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Economy Slowly Improving, but Not On Assessor's Side


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Thursday, January 28, 2010

Although we are seeing some improvement in the economy, the county's assessment roll is not in a healthy state, according to Santa Clara County's assessor, Larry Stone. Stone gave SILVAR members an update on property assessments at Thursday's Cupertino/Sunnyvale District tour meeting.

Good news is we are seeing a resurgence in the stock market; the median home price has increased 15 percent to $500,000 and above - though still a far cry from $800,000 in 2007; the status of banks appears to be improving and some are paying back the TARP money they received from the government; the auto industry has stopped its free fall; and in December, there was a 44 percent jump in the sale of homes - the most Stone's seen since 2006.

However, the unemployment rate is still worrisome; we are still seeing a credit crunch; and although the drop in property values has made housing more affordable, it is negatively impacting the county's assessment roll. In addition, Stone said Santa Clara County housing permits in 2009 were 72 percent below that of the previous year.

Stone said more needs to take place to get us out of the recession: corporate profits have to resume; job losses have to stop; job growth needs to take place; credit liquidity needs to improve; inventory of REOs and foreclosures needs to be liquidated; and more than anything, public confidence has to rise.

There is no good news on the assessment side, according to Stone. When the roll closed on July 1, 2009, the county assessor's department proactively reduced the assessed values of 90,000 properties, of which 99 percent was residential, taking $17. 2 billion off the assessment roll. His office then received 34,000 requests for informal reviews and 16,000 additional requests for a reduction. In the end, the assessor reduced the value of 98,000 properties – almost a quarter of 465,000 properties in the county, which led him to take a total of $19.3 billion off the county's assessment roll. 

Stone noted one in three condominiums and one in five single family homes were assessed below the purchase price. And for the first time, he is seeing some drop in values in high-end, more stable areas.

"It's not that serious, but still significant," Stone remarked.

Stone warned commercial and industrial property, which usually lags behind residential property due to long-term leases will be the "next shoe to drop." He predicts when these leases expire companies will either move, downsize or reduce rent. This year 771 commercial and industrial properties were placed in Proposition 8 status, taking $1 billion off the assessment roll.

Stone said he expects a "tsunami" next year, when the full financial impact of the commercial and industrial sector's troubles will hit in 2010 and 2011, especially if there is no improvement in the unemployment rate.

Of the 98,000 properties that had their property values reduced this year, Stone believes most will carry over next year, with additional reductions. He expects an additional 30,000 to 40,000 properties will be placed in Prop. 8 status next year.

To add to the problem, Stone's department and that of the tax collector is understaffed and as a result, processing is slow. He said right now, the formal appeals process runs at least one and a half years. On the tax collector's side, people are waiting over a year to a year and half to receive their refunds.
Stone suggested the department's new tax estimator, which can be found online at www.sccassessor.org/state can help homeowners estimate their supplemental property taxes for future years. He is also proposing that routine residential assessment appeals from homeowners  be turned over to a value hearing officer instead of the assessment board. This would get quicker results, leaving more complicated appeals issues to the assessment board. However, the homeowner needs to agree that the officer's decision would be binding. The assessor's department also has new software which can quickly output three comps used to determine a property's assessed value.

Stone asked REALTORS® to remind homeowners of the following four important dates:
1) The county assessor closes the roll on July 1 of every year based on property values on January 1 of that year.
2) In June, home owners will receive their assessment notification cards. Homeowners should wait until they receive their notification card before asking for an informal review or appeal. They also should be aware that the market value of a property has to drop below the assessed value before they can seek a property assessment reduction, and the time to take note of comps begins from the lien or valuation date, which is January 1. If they believe there should be an adjustment, homeowners should then gather as much information as they can from REALTORS® and brokers about the value of their property at the beginning of the year (Jan. 1).
3) Homeowners can request informal reviews up to the middle of August.
4) Homeowners have between July 2 and September 15 to formally file an appeal.

Stone warned everyone that unless things change, to expect a bleak outlook for the county and the state of California.

"We will certainly see a reduction in government services in every aspect of our lives," Stone said.


The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.

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