2012 property values: Is there a rebound on the horizon for west Oakland homeowners?

Although residential property values continued to decline last year in most Oakland County communities, the rate of decline, on average, is less than half of what it was the year before. Better yet, some county communities are actually experiencing increases in residential property values, including one in the lakes area. The 2012 residential property assessment figures are prompting some area assessors and other officials to speculate that property values are close to, or have finally hit bottom, prompting optimism that values will once again begin to rise across the county in the near future. That’s significant, according to some officials, since higher property values will translate into property tax revenue growth for money starved cities, villages, and townships, the county, and other taxing authorities.

According to figures recently provided by Dave Hieber, manager of the Oakland County Equalization Division, residential property values fell an average of 3.08 percent in the lakes area based on real estate sales between Oct. 1, 2010 and Sept. 30, 2011, slightly better than the overall county average decline of 3.38 percent. Perhaps more importantly, the average decline in west Oakland over the last year is an improvement from the 8.18 percent average drop across the 11 lakes area communities during the prior assessment cycle. Before that, residential property values dropped an average of 17.32 percent by this time in 2010. The year before that, the Equalization Division cited an average decline of 12 percent in assessed residential property values in west Oakland.

The 2012 property assessment notices are expected to be mailed to owners by the end of the month, if not earlier, according to most local officials. Property tax bills for 2012 based on these 2012 property assessment figures will be sent out in July and December.

The assessment notices typically contain several pieces of information, including a property’s state equalized value (SEV), assessed value, and taxable value. The SEV is half of a property’s market value. A property’s assessed value represents half of a home’s selling price, and should equal the property’s SEV.

The envelope property owners will receive with their property’s 2012 assessment figure will also include the date and time for assessment appeals in their community, where the local Board of Review will meet to hear appeals, and a number to call to make an appointment for a Board of Review hearing.

Under Proposal A, approved by Michigan voters in 1994, the taxable value of a property can’t grow in any given year by more than the consumer price index (CPI), or 5 percent, whichever is less. In addition, a property’s taxable value is reset at the property’s SEV whenever the property is sold or transferred.

Before the bursting of the real estate bubble a few years ago, properties in western Oakland County would rise in assessed value each year, sometimes by double-digit percentages. Proposal A capped annual increases in taxable value at the CPI or 5 percent. That created a large gap between a property’s assessed value and taxable value over time, as there is no cap on assess value growth. Because of the gap between assessed and taxable values, a property owner’s annual property tax bill could keep rising each year, even if the property’s assessed value declined for the year: Property owners didn’t see a drop in their property taxes until their property’s assessed value fell below the property’s taxable value. That reality became more common over the past few years as property assessments fell dramatically. Yet, it’s a reality that may soon end with rebounding property values over the coming years.

An actual tax bill is calculated by multiplying a property’s taxable value, found on assessment notices, by the local millage rate. A mill is equal to $1 for every $1,000 of a property’s taxable value.

In light of a fourth year of decreases in assessed values, taxable values are more likely to fall regardless of the CPI, and most communities will see a loss in taxable values and property tax revenues unless they ratchet up their millage rates.

According to the latest residential assessment figures released by the county’s Equalization Department, Walled Lake has supplanted Waterford Township as the lakes area community experiencing the greatest decline in residential property values. The city’s residential property values fell an average of 10.08 percent in the last year. Conversely, Highland Township’s residential property values actually rose in the last year by an average of 0.12 percent.

Property owners not satisfied with their 2012 property assessments can appeal those assessments before their local Board of Review in March. Those who disagree with Board of Review decisions may appeal to the Michigan Tax Tribunal, a tax court within the Michigan Department of Consumer and Industry Services.

The Oakland County Equalization Division works with city, township, and village Boards of Review to assist them in preparation for the appeals process, and to help determine values for residential, commercial, and industrial properties.

The Equalization Division tracks homestead properties, meaning a primary residence, and non-homestead properties. It also reviews existing properties on a regular basis, such as every five to 10 years, to make sure there haven’t been any non-permitted improvements made to the property, whether residential or commercial. Personnel visit all new homes under construction, those having improvements or renovations done, as well as new or improved commercial and industrial properties in order to provide local Boards of Reviews with the most up-to-date information available about property in their municipality.

