Assessor's crystal ball is cloudy
It may be another year before Crow Wing County is able to truly determine where the housing market is headed.
After years of trying to keep up with fast-rising market values in the lakes area that jumped 10 percent to 20 percent in a single year, the current housing market turmoil means most of the assessed market values in Crow Wing County remained unchanged last year. Assessed market value is just part of determining what the taxes will be.
Crow Wing County Assessor Marty Schmidt said from what he's seen so far a clear picture of the market may not be seen until the next selling period in 2009, which will be a better indicator of where the market is going to land.
Notices of pendency tell a homeowner that the foreclosure proceeding is about to commence. A sheriff's certificate confirms a foreclosure sale took place, most often to the mortgage company that had the loans.
Schmidt said if a chart of sales was made as a market indicator now, it would look more like a saw blade. That makes trends difficult to spot. Whether the market is up or down, the assessor's job is unchanged.
Assessors look at individual properties, at how the property is being used - such as a residence or a business - and at the 12-month sales study.
The sales study, which runs through September, looks at arms-length sales - those not involving family members or foreclosures for example. The county will analyze the sales study data and Schmidt expects to have a better idea about trends in November. Last year, the county looked at about 800 sales. The county looks at sales of similar properties and takes the median number. If there are 21 sales, then sale number 11 is the yard stick.
The assessor's office looks at the individual property and determines whether the assessed market value should be adjusted.
"Those adjustments in the past have always been up, the future may tell us something totally different. We didn't do a lot of changes in 2008 assessment," Schmidt said. "It very well could be that there still could be some areas that need to go up."
Schmidt said if there is an area that needs to go up it likely will be lakeshore, which doesn't seem to be as affected by the ups and downs of the economy or interest rates.
"There is only this much of it and God's not making any more of it so there always seems to be a demand for that kind of product," Schmidt said, noting while it may take longer to sell the property - it is selling. Other areas, off lake or in the cities, may stay the same or could see a decrease in the estimated market value, Schmidt said.
Schmidt said the estimated market value should not be confused with the listing price the homeowner or real estate agent is asking to get. Schmidt said the county's assessments were not the same as the listing prices when the market was rising fast either. As people hear a home listed at $500,000 dropped to $400,000 before selling, Schmidt said they may not realize the estimated market value for that particular property was $350,000.
"We're not going to drop $100,000 because the listing price dropped $100,000," Schmidt said. "We're only going to look at all the sales and drop in accordance to what they actually sold for."
If the home in question had an estimated market value of $500,000 and sold for $400,000, then Schmidt says that is a concern and if there are several such sales that indicates a trend.
Schmidt said most people don't realize that if one property goes up or down that doesn't mean they all need to be adjusted. When things were rising fast, the assessor's office didn't raise all properties because one particular place sold for twice its estimated value.
While there is a lot of property for sale now, Schmidt said that is not unusual for the lakes area but what is different is that properties are taking longer to sell.
A new player in the scenario is the number of foreclosures. Schmidt said while foreclosures are not part of the sales study, they do affect the market as the bank owning a foreclosed home may be willing to take a loss whereas a homeowner selling a property down the block may not be able to afford a loss.
"It may force the asking price to be closer to the foreclosure," Schmidt said.
As for the housing market, Schmidt said the pendulum moved so far for so long that people forgot there would eventually be a swing the other way as the market adjusted itself.
While the market value may go down, that doesn't mean property taxes will go down. But Schmidt said it's been a long time since that has happened - he could recall an instance in 1973. He said just because the market goes down the tax rate may go up to meet governmental budgets, which are affected by rising costs in areas like fuel.
"There is going to be a real challenge in the next two to three years for all concerned."
RENEE RICHARDSON may be reached at renee.richardson@brainerddispatch.com or 855-5852.