Property Tax Appeal Blog

Atlanta Office Values

A class-A office building sold in Atlanta recently. Promenade Two, a 774,000 square foot building in Midtown was purchased by Cousins Properties. The reported sale price is $134,700,000 or $174 per foot. The building is 42% vacant. Jones Lang LaSalle reports that the vacancy rate in Midtown is 24.4% and that is the highest in the metro area. Net absorption was negative in the third quarter in Midtown. Jones Lang LaSalle report that the average office rent in Midtown is $23.75

The best properties in the best locations are still commanding high prices per foot. But with Midtown having the highest vacancy rate of all the Atlanta metro sub-markets can it really be considered a "best location" at this time? Perhaps. Vacancy rates are high in most markets and relatively speaking Midtown's vacancy rate isn't that bad.

Bifurcation. There's the top tier properties, and then there's everyone else's properties. If you think the assessor has your property in the wrong group don't feel singled out. There are a lot of other properties owners being associated with the Chosen properties (you know, the only ones selling) out there. For help getting the assessors to "see the light" talk to the property tax appeal professionals at Fair Assessments LLC.

Happy Holidays

Back from Thanksgiving with a cold, but all is well otherwise.

The S&P Case Shiller house price index dropped 3.6% for the year ended in September which was a larger drop than experts had predicted (3.0%). Of the 20 cities in the index 18 had a year ended September decline and Atlanta had the largest drop in house values at a whopping -9.8%. Much of the blame is being laid on lenders that have increased foreclosures recently and are adding to the inventory of available properties when there is already a glut and little demand.

Builders are on pace this year to sell the fewest new houses since record keeping began in 1963. 2010 was the slowest year ever for new house sales but it looks like 2011 will come in dead last. As noted above, builders are competing with a glut of existing inventory that is sitting, weighing on the market.

CoreLogic reported that over 1/4 of all mortgaged houses in the USA are underwater, or are close to owing more on their mortgage than their house is worth. Homeowners with negative equity are more likely to have above market interest rate mortgage loans. This makes perfect sense since most underwater homeowners cannot pony up additional funds to create 20% equity needed to refinance now. Those that are not upside down are more likely to have enough equity to refinance.

That was a quick autumn. December is here and the air has turned crisp here in Atlanta. The assessor's effective date of appraisal is just 31 days away. Gather your market data before it slips away and prepare for your 2012 appeal. For assistance with all of your property tax appeal needs contact fairassessments.com

Residential Property Tax Appeal News

Fannie Mae says that consumer confidence is still cause for concern regarding the housing market. Fannie Mae economists are projecting that 2012 home sales will be only slightly higher than this year. Construction was up in September, but it was primarily due to apartment construction. Home builders say that it is still very difficult to compete with all of the distressed properties on the market.

It was recently announced that the Federal Housing Administration (FHA) is getting low on reserves and may need to go to the Treasury for more money. Adding to the worry it was reported that more than 30% of all mortgage modifications made by FHA in 2010 defaulted again within a year. Foreclosures on FHA insured loans declined in September but this was attributed to the slowdown in foreclosure processing due to the robo-signing scandal.

Lender Processing Services (LPS) recently announced that mortgage delinquencies declined in October to 7.93% of outstanding loans, which is down 2% from September and 14.6% from a year ago. LPS information shows that approximately 6.3 million properties are in foreclosure or are 30 days delinquent. The states with the highest percentage of delinquent loans are Florida, Mississippi, Nevada, New Jersey and Illinois.

Fitch has data showing that home values have fallen 7% over the past year. They say that now brings the total decline in housing values nationwide to 38% since the peak. Fitch believes that home prices have not reached the bottom and they expect prices to fall another 13%. They blame the continuing weakness in home values on high unemployment, stricter lending standards, and the glut of distressed houses on the market.

The assessor's effective date of appraisal of January 1 is approaching quickly. Do you know where tax rates are headed in 2012? Do you know what's happened to values in your market area? Here at Fair Assessments, our job is to know the real estate market and know how to save you money. If you own residential real estate in Fulton County, DeKalb County or Gwinnett County, Georgia we can help you with your property tax appeal.

Commercial Property Tax Appeal News

CoStar recently reported that their commercial property sale price index had a 0.9% increase in September over August. Accounting for the increase were the still recovering retail real estate sector and the red-hot multifamily sector. Distressed sales accounted for 25% of the sale transactions used to calculate the 0.9% increase. Nondistressed property prices rose 2.3% for general properties and 1.9% for all commercial properties. Distressed properties continued their sale price decline. Costar said that the multifamily sector index increased 2.1% during September and had been up 7.3% in the second quarter. The multifamily index has increased a total of 12.3% since the market bottom and has outperformed all other property types.

