax assessors job to set fair values across the tax digest. When a level playing field is set and homes are assessed for what they are actually worth, local government officials will need to determine the millage rate adjustment required to meet critical local needs.

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