August 17th, 2011
Econintersect: Altos Research reported that municipalities are over-valuing homes for tax purposes.
Here’s a case example from my neighborhood in Davis, CA: 571 Jerome Street
$575,000 (Sold Price, March 2008)
$549,000 (Listed for Sale, June 2011)
$542,000 (Current List Price, August 2011)
$530,000 (Current Median Ask Price for all homes in this Price Quartile)
$447,000 (Current Zestimate; Range: $334-534k)
2010 Tax Assessment: $585,000
The last assessment was completed for 2010, using transaction data from 2009 when prices where in the $600,000 range:
Ask & Sold Prices since 2009: Second Price Quartile for Davis, CA, zip code 95616 (Price Quartiles are 25% price bands in local markets, providing a more precise analysis of "like" homes to a subject property)
The $585,000 valuation is clearly too high because:
- There’s been volatility and a downward shift of home prices in this community
- Market trends changes in this price quartile
- The property is currently for sale at $542,000 and hasn’t sold
Due to the low interest rates, mortgage applications are grew at 4.1% week-over-week according to the Mortgage Bankers Association (MBA) driven by refinancing mortgages.
“Unprecedented volatility in the stock market last week amid additional signs that the economy has slowed led to further drops in mortgage rates, with the 15-year rate reaching a new low for the MBA survey,” said Mike Fratantoni, MBA’s Vice President of Research and Economics. “Purchase application activity fell sharply over the previous week, likely the result of potential homebuyers hesitant to purchase in this highly volatile and uncertain environment.”
Fratantoni continued, “Refinance application volume increased substantially for the week, although there was substantial variation across the market. In September MBA’s Weekly Applications Survey will transition to an expanded sample that covers 75% of the retail market rather than the current sample that covers roughly 50% of the retail market. That expanded sample showed a significantly larger increase in refinance applications than the current sample, with some lenders reporting increases in refinance applications in excess of 50 percent for the week. The big differences in refinance volumes were likely driven by the decisions of some lenders not to drop rates last week, largely due to the need to manage their pipelines.”
Hat tip for the above graphic to Calculated Risk. The average interest rate for 30-year fixed-rate mortgages decreased to 4.32 percent from 4.37 percent, with points decreasing to 0.87 from 1.07 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.