Shadow Inventory and the FHA Time Bomb

There is much variation in the estimate of the number of homes currently in foreclosure and those that are seriously delinquent. As I noted in a previous blog post Lender Processing Services estimated that the number of delinquent and foreclosed properties was approaching 6.4 million. Different real estate research companies have differing ways of estimating this number however, and the estimates range from 1.6 million to 8.2 million delinquent mortgages. Capital Economics estimates that the shadow inventory is 4.3 million homes and they call this a cautious underestimate. They say that with 4 million homes waiting to be eventually added to the supply of properties for sale it will take 18 months to clear both the visible and shadow inventory of homes.

Atlanta Apartment Market Shows Signs of Life

The stalled mixed-use project called 12th and Midtown is about to see some new construction. All over the country the apartment market is doing very well because very few people can get mortgage loans to buy houses due to increased lending standards or they just refuse to buy because they think housing values have further to fall. This is been boosting occupancy and rent in apartment communities nationwide. Atlanta, of course, has not been immune to this trend. The vacancy rate in Midtown Atlanta has fallen to 7.2% in the third quarter, which is down from an 11.4% vacancy rate in the third quarter of 2010.

Atlanta Property Tax Appeals

Lender Processing Services (LPS) says that they track home sales on a monthy basis and their home price index gives them a quick read on changes to the market. Their data shows that house price declines were widespread, throughout the country, in August but that higher priced homes declined less than lower priced homes. Of all the cities that they track with their index the city with the largest home price decline in August was Gainesville, Georgia.

The city with the largest price decline since the beginning of this year, as measured by LPS is Atlanta, GA. The Atlanta metro area shows a 2011 price index decline of -10.5%. The city with the second highest price decline was Phoenix, AZ with a 2011 decline of -5.2% or about half of the drop experienced (here) in Atlanta.

If you want property tax relief in the coming year and you would like the help of real estate professionals that are saving property owners 21% on average in 2011 contact Fair Assessments, LLC. We are your Atlanta based property tax consulting firm. Our 20+ years experience in real estate appraisal, property tax assessment, and property tax reduction is unequaled. For help with your property tax appeal contact us.

No Penalty For Piling On

The negative news and forecasts for the residential real estate market just keep on coming. Recently Pacific Investment Management Company (PIMCO) predicted that housing values could decline another 6-8% before hitting a bottom. They blame it on tightened lending standards that are shutting many Americans out of the housing market.

Lender Processing Services (LPS), the company that recently reported that 6.4 million mortgages are delinquent, also announced that their home price index has declined 3.8% year over year as of August. In the month of August they show housing values fell 0.9%. Their home price index shows that nationally, home prices have fallen 28.3% on average from the peak in mid 2006.

If you would like to save money in 2012 consider appealing your real estate property tax assessment. If you live in the Atlanta metropolitan area and would like professional assistance with your property tax appeal contact Fairassessments.com

Defaults and Foreclosures

Realty Trac, Inc. reported that default notices increased 10% in October as compared to September and rose to an 11 month high in states where foreclosures must be processed through the court system. Nationally, auction notices increased 8% and home seizures jumped 4%. Nationally foreclosure filings increased 7% to a seven-month high in October after a year-long slowdown due to the robo-signing scandal.

Over a quarter of one million properties received default notices, auction, or repossession notices in October. The number of notices was actually down 31% from a year ago as one year ago was when the complaints started being raised about the foreclosure process and faulty/forged documentation. Realty Trac also estimated that the nation's housing market may need as long as 40 months to clear all of the distressed sales.

If you need help with your property tax appeal please visit www.fairassessments.com and contact us for your Fair Assessment.

Massaging the Numbers

The National Association of Realtors (NAR) recently reported that their data shows a national, median home price decline of 4.37%. This was the decline in the third quarter of 2011 and values declined in 111 out of 150 metropolitan areas tracked. The number of metro areas showing a decline in housing values was little changed from the number showing declines in the second quarter.

Separately Integrated Asset Services (IAS), owner of the IAS360 House Price Index, reported that home prices ROSE 4% during the third quarter. How could this be? You would think that the NAR would have a database of property transactions that is wide and deep. Although the information in the various MLS around the country is often less than accurate, where could IAS get better information, public records? The public records are at least as suspect as the MLS in most jurisdictions.

