AZ Republic – Silver lining of housing slump; Tax may decline

Glen Creno
The Arizona Republic
Dec. 29, 2007 12:00 AM
 Valley homeowners upset about the fast rise in their property-tax assessments may feel some relief this year as the latest valuation notices hit their mailboxes.

The Maricopa County Assessor’s Office says the new round of valuations to be mailed around Feb. 1 will reflect the slump in the housing market. The office, however, would not disclose specifics and emphasized that not all property owners will see a decline in assessed value. Some neighborhoods have held values better through the downturn.

“In some parts of the Valley, values will be flat or maybe increase a little bit,” said Paul Petersen, an assessor’s spokesman. “It depends on where you are located.”  The valuations are important because they are used to calculate the taxes that support such things as cities, school districts, community colleges and other taxing districts.

Consumers hoping for an immediate property-tax reduction will likely be disappointed. Though the valuations come out in February, the payments are billed in 2009.

The lag time is built into the system so property owners can appeal the valuations. Petersen said appeals have increased 25 to 30 percent during the housing boom. The combined median prices of new and existing homes increased 55 percent in the Valley from 2004 through 2006, according to Arizona State University’s Realty Studies program.

But the market turned locally and nationally, and home prices fell in more than half of the Valley’s ZIP codes in the first eight months of this year, according to The Republic’s latest Valley Home Values study.

The valuations being mailed in February will reflect sales data from the third quarter of 2006 to the same quarter of this year. Of course, the market may change a great deal by the time taxpayers write a check for those assessments next year.

“We’re always playing catch-up,” Petersen said.

Many Valley homeowners, though, are keenly aware of neighborhood price moves, and they balk when they pay taxes based on a market snapshot that’s a year old. There was so much aggravation about how values were set during the boom that three initiatives were filed this year with the goal of controlling property taxes. A November poll of county residents indicated that 31 percent think home values are a little too high and 24 percent call prices much too high, according to WestGroup Research of Phoenix.

The valuation notices provide two figures: the full cash value of a house and its limited-property value. The assessor says the full cash value is the current market value of the land and house. It is used to figure secondary taxes for such things as bonds, budget overrides and special districts.

The limited value is the basis for calculating primary taxes that are used to run government and schools. It is based on a formula set by law and can’t exceed the full cash value.

The full cash value does not necessarily represent how much the property is worth or could be sold for. That is set by the marketplace.

Kevin McCarthy, president of the Arizona Tax Research Association, said his group advocates that state and local governments reduce tax rates rather than pushing for initiatives it believes would damage public financing. But he said new, reduced valuations in Maricopa County will not reduce angst over the higher tax bills of the past two years.

“Even if there are small reductions, I don’t think it will do a lot to alleviate people’s fears that taxes will continue to increase,” he said.

Framing subcontractor Bob Larson successfully appealed a valuation notice for land he bought in Desert Mountain in north Scottsdale. He bought the land for $105,000 in 2003 but said his first tax bill showed a value of $288,000.

He filed the affidavit of value from the sale with the assessor, and the value on the land was reduced to the sale price. He’s not sure what happened but assumed it was a technicality: A pricey golf membership attached to the land was removed before he bought it.

“It wasn’t any huge financial hardship, but it’s very unfortunate when you buy a property after that appeal time has expired,” he said.

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