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Home My WebLink AboutCity Council Packet 04-08-1998 BOEAGENDA 1998 BOARD OF REVIEW APRIL 8,1998 7:00 PM Plymouth City Council Chambers I. City Assessor's Report II. Public Comment 1998 BOARD OF REVIEW LETTERS Letter #1. Jeff Segal Letter #2. Richard Hannah Letter #3. Carol B. Neumann Letter #4. Sandra B. Steinman Letter #5. Doris Campbell 11325 42nd Place. N 16005 45`h Ave N. 1295 Zircon Lane N. 12500 45`h Ave N. 13902 Sunset Trail 14-118-22-14-0053 17-118-22-11-0048 31-118-22-22-0039 11-118-22-33-0056 34-118-22-32-0020 v y fi'n' 3'c' i9F k.fi < ar'n 5r wq i. PLNI/rM" iP. 5 i i 7 a'st ti z 1 r mat a` ` `•` a +'Y+"s T*' ' ^ tis. ,a s a 3 Yk I.X s 7' K y 3^ r4 rfCsav d 3 Y T DATE: April 8, 1998 TO: Plymouth Board of Review FROM: Nancy D. Bye, City Assessor% SUBJECT: 1998 BOARD OF REVIEW Attached for your review, is a report on the 1998 Assessment. The report introduces you to the statistical measurement and general information the assessing staff utilizes in determining values for the annual, January 2 Assessment. This will hopefully make your job as a member of the Board of Review easier to understand. The purpose of the Local Board of Review is to hear testimony from property owners on their objections to the Assessor's 1998 estimated market value or property classification. This may be done in three ways: (1) in person, (2) in writing, or (3) by the property owner's representative. The Board of Review is not empowered to adjust taxes, but only deal with the 1998 estimated market value or classification questions. At the conclusion of the meeting the Board of Review will recess, and will reconvene on April 22, 1998 at 7:00 p.m. Decisions on all appeals will be made at that time based on staff reports and information submitted. Please read through the information and feel free to contact me with any questions or comments you may have before the Board convenes. Extension #5351. MEMO/5026/NANCY I TABLE OF CONTENTS DESCRIPTION PAGE # LOCAL BOARD OF REVIEW AUTHORITY 1 1998 BOARD OF REVIEW SUMMARY 2 INTRODUCTION TO THE 1998 ASSESSMENT 4 INTRODUCTION TO PLYMOUTH ASSESSING DIVISION 8 1998 ASSESSMENT STATISTICS 9 ASSESSMENT TERMINOLOGY 10 1998 SALES RATIO STUDY 16 DISTRIBUTION OF MARKET VALUE 17 SINGLE FAMILY HOUSING BREAKDOWN 18 1998 ASSESSMENT SALES STATISTICS 19 RESIDENTIAL VALUE DISTRIBUTION 20 APPEAL PROCESS 22 PROPERTY TAX SUMMARY 23 LAKESHORE STUDY 28 ADDENDUM 29 LOCAL BOARD OF REVIEW AUTHORITY Minnesota Statutes, Section 274.01, provides that the council of each city shall be or appoint a Board of Review. The Plymouth City Charter requires that the City Council act as the Board of Review. Assessments of property are made to provide the means for the measuring of the relative share of each taxpayer in the meeting of the costs of local government. It is the duty of the Assessor to assess all real and personal property except that which is exempt or taxable under some special method of taxation. If the burden of local government is to be fairly and justly shared among the owners of all property of value, it is necessary that all taxable property be listed on the tax rolls and that all assessments be made accordingly. The authority of the local board extends over the individual assessments of real and personal property. The board does not have the power to increase or decrease by percentage all of the assessments in the district of a given class of property. Changes in aggregate assessments by classes are made by the County Board of Equalization. Although the local board has the authority to increase or reduce individual assessments, the total of such adjustments must not reduce the aggregate assessment made by the Assessor by more than one percent of said aggregate. If the total of such assessments does lower the aggregate assessment made by the Assessor by more than one percent, none of the adjustments will be allowed. This limitation does not apply, however, to the correction of clerical errors or to the removal of duplicate assessments. In reviewing the individual assessments, the board may find instances of under valuation. Before the Board can raise the market value of property, it must notify the owner. The law does not prescribe any particular form of notice except that the person whose property is to be increased in assessment must be notified of the intent of the board to make the increase. The Local Board of Review meetings assure the property owner an opportunity to contest the valuation that has been placed on his/her property or to contest or protest any other matter relating to the taxability of his/her property except the tax. The board is required to review the matter and make any corrections that it deems just. 1 1998 BOARD OF REVIEW SUMMARY This past year there were changes in estimated market value of most properties located in Plymouth. Some of these value changes range from general city wide increases to substantial increases due to locational market activity. Average percentage increases in valuation are as follows: Property Type Residential Residential Lakeshore Condominiums Townhomes Apartments Commercial/Industrial Value Percent Change 2% 2% 3% 2.5% 13% 9% Exceptions to the above market value changes would include new construction, quartile areas, reappraisals, and/or other market adjustments. The condominium and townhouse market, after being flat for a number of years, continues to be a rapidly appreciating market. This is based on the aging baby boomers and the demand for maintenance free living. On March 2, 1998 estimated market value notices were mailed to all Plymouth property owners. State law provides that the assessment shall be an annual assessment with all property in the taxing jurisdiction re -valued to its market value every January 2nd. For the fourth year in a row, the city had a near record breaking number of building permits. This does not include the 5,443 quartile parcels that had to be reviewed and reappraised and the 780 exempt properties that needed to be revalued in 1997. Continued administration of legislative changes required considerable added staff time to maintain. With an ongoing conversion of our computerized system for property appraisal, certain workloads were increased. A new property control system required extensive staff time in verifying the accuracy of the converted data. Our computerization of the assessing function of Plymouth continues to be one of the most progressive and sophisticated systems that exists in the State of Minnesota. The excellence and quality of the 1998 assessment is a direct result of this computerization. 