I'm not saying that the NAR or IAS are wrong. The problem with statistics is that if the data used is skewed, the result is skewed. If the sample from the population of transactions used is skewed to the upside or downside your results are not indicative of the true state of affairs. After all of the recent news bites that have been released about the continuing decline in housing values it seems very odd that IAS would release a report about housing values climbing. To their credit, they said that this is the calm before the storm, and indicated that the shadow inventory of foreclosures have yet to fully impact house values.

Perception is Reality

Perceptions about housing values are becoming a reality as potential home purchasers continue to put off their home purchase decisions. Although 27% of Americans indicate that they will be buying a home at some point in the future only 2% say that they plan to buy within the next 12 months. The people that don't plan to buy within the next 12 months are concerned about the real estate market and declining values, the economy and jobs. Many also say that they won't be buying any time soon because of the lack of available financing.

Although there are about 6.4 million delinquent mortgage loans right now Fannie Mae and Freddie Mac are only holding about 180,000 homes. Fannie Mae said that the houses it has been selling have been selling for 56% of the unpaid mortgage balance. That's quite a haircut especially if there was any equity put into the deal at the beginning. Both Fannie and Freddie cannot sell houses faster than the foreclosures are coming in. At their current rate of sale it will take Fannie Mae four years to sell their inventory and Freddie Mac will take 15 years to clear its inventory.

The negative data keeps piling onto the residential real estate market. It seems like every day someone else comes out with a home price index that showing that the market is still falling. Recently, Fiserv reported that home prices fell 5.9% on an annual basis during the second quarter of this year. They said that this continues the double dip in home values that started last year. Fiserv predicts that houses will continue to fall, dropping another 3.6% by June of 2012. Although existing housing has become much less expensive than it was just a few years ago, increased lending standards brought the volume of house sales back to the 1998 level.

At fair assessments LLC. We concentrate on commercial property value reductions. However we do residential property tax appeals for homeowners in the Atlanta Metro area that live in Fulton County to County and Gwinnett County. If you would like assistance with your property tax appeal in 2012, please contact us at www.fair assessments.com and we will do our best with your property tax appeal.

Like a Hotel Horror Film

There is increasing concern that the lack of available financing will be a major problem in 2012 for commercial properties whose loans are maturing. The problem appears to be especially acute for hotels as they have about $21.7 billion of mortgage-backed securities on 232 hotels that will need to be refinanced over the next year. Some knowledgeable people in the hotel industry believe that maybe as few as one third of the loans that need to be rolled over will find financing.

There is little money available to finance the construction of new hotels right now. Lenders don't want to get into this space when everyone is anticipating a large number of hotel properties to be foreclosed. Although capitalization rates on hotels as well as other commercial property types have fallen recently, it will take some time to see if we actually get a double top in Rates. Limited service hotels in marginal locations have been hit the hardest in the hotel motel space.

I have worked property tax appeals on hotels for many years. There is room for negotiation on the assessor's values even if capitalization rates are down this year compared to last. County appraisers are often undereducated on allocating a portion of the income stream to personal property as well as deducting for personal property replacement. Business startup costs are another expense item that can be used to account for the specialized personnel that work in a hotel and the technology and training that is needed. If you need professional assistance with your hotel property tax appeal, please contact us.

Zillow News – If You Can Believe It

Zillow, the much less than accurate, automated valuation model that everyone loves to play with reported that the number of US homeowners that owe more than their properties are worth climbed in the third quarter. The share of borrowers that are underwater rose to 28.6% or more than one out of every four mortgaged houses in the United States. Zillow said that the number increased because fewer properties are being foreclosed on by the banks. So there's our long-term solution! Just speed up the foreclosure process. Once the bank takes the house back it ain't underwater anymore!

CoreLogic a real estate research firm recently reported that the Atlanta metropolitan area showed a year-over-year decline in single-family home values of -7.8%. Of the 10 largest metropolitan areas only Chicago and Phoenix had higher year over year single-family home value declines. The Washington DC and New York City metropolitan areas are the only two of the top 10 metropolitan areas that showed a year-over-year increase in value.

If you are a homeowner in the Atlanta, Georgia Metro area and you don't think that your county tax assessor has been realistic about values in your neighborhood, then it's time to be proactive. The property tax appeal process isn't like fighting City Hall. The tax assessor's office expects property owners to appeal their real estate assessments. If you would like help from someone with experience both inside the assessor's office and outside of the assessor's office appealing tax assessments, please contact us for help with your property tax appeal.

