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House valuations drop, but tax bills won't

Tough times set in for local real estate

By Matt Gunderson
Globe Correspondent / November 2, 2008
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Last fiscal year, home valuations on Lost Lake in Groton skyrocketed as much as 70 percent in some cases, stirring outcry from homeowners there. This year, with residential values slumping in many cities and towns, such a scenario is less likely.

In the midst of a real estate downturn, home sale prices are dipping across the region, a trend that has had a ripple effect on residential property revaluations this year, say assessors across the region.

But assessors stress that the drop in revaluations won't affect tax bills, unless a person's property value drops or increases relative to the average decline in values. If a property's value drops more than the average, the owners will see a decrease in their tax bill and, conversely, an increase if their values are higher than the average drop.

In the town of Groton, the average assessed home has skidded from $480,000 last fiscal year to $444,000 in the current one, a familiar scenario these days as the realities of a rugged real estate climate set in for cities and towns.

Groton assessor Rena Swezey sees the approximately 3 percent drop in residential valuations as a bit of a balancing process, after a housing bubble of recent years sent some local home values soaring.

"Groton hasn't seen it as extreme as other communities," said Swezey. "Properties are staying on the market a little longer. I think we're seeing more of a leveling-off in the market here."

Some municipalities have seen deeper drops than others during their annual property revaluations, perhaps illustrating that the housing market remains a moving target from community to community. For example, Carlisle assessors recorded 66 home sales in 2007, which indicates that the housing market there is still robust. But these home sales, which are used as a barometer to adjust the residential valuations annually, will push the average assessed home value in town downward between 5 and 10 percent. The revaluations are based on recent home sales for the current fiscal year, said Melissa Stamp, the principal assessor. The average assessed home in Carlisle is around $800,000, she said.

Meanwhile, some communities have seen slight increases in their average valued home. Lincoln has witnessed its home assessments climb from $818,082 in the previous fiscal year to $826,081 during its recent revaluation, a $7,999 increase.

Lisa Juszkiewicz, a spokeswoman for the Massachusetts Department of Revenue, said the state tax agency has received revaluation data from 93 of the 351 communities in the state so far this year. Of those, 24 have witnessed slight increases in their residential property assessments, while the other 69 have all seen varying degrees of decreases.

In Globe NorthWest's zone, most of the communities on the state list have seen decreases so far. Dracut's average assessment has dropped $697. Reading's has fallen $9,198, Belmont's has dropped $12,117, Burlington's has dropped $1,150, and Pepperell's average home value has skidded $15,645.

Juszkiewicz said the Department of Revenue will not determine whether there is a trend toward assessment decreases until all communities in the state have reported their figures, which is expected in December. She also noted that luxurious or extremely high-priced home sales can skew the data for different communities. If, for example, a home valued at $18 million sells for $2 million less, then it can drastically throw off the average change in assessed value for a community, she said.

"We've gotten a small sample," said Juszkiewicz. "But it's not enough data to establish a trend."

Other communities that have not yet reported to the Department of Revenue are showing declines in their home prices as well, however.

The year 2007 saw 34 more home sales in Bedford than in 2006, but associate assessor John Speidel said the average sale price fell by about 3 percent. The average assessed home in Bedford will drop 3 percent from its current value of $534,795 as a result, he said.

Speidel said some towns are seeing condominium prices drop more than single-family homes. Bedford doesn't have many condos, but in Boxborough, where numerous condos have been built near Interstate 495, the town is seeing a 4.1 percent drop this year in condo values, said Boxborough assessor William Naser. Single-family home assessments will fall by 3.2 percent, and the average single-family for the previous fiscal year is $565,500, said Naser. Meanwhile, commercial valuations have risen 6 percent, which means business in town will be shouldering a slightly higher amount of the town's property taxes, he said.

But the drop in residential valuations will also cause the town's tax rate to jump 45 cents this fall, he added.

"I think the town's still in good shape value-wise," said Naser. "It's one of the towns that doesn't have big swings either way."

In Groton, resident David Howes said he wasn't thrilled about the potential decrease in his home value. But Howes, 42, said he's not planning on selling his property anytime soon, either.

Howes said his bigger concern right now is his 401(k) retirement plan, which has been plummeting on the stock market.

"In these times, I'll take a 3 percent hit" on my home value, Howes said. "I think it's better than what other parts of the country are experiencing."

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