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INFORMATION TO HELP EXPLAIN THE 2008 REVALUATION PROCESS (STATISTICAL UPDATE) AND NEW VALUES The New Hampshire State Constitution mandates that New Hampshire communities update their property values at least every 5 years. Since the last time Durham updated values was in 2003, the Town was required to do so this year. State law also requires valuations utilized by communities to be “full and true.” “Full” means that the values approximate 100% of market value. All assessing and appraisal work is done “as of” a certain date. The date for this effort is April 1, 2008. “True” means that the values are fair, that is, that the same methodology is used for everyone. In the very broadest sense, the goal of revaluations and property assessment in New Hampshire is to ensure that no taxpayer pays more or less than her/his fair share in support of the local (School, County, and Town) tax burden. Many Durham taxpayers are asking, “Since we are in a declining market (which we are), how can assessments go up?” The answer to this question is that the last town-wide update was done in 2003. Unless work was done to a property under a building permit, assessments for individual properties have not changed since then. The market reality in Durham is that since 2003, the community has experienced a net increase in value. From 2003 to early 2006, values increased, then leveled off in 2006 for a time, and then began to decline as the broader New Hampshire and national real estate market began to see a decline.
According to our assessing data base, the average sale price (89 sales) in our 2003 update period was $316,516. The average sale price for the 2008 update is $339,679 consisting of 75 sales. These numbers indicate a 7.3% increase in sales prices from 2003 to 2008. Given actual sales data, assessments which were in line with sales in 2003 need to increase at this time to meet our new sales reality in Durham in order to be “full.” Even given the continued real estate downtown in the United States over the last few months, the average sale price in Durham from July 2008 through September 2008 was $338,331 (24 sales).
As a concrete example of what has happened in the general residential Durham real estate market over the last five years, one specific Durham property has sold three times since 2003. In 2003 this parcel sold for $400,000 and the Town assessed it at $407,900. The parcel sold again in 2005 for $442,500. Finally, in May of 2007, it sold for $430,000, and the new 2008 assessment is $423,500.
In order to be “true” we have to analyze our market. What the Assessing Office has found is that not all properties have risen at the same rate. In other words just factoring up the 2003 assessments by 7.3 % would not be fair to all property classification types. Some specific types of properties have experienced a net increase that has been greater than others and some have actually experienced a net decline since 2003.
Generally speaking, older, smaller homes including pre-WWII residences with values totaling $350,000 +/- or less have retained their value to a greater degree than newer, higher priced homes. High end waterfront property has seen a net decline in value. Student housing properties have experienced a dramatic increase in value, indicated by higher sales (four separate sales involving 20 properties) and higher rents received. In 2003, the market value for multi-unit student housing properties was around $25,000 – $30,000 per bed. Recent sales indicate an increase in value ranging from $40,000 – $45,000+ per bed for 2008.
The Assessing Office’s analysis has included looking at relevant sales by style, quality of construction, size, age, assessed value and location. The basic methodology is to develop a model for all the sales. The Assessing Office looked at sales from January 2007 through September 2008, about 140 in all, in order to get a broader perspective concerning the overall real estate market in Durham. The model developed matches new assessments as close as possible to these actual sales, then transfers the rates, tables and factors from these sales to all the non-sale properties. This is done in a global fashion by our assessing computer software to ensure that every parcel is treated in the same way. The results meet universal assessing practice standards and are intended to be “full and true.”
The final increase to the taxable property base for 2008 is as follows:
2007 (Current) 2008 (Final) %increase
Residential $669,477,806 $702,171,406 5% Multi family $61,061,500 $94,682,000 55% Comm/ Indus $85,367,941 $92,222,034 8% _____________ ____________ Total Valuation: $815,907,247 $889,075,440
Many property owners have come in to meet with Assessor Robb Dix and have offered good information about their individual properties and about the town-wide results. The Assessing Office welcomed this information and used it to further refine results and make changes on individual assessments as appropriate.
Some of the results of the meetings with Mr. Dix were:
1. It was determined that most of the proposed assessments in the Wedgewood subdivision (Cutts Road, Ffrost Drive, etc.) exceeded the sales. Therefore a 5% deduction to the house value was given to every property in the subdivision. For the sake of fairness, it is important to apply the reduction to all properties within the subdivision and not just the sale properties. 2. For the same reasons as #1 above, market adjustments were given to house values on Stone Wall Way (-5%), Little John Road (-5%), and Edendale Lane (-10%). 3. When undertaking the initial sales analysis, it was found that land values were reduced on Sumac Lane and Laurel Lane sales. Unfortunately the same reductions were not applied to the other non-sale properties on those roads so that was corrected and applied to all properties. 4. Due to testimony from taxpayers it was concluded that larger, older homes were assessed too highly, so all older houses (pre-1940) received a uniform downward adjustment. 5. In the student housing segment land values increased based on a dollars per bed calculation of $20,000/bed. The Assessing Office solicited information before the update from multi-unit owners to see if our “bed counts” were correct but none were supplied. As a result of the hearings the Assessing Office did receive some more accurate information so values on specific individual properties were adjusted to reflect the correct number of beds. 6. Other assessments were changed on a property specific basis for reasons such as data corrections, requested visits to houses to verify inaccuracies, and previously unknown information which was brought to our attention.