Equalization Division manager Hieber said declines in residential property values are still largely related to lower sales prices for homes.

“They’re still selling for less than what they did several years ago,” he said. “The peak in the residential market in Oakland County was 2006 and 2007. (Mortgage) foreclosures have added pressure on the prices for all properties. It’s harder for sellers to compete with banks trying to sell foreclosed properties in the same neighborhood.”

Hieber and Oakland County Treasurer Andy Meisner cited fewer foreclosures in the county during the last year as the chief reason for smaller residential property assessment declines — or even assessment value growth.

“The high year for foreclosures in Oakland County was 2010,” Hieber said. “There were over 9,000 (mortgage) foreclosures that year, or one in every 51 properties. It was down to 7,370 last year. We’re headed in the right direction, but there’s still an extremely high number of foreclosures compared to the 1990s and early 2000s, when they were an anomaly.”

“Oakland County has lost $14 billion in taxable value since the foreclosure crisis,” Meisner said. “Foreclosures are what’s causing the property value crisis. Foreclosed properties can sometimes become abandoned, blighted, sources of crime, and general nuisances in the community. That’s why in my first six or eight months in office I started the Oakland County Foreclosure Prevention Initiative, and its website at fightmortgageforeclosure.com/oakland, to help stop foreclosures. This is a partnership between my office and the United Way and housing counseling agencies, where property owners can get free certified housing counselors to help them get answers, and get the county treasurer’s office to help them stay in their homes or arrange a dignified exit to prevent undue harm to their credit.”

According to Meisner, his office’s foreclosure initiative, and others at the state and federal level represent a concerted effort to ward off foreclosures — and it’s beginning to pay off.

“In Oakland County, mortgage foreclosures are down 30 to 35 percent from the previous year,” he said. “That modest improvement is reflected in the assessments we’re now seeing in some communities.”

“If foreclosures trend the way the did in 2011, and the job market improves, I would agree that we’re at or near the bottom, or even past it in some cases,” Hieber said of falling property values. “But it’s not a one-size-fits-all situation. Some communities will see further decreases in assessed values.”

According to Hieber, things are looking up for the 2013 assessments. His office is already looking at property sales since Oct. 1, 2011, and compared to the prices seen during the previous cycle, residential property values are stabilizing, if not increasing in many county communities.

“Overall for the county, we’re seeing a 1 percent decline for 2013 (based on sales between Oct. 1, 2011 and now),” he said. “We still have a ways to go until Sept. 30, 2012, but that’s what we’re seeing thus far for 2013.”

In general, market transactions are used by assessors to compare assessed values with actual sales prices for similar properties. Assessed value is based on sales price, or the true cash value of similar properties. Every year, assessors determine the assessed value of parcels of land. That assessed value is generally half of the property’s anticipated sales price, but since the market changes all the time, assessors re-evaluate their ratios once a year through a sales study.

Many communities have their own assessors and perform those duties themselves, while others contract with the county to get that done. Oakland County’s Equalization Division performs contract assessing for approximately a third of Oakland County’s communities.

The following is a breakdown of the lakes area’s 2012 residential property assessment figures, and comments from local officials on how the assessments may impact their community’s property tax revenues and Board of Review cases this year. Since they are villages, Wolverine Lake’s property assessment figures are collected and incorporated into Commerce Township’s, and Milford Village’s are collected and incorporated into Milford Township’s.

White Lake Township

According to the residential property assessment figures for 2012, White Lake Township is facing an average decline of 4.40 percent. However, township officials are unsure how much they expect to lose in tax revenue, since they haven’t finished setting all the assessments yet, according to White Lake Assessor Jeanine Smith.

“Some neighborhoods are up and some are down (in value),” Smith said. “To know yet how (the property assessments) will affect the (revenue from property) taxes is kind of unknown. Some are increasing, some are staying the same, and some are decreasing even more. We are all over the map.”

Smith said she doesn’t believe the township will see an increase in Board of Review requests this year. Last year, the township held 276 hearings.

“I don’t think we will see an increase,” she said. “But with some neighborhoods going up (in property value), some people will be baffled because they just look at the overall number that the county publishes. They don’t realize that their neighborhood is what is being compared, not just the township and the county.”

