I just got my new appraisal from the county in the mail. In the 6 years since we bought our home, the value has dropped about $80,000. Not good news for someone wanting to sell so as to upgrade to a bigger lot and shop.

The obvious question is who is to blame? The Dems or repubs? Bush or Obama? Those who walked away from their mortgage and foreclosed? Myself for buying when the market was abnormally high?

My buddy just sold his place and relocated to Ephrata. His place sold in a matter of weeks because he bought a few years earlier when the market was normal and so he actually did okay. Mine has been on the market for several years and I'm pretty much convinced to take my "For Sale" sign down.

At this point, it will be faster to save up for a new down payment on a new place and rent my old one out (always renters available in a college town) before the market turns around and I can recover my so-called investment.

The economy sucks right now but I guess I'm glad for a job I like and a family I love.

Tax assessed value (TAV) and market value are two entirely different animals. At one time we (my small bank) were allowed to rely upon TAV as a proper valuation when using real estate for loans. The valuations we have received from actual third party appraisals show that the values determined by the county are way off. In Grays Harbor County, most TAV's have been higher than the market value.

Dogfish is spot on here. Your assessor uses computer models and while they also review recent sales, they don't try to match apples to apples. They don't have to so they don't. Furthermore, it isn't in their best interest to drop their value determinations because it takes dollars out of the county coffers.

Aunty you crack me up.

"The obvious question is who is to blame? The Dems or repubs? Bush or Obama? Those who walked away from their mortgage and foreclosed? Myself for buying when the market was abnormally high?"

You want the truth? All of them is the correct answer. There are a few more players that had a hand in the mess as well. The snow ball was started down the hill in 1989 when the Clinton Administration pushed hard for a lessening of regulations that allowed Fannie and Freddie to guarantee loans that were higher risk. This was passed in a bi-partisan vote in Congress as every politician liked the idea. Along the way many other things happended to get us where we are today but that was the start of the mess.

It would not have been me appraising land in Mason County. It takes way more money to get me to go out there then lenders or AMC's want to pay. The "crack up" is when you say "too many people purchased 5 acre parcels near us that paid way more than what the property was really worth and some appraisers somewhere did a piss poor job IMO." Do you have any real facts to back that up?

The very simple definition of what something is worth is "what someone is willing to pay for it". In the case of a purchase transaction with a mortgage or loan involved, by the time the appraiser is on scene, the value of the property has been established by the seller and buyer. The appraiser in essence is confirming that the property is actually a sound investment for the lender as that is his/her client. The seller and buyer are not the appraiser's client and determining the outcome for those two parties isn't a part of the process.

All that being said, IMO the hardest appraisal to perform is Vacant Land. It should be pretty easy, its just a chunk of dirt. However, there are never enough comparable sales to review, obviously zoning factors in as do available utilities. Throw in a view of water or mountains, or even some salt water frontage and you have yourself a rocking good time.

BTW, assuming you are on Harstine Island, Multiple Listing Service reports that there has been 2 sales of 5 acre parcels on the island in the previous 2 years. 1 sale is from 12/2009 and sold for $50,000 with cash. The other sold 7/2010 for $74,900 with Conventional financing. No sales of 5 acre parcels occurred during the previous 12 months that sold through the NWMLS. There were 13 total vacant land sales on the island during the previous 2 years and 5 of those occurred during the previous year.

There is a sale on E. Harstine Is Rd of a 2 acre parcel that just sold in 8/2011 for $50k.

Aunty,
I think I mentioned a while back that Mason County assessments were a joke. You should protest it and see what they used to come up with their values.

DaveD,
Do you have any equity. If you do or are close, you should see if you can find what you are looking for. Usually within the same market the higher priced properties have fallen more then the lower priced ones. This isn't true everywhere, but if it applies to your area you should be buying now. What this means for you is that even if you lose money from what you paid you can still come out ahead. Imagine if prices stayed the same. Ex. Your house is worth $200,000 and the one you want is $300,000. Now the market has fallen and your's is worth $140,000 and the desired one is $220,000. Yours fell $60,000 but the new one fell $80,000. By buying now you actually come up $20,000 over the old prices plus have lower loan and closing costs. Even if you need to finance part of your loss, you still should come out even or better than you would have in the old market. If you are moving down, of course, the exact opposite could be true.

