Welcome to the "Z" Team! Douglas and Bud Zeller

If you own a home in California, chances are the assessed value of your property just dropped. County assessors statewide are releasing this year’s property tax rolls – the total assessed value of all properties in a given county – and most are lower than last year. 

Sacramento County’s tax roll dropped nearly 2.2 percent to $128.8 billion. Yolo County’s is down about 1.9 percent. And El Dorado County and Placer County both saw the value of their taxable property drop more than 6 percent. The falling values represent good news for many homeowners, who will see lower property tax bills this October.

However, the second straight year of shrinking tax rolls is another blow to local governments that rely on property tax revenue to fund programs and services. 

“It’s a significant hit,” said Mike Applegarth, a principal analyst in El Dorado County. “It translates into people (losing their jobs). It takes people to deliver services.” 

Last year marked the first time most counties saw property tax rolls drop since voters approved Proposition 13 in 1978. That’s because the market value of many properties dropped below the assessed value. In such cases Proposition 8 – a tax measure passed as a companion to Proposition 13 – requires assessors to temporarily lower the taxable value of properties until the market value climbs again. 

Market values have continued to plummet, and as a result, most county assessors have continued to lower the taxable value of properties in their region. Sacramento County Assessor Ken Stieger’s office just lowered the assessed value of another 38,000 properties. In all, owners of nearly 154,000 Sacramento County properties are paying less in taxes because the market value is below the previous assessed value. 

This year, there is a second factor at work as well. Under state law, counties are allowed to raise property taxes by up to 2 percent a year as long as the overall cost of goods and services is rising – in other words, during periods of inflation. In a time of deflation – when the costs of goods and services are falling – they are required to lower property taxes. 

For the first time since 1978, that scenario is playing out. So even homeowners whose property is still worth more than when they bought it will see a quarter percent decrease from last year in its assessed value. That should amount to $2.60 less in taxes per $100,000 of assessed value, according to the State Board of Equalization. 

“It’s the first time ever since Proposition 13 and probably the last time in our lifetime,” Stieger said.

Article provided by Ken Calhoon, Broker in Placerville, California.

Home sales decreased 11.7 percent in February in California compared with the same period a year ago, while the median price of an existing home rose 14.1 percent, per the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).

“The federal tax credit for home buyers, low mortgage rates, and affordability at record levels have contributed to an unprecedented opportunity for many first-timers in the market for a home of their own,” said C.A.R. President Steve Goddard. “Although sales have declined from the unusually strong levels we experienced a year ago, they’ve remained above the 500,000 unit threshold for 18 consecutive months, while home prices continue to firm in the regions of the state most attractive to buyers taking advantage of today’s favorable market conditions.”

The median price of an existing, single-family detached home in California during February 2010 was $279,840, a 14.1 percent increase from the revised $245,230 median for February 2009, C.A.R. reported. The February 2010 median price decreased 2.4 percent compared with January’s $286,600 median price.

“Sales of distressed properties to investors and first-time buyers continued to drive the market in February, although at a lesser rate than a year ago,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “Supply continues to lag demand at the more affordable end of the market, with a 3.9 month supply of homes for sales priced below $300,000, compared with the long-run average of more than seven months. This contrasts sharply with the nearly 15-month supply of homes for sales priced at $1 million or more at the upper end of the market.”

Note: Large changes in local median home prices typically indicate both local home price appreciation, and often, large shifts in the composition of housing market activity. Some of the variations in median home prices for February may be exaggerated due to compositional changes in housing demand. The DataQuick tables listing median home prices in California cities and counties are accessible through C.A.R. Online at http://www.car.org:/marketdata/historicalprices/2010medianprices/feb2010medianprices/.