As indicated above the average single family home assessment went up 5% while the multi-unit student housing stock and other commercial property increased by 55% and 8%, respectively. This produces what is called a “burden shift,” which occurs when one class of property increases in value to a greater degree than another. Thus the relative burden of taxation shifts. When the burden shifts one class of property pays more and another pays less.
Although the average residential increase was 5%, the total increase in taxable valuation has reduced the tax rate by approximately 5.5% which may result in some lower tax bills for residential properties. For comparison, the 2007 increase in the tax rate was 3.5%, 2006 tax rate increase was 4.2%, and the 2005 tax rate increase was 4.2%. TAX RATE IMPACT OF FINAL VALUES
By utilizing the new final 2008 property valuations generated to date by the Durham Assessing Office, the 2008 tax rate has been set at $26.67, an approximate 5.5% decrease.
To demonstrate the tax impact of the 2008 final values for an average household ranging in valuation from $250,000 - $350,000, with an assumed increase in property valuation of 5%, the Business Office has produced the following illustration showing that there would be an impact on actual taxes paid ranging from between ($59) to ($83).
In order to assist Durham property owners in better understanding the revaluation process, you will find below a number of frequently asked questions and answers. In addition, do not hesitate to contact the Durham Assessing Office at (603) 868-8065. WHAT CAUSES PROPERTY VALUES TO CHANGE? A property's value can change for many reasons. The most obvious is that the property changes. A bedroom, garage, or swimming pool is added, or part of the property is destroyed by flood or fire. But the most frequent cause of a change in value is a change in the market. If a town's major industry leaves, property values can fall dramatically. As deteriorating neighborhoods with good housing stock are discovered by young homebuyers, prices gradually rise, and then may soar as the neighborhood becomes fashionable. A shortage of detached houses or apartments in a desirable town neighborhood can send prices to extremely high levels. In a recession, larger homes may stay on the market for a long time, but more affordable homes are in demand, so their prices rise. In a stable neighborhood, with no extraordinary pressure from the market, inflation may increase property value. IF ASSESSED VALUE RISES, DO TAXES HAVE TO RISE? No. IF ASSESSED VALUE FALLS, DO TAXES HAVE TO FALL? No. HOW DOES VALUATION AFFECT WHAT YOU PAY AS PART OF YOUR LOCAL PROPERTY TAX BILL? School, County, and Town budgets decide how much money the property tax has to raise each year to pay for services offered. For illustrative purposes, we will use a figure of $1 million. Municipal assessors estimate the total assessed value of all taxable property in the community. For illustrative purposes, we will use a figure of $100 million. A tax rate is calculated by dividing the amount of tax to be raised ($1 million) by the total assessed value ($100 million): $1 million/$100 million = 1 percent. Therefore, if your home’s assessed value is $100,000, your tax bill would be calculated by multiplying the assessed value by the percent as determined above: .01 x $100,000 = $1,000. If the total assessed value in a community doubles to $200 million, and the amount to be raised stays the same, the tax rate would be calculated as follows: $1 million/$200 million = 1/2 percent. If your home doubles in value as a result of a revaluation, the taxes will be calculated as: .005 x $200,000 = $1,000 so there would be no change in taxes. IF YOU ARE CONCERNED WITH YOUR VALUATION, WHAT INFORMATION WOULD BE HELPFUL TO SHARE WITH THE ASSESSING OFFICE?
THE CONNECTION BETWEEN PROPERTY TAXES, VALUATIONS, AND SPENDING?
HOW PROPERTY IS APPRAISED
1.
Sales
comparison approach
2.
Cost
approach
3.
Income
approach
WHY ASSESSED VALUES MAY CHANGE FROM YEAR TO YEAR
ASSESSED VALUE AND THE TAX RATE
WHAT ARE YOUR RIGHTS AND RESPONSIBILITIES?
THE ABATEMENT PROCESS
If, after meeting informally with the Town Assessor as part of the ongoing revaluation (statistical update) process, taxpayers still believe that their property is inequitably assessed, they may formally apply for a property tax abatement. The time period for filing a tax abatement application is AFTER the issuance of the final tax bill (generally sent out in November) and ON OR BEFORE the following March 1st. It is the taxpayer's responsibility to provide documentation in support of an abatement request. Forms are available at the Town Hall, or follow www.state.nh.us/btla/ to the forms. PROPERTY TAX EXEMPTIONS AND CREDITS Applications for Exemptions and Tax Credits are available in the Durham Assessor's Office, and must be filed by April 15th preceding the notice of tax. For more information regarding application procedures and definitions, contact the Assessor's Office or refer to New Hampshire Revised Statutes Online.
Exemption
for the Disabled
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| 2008 property values are now available for comparson and viewing. Find a house by looking up a block/lot number, address or name. To do a search, just click on the binoculars button after you've opened the PDF document you're interested in, and type the information in the search box. (Note: You'll need Adobe Acrobat Reader to open these files.)
Assessment Update Property Sales Information:
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Original Web site by Dawn Boyer Design.
Revisions made by Luke Vincent.