In the past, many people I met used to tell me how they couldn't sell and rebuy because the new homes were so expensive. Of course they would fail to take in consideration how much their existing home had gone up in value. In the end, as long as you are moving within the same market its all relative.

Can we blame the Boldt Decision too?

Well I would think so...not exactly sure how that is calculated but I know we put 20% down and we have been paying more than our actual mortgage since taking ownership so even though the appraisal has gone way down, it is still about the same as our remaining mortgage balance. What you are saying makes sense; however, we want to build and it seems more difficult to go that route than just buying something already complete.

Besides, if I were to get a bigger place, I would immediately want to go out and get a jet sled to fill up my shop.

DBA,

You posted above, "The snow ball was started down the hill in 1989 when the Clinton Administration pushed . . ."

A minor but important correction sir, the Clinton administration began in January 1993 until January 2001. Details, details.

Sg

Salmo, there is a typo there, it was 1999, not 1989.

Here is a link to a NYT article that explains the deal and one of the individuals quoted in the article is pretty prophetic. I'm pretty sure I have put this up in the past, but it is a good refresher.

NY Times

Just curious about Harstine Island:

If you and the Hubby decide to "Put on the Ritz" and go see a "talkie," how long does it take to get to a movie theater?

And I mean one with a roof and seats, not one where you have to dial in the sound on the radio mounted on your flivver.

My assessment went up and I thought this isn't right. Property values have taken a serious dip here.

I go down to the Courthouse (hear you actually get good service). The employee explains that part of valuation is based on what it would cost in materials to build the same home today. Meaning, lumber and everything else that goes into the house has risen in price so that contributes to the higher assessed value. The other part is based on sales and they hand me a ream of sales info that is pertinent to my area, but I don't find anything that seems to compare with my house.

Hardly anyone is successful here appealing their assessment. How can you, when the deck is stacked.

Mike, they fed you a load of crap. Assessor's don't use the cost of materials to figure out a property's value and even if they did, that is the least effective method there is. Even though the cost of materials has gone up, there is still depreciation to be calculated.

Cost approach is common with new construction. Sales approach after that.

I'm in southern Thurston and been at the same place for 18 years. While there has been some ups and downs in the taxed value I haven't really seen it as being that far off. Mine went down 15k this year. If that were to hold true in a regular assessment it would screw me in trying to refinance because of the LtV.

Cost Approach does work well for New Construction and Manufactured Homes. However, Sales Comparison approach is much more effective way to value a property and I would be shocked if the Assessors are really taking the time to value each property by the cost to construct and then calculating the depreciation for said property, particularly when they only drive by the properties and actually physically inspect a handful.

Cost approach may be used to show a "value in use", but it doesn't represent the market or sales approach value. Cost approach is also usually thrown out in the case of older structures, as the cost to rebuild doesn't pencil out when you figure in the accumulated depreciation and remaining effective useful life of the improvements.

Two homes, one 5 years old, and one built brand new, same amenities and size, would likely appraise for the same value, regardless of the cost of construction. TAV might be different, but at the moment there is very little entrepreneurial profit benefit when building a new home. Your better value right now is to buy an existing home, with very few exceptions. Building your own home will likely cost you more right now than youcan buy the same home for, especially if you contract it all out.

(Sorry, I do appraisal reviews for my bank)

DBappraiser is also spot on when he says that the appraiser doesn't determine the selling price for a home. In an arms length transaction with a willing buyer and seller, they are the ones who determine the selling price of the property. The job of the appraiser is to determine the value of the home based on comp sales and directions of their client.

It's Oregon for me but the tax assessment for 2011 went right down to what I paid for it when we bought it from the bank.