For those who may be confused by their property assessments, Smith welcomes them to go to the township offices and look at the latest sales studies to understand why their property received the assessment it did.

Meanwhile, Board of Review meetings will be held on March 6, 12 and 14 at the Township Hall. Residents are asked to make appointments through the township Assessing Office. The township also accepts written appeals provided they are received before the last meeting of the Board of Review.

Highland Township

Highland Township saw an average 0.12 percent increase in residential property value in the last year, according to the 2012 residential assessment figures provided by the county.

“Obviously, seeing a little boost like that is certainly an improvement over continuing to go down,” said township Supervisor Triscia Pilchowski. “But that kind of increase is more stabilizing than anything else.”

Last year, Highland had 175 appeal petitions go before its Board of Review, a drastic decrease from 2010 when 346 petitions went before the board.

Pilchowski said she believes the number of hearing requests will continue to decrease this year because she was told by Oakland County officials that the number of calls for appointments were “down dramatically.”

“From that news, we expect even less applicants to be coming before the Board of Review,” she said.

Meanwhile, anyone wishing to appear before the Board of Review should contact Highland Township, where help in preparing the proper documentation is offered.

Dates:

Commerce Township

Commerce Township has experienced an average 1 percent decline in residential property values based on property sales between Oct. 1, 2010 and Sept. 30, 2011. According to Supervisor Tom Zoner, that’s better than what was projected.

“There was a time when we were expecting a 4 percent decrease,” he said.

As such, the township prepared a conservative 2012 budget, according to Zoner.

Meanwhile, he said he expects the number of Board of Review petitions this year to remain at about 400.

“I really expected the requests to increase every year, but that hasn’t been happening,” Zoner said. “They’ve been staying normal.”

The township Board of Review will start meeting on March 6 and will continue to meet on March 7, 8, 12, 14, and 15. Those wishing to appear before the Board of Review should contact Commerce Township offices.

“Residents can stop in at our assessing department where they can get assistance with their application and obtain material on how to go before the Board of Review,” Zoner said.

West Bloomfield Township

Preliminary figures have West Bloomfield Township’s preliminary residential property values for 2012 declining by an average of 0.08 percent.

Township Assessor Lisa Hobart said she believes the loss in value will be made up in part by new construction and building improvements, such as new homes and upgrades.

“I was projecting a 4 percent reduction, but when you deal in averages, some homes decline in value and some have increased,” she said.

The township held 850 Board of Review case hearings in 2011, according to Hobart.

“We always plan for about the same,” she said. “We provide information with our assessment notices on how to set up appointment.”

She added that the notice encourages residents to contact the township office and that the notice has appointment times listed.

“We provide explanations that answer people’s questions and many decide that they don’t need or wish to appeal,” Hobart said. “They can appeal in a letter or in person.”

Milford Township

Milford Township’s 2012 residential property value assessments declining by an average of 2.85 percent, according to county figures.

Township Supervisor Don Green said he knows the township will have an increase in Board of Review hearings from the 162 hearings held last March.

“My house’s values went up and my neighbor’s values went down 10 percent,” Green said.

Township Treasurer Cynthia Dagenhardt said the township is going to see a 2 percent decrease in property tax revenue compared to last year, based on the 2012 property assessment figures.

“Sometimes values go down or go up,” Dagenhardt said. “I would say on the budget, we always budget conservatively. We’ve cut back on everything.”

Dagenhardt added that she believes the township will have as many or fewer Board of Review hearings next month as compared to last year, because property values have dropped again.

The township will hold its Board of Review informational meeting on March 6 and will hold public hearings from March 7 to March 20 at the township offices.

Dagenhardt said residents will get their property assessment notice in the mail and that they can call the phone number on the notice to set up a Board of Review hearing appointment.

Wixom

Wixom residential property values dropped an average of 6.08 percent in the last year, according to the county.

Given the decline, city Finance Director Kevin Brady estimates a loss in residential property tax revenue of $132,000, but a greater loss once commercial and industrial property assessments are factored in. Commercial property assessments are down an average of 10.4 percent, and industrial property values are expected to decline by an average of 13.65 percent, according to Brady.