A Wintery, Slippery Slope

Fitch Ratings service recently indicated that increasing numbers of foreclosures will add to the distressed housing inventory and will put further pressure on housing prices over the near-term. Of the huge number of delinquent home loans out there approximately 10% are moving into foreclosure now every month. Fitch went on to predict that housing prices will decline another 10% before they stabilize.

At the same time CoreLogic released data that showed that the year-over-year decline in residential real estate values in September was 4.1%. Of course, that number includes a lot of distressed sales but when you take out the distressed sales there was still a year over year decline in value of 1.1%. Due to the large number of delinquent residential mortgages that have not been processed because of the robo-signing scandal, the number of foreclosure properties coming to market will continue to stay high for months to come.

Separately, Clear Capital, which has their own housing price index reported that their year-over-year October reading was a -2.8% and they indicated that all data indicates a further negative path in home prices through this winter. If your County assessor is sitting on his or her hands and not doing anything with the values in your neighborhood, you should seriously consider a property tax appeal. If you need assistance with a property tax appeal or additional information please contact us.

Architectural Woes

The American Institute of Architects released a report where they concluded that the major issue which is preventing job growth in this country is a lack of debt financing for commercial real estate projects. I know this sounds kind of self-serving but they did note that one in five stalled projects are a direct result of financing issues and they did it knowledge that financing problems account for a higher share of stalled projects in the education and multifamily sector.

Separately, Trepp, LLC said that of the 11 banks that failed in October 65% of the non-performing loans were commercial real estate loans. The number of bank failures is up from September when there were six failures and August when there were seven failures. They noted that the slowing of the US economy seems to be having a negative impact on the banks as delinquency rates and the volume of troubled commercial loans has increased recently.

Here it Fair Assessments LLC we are saving our clients an average of 21% on their property tax assessments in 2011. If you would like help with your property tax appeal in 2012, please contact us. We are here to assist in will be happy to answer any questions you might have about our service.

Here Comes the Commercial Property

Everyone thinks that the residential real estate market is in the dumps and the commercial real estate market is in recovery mode. There have been commercial foreclosures over the last couple of years but most of those commercial mortgage sales came from a few banks and the Federal Deposit Insurance Corporation. Now more troubled loans are being worked by other lenders and servicers. Next year around $400 billion of commercial real estate loans mature. That is up from $375 billion this year and $250 billion in 2010 according to Deutsche Bank.

Each month billions of dollars of commercial real estate properties are falling into default. The delinquency rate for commercial mortgage-backed securities has remained high for much of this year and was 9.8% in October, one of the highest percentages ever. Many people think that we're going to see a lot more loans going into default over the next few years.

This is problematic for the property owners that are current on their mortgages as the investors buying distressed commercial loans and foreclosed properties are able to rent them at much lower rates and service the debt. That puts the owners that are still holding on to their old debt financing at a disadvantage. The pressure on rents has the potential of sending commercial property owners that are current into default. Commercial bond investors are suffering an average loan loss of 38% on property sold this year according to Deutsche Bank.

For more information on commercial property values and ammunition for property tax appeals please visit us at www.fair-assessments.com and for assistance with your property tax appeal, please contact us.

Apartments’ Silver Lining

The good times are rolling for apartment building owners, due to the millions of homeowners that are being displaced by the foreclosure tsunami. After being burned by declining home values many people are just choosing to rent rather than buy a smaller, cheaper home. Strong rent growth and high occupancy levels are pushing some apartment community values to record levels. Occupancy is now at its highest level since 2006. Third-quarter vacancy was 5.6%, down from 5.9% in the second quarter.

Retail Property Tax Appeals

The economy is roaring back if the October stock market has anything to say about it. Just two short months ago the economy was slowing, Europe was (and is) on the ropes, and we were just a shock away from recession. Now everyone seems to be convinced that we are (my Halloween analogy) whistling past the graveyard.

Consumer confidence is still residing in the basement however, and the number of pending home sales has been trending downward for the last three months. The savings rate has been trending down for three months also, and this has been somewhat evident in retail sales figures. Apparently the draw-down of savings has not gone toward house purchases.

Although the holiday season should give a boost to retailers and their landlords the retail real estate sector faces serious headwinds. According to CoStar, vacancy rates declined for the general retail, shopping center and specialty center property types. The vacancy rate rose for malls and power centers. The total retail vacancy rate dropped 10 basis points from 7.2 percent to 7.1%. The drop in vacancy for some property types appears to come at the expense of rental rates. The rental rates for all property types fell in the third quarter.

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