Metro area home values on upswing
Residential property assessments are up in all three Metro Detroit counties — nearly 12 percent, on average, in Oakland and Macomb counties and about half that in Wayne.
The good news is a higher assessment probably means a property can fetch more when it's sold, since by law the assessed rate is supposed to be half of the market value.
However, since assessments are the basis for property taxes, tax bills will go up by the rate of inflation — which the federal government says was 1.6 percent in 2014. But if a house is sold, the taxes will catch up to the full assessed value — which in some cases is substantially more than the current owners are paying.
Preliminary figures, subject to final approval by county review boards in April, show residential assessed values in Oakland are up an average of 11.64 percent countywide in 2014, 11.63 percent in Macomb and 5.67 percent in Wayne.
Real estate professionals say it's little surprise assessments are up in many communities, because selling prices, along with the region's economy, are improving after collapsing several years ago. Many homeowners found that their houses were worth substantially less than they'd paid for them during the earlier real estate bubble. Their properties were worth less than what they still owed on them, or "under water."
Karen Kage, CEO of RealComp II Ltd., a Farmington Hill multiple-listing service, said the steady rise in local sale prices began in 2013.
"In 2014, each month we saw a rise in prices," she said.
Mitch Tomaszewski, who recently put the Clinton Township home he built two years ago on the market, wants to take advantage of the upswing.
"It is a great time to sell a house, especially with interest rates as low as they are," said Tomaszewski, 26. "Hopefully, when I build the next one, the interest rates will still be low."
Steve Mellen, Macomb County equalization director, concurred with Kage.
"There was one point in time when 80 percent of our units were going down in value just a few years ago," he said. "Then it was 40 percent, then last year 20 percent and now there are none going down. They are all going up.
"Over the past three years, they have made the transition from not so good to being on the right side of the ledger sheet."
Commercial and industrial assessments are also going up, albeit moderately, around 2 percent on average, said Dave Hieber, Oakland County equalization manager.
"That is the first increase that we have seen in commercial and industrial since 2007, so that is kind of a milestone for us."
In Macomb, commercial assessments are up 7.77 percent and up 7.47 percent for industrial property.
Hieber and Mellen said the increases are due, in part, to a decline in foreclosures in both counties.
Countywide, average home assessments in 2013 were up 8.38 percent in Oakland, 4.78 percent in Macomb and 1.46 percent in Wayne.
The state Constitution, through Proposal A, caps the increase in assessed values for taxable purposes to 5 percent or the rate of inflation — whichever is less. In Riverview, for example, that means that while the assessment jumped 20.95 percent, tax bills for homeowners still will be up just 1.6 percent. When properties sell, however, new owners pay taxes on the full, revised assessed value.
Listings get multiple offers
Dave Henderson of Real Estate One in Troy said that after the 2008 housing crash, 70 percent of the homes offered for sale were foreclosures or short sales.
"Last year, it was the exact opposite but equally as difficult because you found a home for somebody but there were maybe two or three other people bidding on the home," Henderson said. "It made prices skyrocket. It went from a buyer's market to seller's market practically overnight."
Henderson said he anticipates 2015 will bring the same.
"Last year, you put a house on the market you were getting close to asking price if the house was in good condition. I sold two homes over asking price because there were multiple offers.
Jean VanOosterwyk of RE/MAX First and who worked out of the company's Clinton Township office said even with the snow people are calling.
"The number of homes on the market is less, about 18 percent less than they were before," VanOosterwyk said. "If I am going to list a house now and it is clean it is selling within a few weeks."
'Good news for residents'
In Oakland County, Hieber said a home with a market value of $200,000 would see a $45-$50 increase in 2015 tax bills, on average, based on the assessed value, which is half of market value.
"The main positive property owners are seeing (is) increases in property value, and many times your home is your largest asset and it is nice to have that go in a positive direction as opposed to where we have been," Hieber said.
Madison Heights had the largest community leap in assessments in Oakland County: nearly 16 percent.
"It is good news for residents. This is the first time we have had a positive increase in years," Melissa Marsh, deputy city manager of Madison Heights.
The city will be able to tax residential properties an additional 1.6 percent but Marsh said that's better than a decline. Madison Heights had fallen each year for the past five.
It's also good news for municipal budgets. An increase in property taxes means more money for local government services and employee wages.
The smallest assessment increase in Oakland County was in Fenton at 6 percent; Royal Oak Township was down 0.62 percent.
In Macomb County, several communities are seeing double-digit increases, with Sterling Heights leading the way at 15.29 percent and Lenox Township at 15.26 percent. Memphis had the smallest increase at 1.81 percent. In no Macomb community did assessments decline.
Mellen said under Proposal A, everybody in the county will see at least a 1.6 percent increase in property taxes. For the owner of an average home with an assessed value of $100,000 that means between $50 and $75 more in taxes annually. The increase will be reflected in July 1 and Dec. 1 tax bills.
Detroiters to save on taxes
In Wayne County, the average assessment increase is projected to be 5.67 percent. Riverview had the largest jump, at 20.95 percent. Conversely, River Rouge saw a decline of 26.65 percent. Detroit's home assessments fell 9.7 percent.
Last week, Detroit Mayor Mike Duggan announced that he was going to cut residential assessments from 5 percent to 20 percent. Duggan said the reduction was in response to longtime complaints that Detroit property was overvalued. The cuts will mean residents will pay an estimated $10 million to $15 million less in property taxes, city officials say.
"Detroit's housing market is doing quite well, all things considered," said Kurt Rankin, an assistant vice president and economist for PNC Bank in Pittsburgh.
He points to a couple of encouraging signs: Building permits for new residential homes in the area have been up every single year since the recovery began and there are plans in place to address blighted properties.
Rankin said it's a good time for people thinking of buying a home in the area to do it.
"The recovery has been kind to Detroit and it's expected to continue," he said. "Detroit's economy is going to continue to grow from here. I think all of the signs coming out of bankruptcy for the city are positive that Detroit is going to be a more stable economic and political environment in the coming years."
Rankin said whether it's the right time for anyone to sell a house depends on each owner's situation.
"There are plenty of mortgages that are probably still under water and values that just haven't recovered, depending on where exactly they are," he said. "So it's more based on each individual than just saying it's a good time to sell in the Detroit area."
Staff Writers Charles E. Ramirez and Christine MacDonald contributed.
To challenge your property assessment
■Call your community's assessor's office to schedule an appointment with the board of review. Boards typically meet in March.
■Obtain an appraisal record from your community to ensure the assessor's office has the correct information on your property.
Property owners may appeal local board of review decisions to the Michigan Tax Tribunal. To contact the tribunal, call (517) 373-4400 or visit www.michigan.gov/taxtrib
Source: Detroit News research