“When you take into account commercial and industrial, you’re looking at possibly another $399,000 (in lost property tax revenue), according to preliminary numbers,” he said.

Brady is trying to get a better grasp on the reasons assessments have declined so sharply and has queried Oakland County officials for an explanation.

For residents questioning their tax assessments, the Wixom Board of Review holds three dates for appeals: March 6 from 10 a.m. to 5 p.m. with a lunch break from noon to 1 p.m.; and March 12 and 14 from 1 to 9 p.m. with a dinner break from 4 to 6 p.m.

According to Wixom Assessing Tech Debe Barker, the city expects a decrease in Board of Review appeals this year.

“We’ve received less than six calls questioning assessments, so we anticipate the appeals to be very low this year,” Barker said. “That’s in part because people are accustomed to seeing reduced assessments. There were many who questioned it initially when the downturn first occurred, but now taxable and assessed values are the same this year, similar to last year, so very few residents are seeing an increase in taxes.”

Orchard Lake

The 2012 residential property assessment figures for Orchard Lake have dropped an average of 0.30 percent in the last year.

According to Director of City Services Gerry McCallum, it’s unclear how much tax revenue the city will lose out on due to the new property assessments, but he estimates that figure to be between $15,000 and $20,000.

The city Finance Committee convened in January and discussed the issue.

“The financial plan also includes a provision for $70,000 of additional tax reductions assuming each of the Tax Tribunal cases are lost,” said Finance Committee Member Dave Boerger. “It was a very conservative assessment, but we picked that to be safe. If it ends up being less, then (the higher property tax revenue than anticipated) would flow into fund balance.”

With property values continuing to drop, although not nearly as sharply as in some other communities in west Oakland County, McCallum said he’s unsure how many cases will go before the Board of Review this year.

“Last year we had 60 cases and we anticipate a little higher this year, only because taxable values are increasing on lakefront properties — or then again, maybe they will level out,” he said.

Board of Review hearings are scheduled for March 6 from 9 a.m. to 5:30 p.m. and March 12 from 9 a.m. to 9 p.m.

Walled Lake

Of all the lakes area communities, Walled Lake is experiencing the greatest decline in property assessments for 2012 — an average drop of 10.08 percent, according to the county’s data.

City Finance Director Colleen Coogan said the continuing decline in residential property values is centered on condominiums.

“The drop area is mostly the condominium units, not residential, single-family homes,” she said.

Coogan declined to estimate the impact lower property assessments will have on tax revenue, saying she is still calculating all the figures.

“We are in the middle of working through the figures and haven’t even presented them to the city manager because it’s more than just residential property (that’s involved),” she said. “There are a lot of levels here and we are doing a full analysis on the impact.”

The city’s Board of Review typically holds two meetings in March, which are scheduled by Oakland County.

Residents are encouraged to come prepared and have good, valid comparable real estate sales figures to support their arguments.

As to whether the number of appeals will increase this year, Coogan said she is uncertain.

“You never know if they will increase or not,” she said. “You can’t rely on history. However, tax challenges are slowing down.”

Waterford Township

Waterford Township residential property assessments fell an average of 2.87 percent over the last year, according to county data.

“It’s not as bad as compared to what it’s been like in 2010, when they went down 23 percent,” said Waterford Assessor Don Wood. “While I’m not pleased they are going down, I’m glad it’s not as much as it has been. I’m hoping this will be the last year we see a decline.”

Wood estimated the township will lose about $1.75 million in revenue overall due to lower property assessment figures.

He also noted that, in certain areas of the township, home sale prices are actually rising.

“Sales prices are coming up a bit in some neighborhoods,” he said. “Some of those went up anywhere from 1 to 2 percent.”

The township’s Board of Review held four hearings last year to hear 350 appeals. Wood said he expects a similar number again this year.

“They won’t go up, but I expect the same this year,” he said.

The Board of Review hearings are scheduled for March 6 and 12 from 9 a.m. to 4:30 p.m.; and March 7 and 13 from 3 to 9 p.m.

Wood said he encourages property owners to bring data on comparable property sales or appraisals to bolster their arguments before the Board of Review.

“If they want to dispute the value, they should bring something to support their claims that I’m over-assessing them,” he said.