Upside of a downturn
For those of you who have watched your tax assessments skyrocket as of late, this is an opportunity to get a little back, as this article details.
In a mass appraisal, assessors gather and study certain economic data for a one- to three-year period preceding the assessment’s effective date, including sales transactions, market rents, vacancy levels and/or levels of operating expenses. . .
Odds are that assessors’ usual valuation models for the 2009 tax year may be significantly flawed because a huge disconnect exists between economic conditions two to three years ago and today. . .
Perhaps the biggest data disconnect lies in capitalization rates, which act as a proxy for buyers’ recognition of risk. Before the September 2008 economic crisis, buyers expected rental income and property values to continue rising. Now the reality of declining occupancy and rents, plus higher risk, has raised cap rates and lowered property values.
In my experience, whenever I complain to my local Board of Equalization about increased assessments on my properties, the response is often a smart-alecky “Will you sell it for that amount?” I’m betting no one asks that this time around, for fear I’ll say yes.