By D.L. BENNETT
The Atlanta Journal-Constitution
Published on: 05/12/08
For less than the price of a decent used car, you can buy a home in Atlanta today.
Actually, real estate agents list a dozen choices for $10,000 or less.Recent headlines:
Step up in price to $20,000 and your choices expand 10 fold.
The prices seem absurd but they are part of a real estate market suffering with rampant foreclosures, mortgage fraud, abandoned investor properties, a collapsing mortgage industry and other ills. The market is unlike anything seen in metro Atlanta in years and it has local tax assessors and appraisers as confused as anyone.
What is the value of a lot if no one can get a loan to buy it? How should you value a home that sits on the market for a year with no offers? When a neighborhood has several foreclosures, short sales and abandoned properties, do they set the market?
The training and rules for mass appraisal say taxable values should be set at fair market value or at the price for a sale between a "willing buyer and willing seller." Distressed sales, foreclosures and short sales are not supposed to count toward setting taxable values.
Therein lies the problem for tax assessors.
As Fulton's chief appraiser, Burt Manning finds it hard to believe any parcel in Fulton is worth less than $10,000.
Still, real estate listings prove they are.
"We are trying to understand all these things," said Manning. "What's the right answer? We don't know. It's tough. I've got entire neighborhoods where all I've got is distressed sales. I don't have any good sales."
In fact, seven of Atlanta's least-expensive homes are listed on average for $8,800 but taxed at an average value of nearly $93,000.
The cheapest, at 336 Adelle Street in the Lakewood area, comes in at $5,900. Tax records list its value at $101,700.
The problems are pronounced in areas like West End, Lakewood and Vine City.
Wayne Flanagan, a RE/MAX agent who sells bank-owned properties, said in zip codes like 30310 and 30315 values have taken a nosedive faster than public officials can account for.
"There are some price ranges like $20,000-$80,000 where 90 percent of the properties on the market are foreclosures," Flanagan said. "You've got one bank competing against another. It's a spiraling situation, downward."
The agent said when tax values and true values are way apart, it can keep properties from selling and further depress values. Flanagan said he'd had a $95,000 deal on a duplex fall through recently because it was being taxed at $300,000. The buyer didn't want to be saddled with taxes at that level.
"They (government officials) are going to have to take a look at this," Flanagan said. "We are experiencing some of the same problems as Detroit, taxes are so high they drive down value."
Fulton noted the downturn in its 2008 values by marking down about 86,000 properties a total of nearly $364 million. Manning said in a typical year, Fulton tallies about 27,000 sales assessors consider as valid to set tax values. This year he counted only 20,000 due to the increase in distressed sales.
"I am less uncomfortable with values than I've been in a long time," Manning said. "These are unusual times."
Still, the issues aren't confined to Atlanta and Fulton.
Record foreclosure numbers across the region have appraisers in Cobb, Gwinnett, DeKalb and other counties wrestling with similar concerns. They also struggle with where to set the values for homes that don't sell or lots that normally are easy to value but now are tumbling because lenders won't give builders money to build new homes.
Thomas Stump, interim chief appraiser in DeKalb, said the number of "good sales" dropped from 12,400 last year to 8,500 this year. The lower number makes it even harder for the assessors to come up with values, he said.
"We have people in our office who want to sell but can't find a buyer," Stump said. "Still, there are buyers out there. It may take much longer. I don't think you can say a property has no value because it won't sell."
DeKalb reduced the values on about 4,500 parcels in 2008 and expects to drop many more in 2009 if the market slump continues.
"It's just a very strange market," he said. "It's very difficult to determine values."
Calvin Wimberly, a real estate agent who primarily sells bank-owned properties and has two listings under $10,000, said home prices in some areas have tumbled 200 or 300 percent in the past year. He said many suffered from mortgage fraud that artificially inflated values.
Wimberly said he'd recently sold a home in West End that tells the tale of what's happened in some neighborhoods. The home sold in March 2004 for $305,000 and then in August 2004 for $700,000. It tumbled to $122,900 in a sale last year. It sold recently for $51,000.
Those are the kind of numbers that have public officials scratching their heads.
"I had the toughest time trying to convince the bank the price was correct," Wimberly said. "They thought I was out of my mind."
Tuesday, May 13, 2008
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