2 The assessment just completed for 1998 represents many hours of staff research and time. We feel confident the 1998 assessment is fair and well equalized throughout the City of Plymouth. Respectfully submitted Assessing Department Staff INTRODUCTION TO THE 1998 ASSESSMENT The 1998 Assessment affects all the property owners of Plymouth. As required by current state law, the Assessor is required to reassess all property every year. State Statute reads: "All real property subject to taxation shall be listed and assessed every year with reference to its value on January 2 preceding the assessment." This has been done and the owners of property in Plymouth have been notified of any change. Minnesota State Statute 273.11 reads: "All property shall be valued at its market value." It further states that "in estimating and determining such value, the Assessor shall not adopt a lower or different standard of value because the same is to serve as a basis for taxation, nor shall he adopt as a criterion of value the price for which such property would sell, or in the aggregate with all the property in the town or district but he shall value each article or description of property by itself, and at such sum or price as he believes the same to be fairly worth in money." The statute says all property shall be valued at market value. This means that no factors other than market (such as economics, personalities or politics) shall affect the Assessor's value and the subsequent action by the Board of Review. Market value has been defined many different ways. Simply stated, it is "the highest price estimated in terms of cash which a property will bring if exposed for sale on the open market by a seller who is willing but not obligated to sell, allowing a reasonable time to find a purchaser who is willing but not obligated to buy, both with knowledge of all the uses to which it is adapted and for which it is capable of being used." The real estate tax is an ad valorem tax which is based on the value of property and not on the ability of the property owner to pay. The values placed on all real estate in Plymouth are based on the amount of land and the improvements upon the land, while no consideration is given to who owns the land. The 1998 Assessment (not the 1998 taxes) reflects an increase of 8.3 % overall valuation over the 1997 assessment (including new construction, quartile adjustments, and/or market adjustments). This can be demonstrated as follows: 1997 TOTAL CITY VALUE 1998 TOTAL CITY VALUE PRELIMINARY) 4,137,400,500 4,481,213,100 Total Value Increase: 343,812,600 8.3% Value of New Construction: 139,468,700 3.4% Appreciation of Existing Property: 204,343,900 4.9% 4 Sheet1 TOTAL PERCENT VALUE GROWTH OF PLYMOUTH 5 12.00 z'. i iV 10.00 AIR fix, x y g 008.00- 6.006. 0 0 My, a k r4.00 F 2.00 - ow r r 0.00 ppr%^ r 1992 1993 1994 1995 1996 1997 1998 YEAR 5 1998 ASSESSMENT INTRODUCTION During this past year, our staff has concentrated on collecting field data on a property card. Once collected the data was entered into and calculated by the computer system The output is then analyzed for accuracy and parity. Those areas of the city that equal 25% of all existing properties have been physically reviewed during 1997 and represent over 5,400 parcels, excluding 2,075 building permits. This is commonly referred to as the "Quartile". In the areas of re -inspection, new items that previously were not on our records were added, or where applicable, deleted. 68% of all homes reviewed were internally inspected. This year, again, a preliminary sales study was analyzed, prior to placing a final value on each property inspected. Plymouth's preliminary residential median ratio entering the 1998 assessment was 91.2%. This is determined by Hennepin County comparing the January 2, 1997 estimated market values to sales occurring from October 1, 1996 through September of 1997. The average residential increase for the January 2, 1998 assessment was 2%. This was determined by comparing the January 2, 1998 estimated market values to the same sales, thus establishing the 1998 estimated market values at a median sales ratio of 93.8. and a mean ratio of 93.7 with a coefficient of dispersion of 6.0. In accordance with the results of this sales study, certain areas of the city, certain styles of houses and certain sizes of houses were adjusted in value, either lower or higher than the original value, to more properly reflect actual market values. The average sale price of existing housing stock in the City in 1997 was $192,800. This is extracted from the Hennepin County Ratio Study of all arms -length transactions involving single family homes. The average sale price of new construction for 1997 was 296,178. Lakeshore in Plymouth was adjusted according to the sale activity on the Jakes in general as well as the individual sale activity of various neighborhoods around the lake. The average lakeshore property received an increase of approximately 2%. The average sale price of existing lakeshore property in 1997 was $272,900. Various townhouse and condominium complexes were adjusted according to market activity as well as studies to determine if the number of bedrooms per unit affected the sales prices. The average increase to the townhouses was 2.5% and 3% to condominiums. The sale activity of condominiums and townhouses was brisk in 1997. The market was strong on existing townhouses ranging from $80,000 to $150,000 and existing condominiums ranging in sale price from $60,000 to $100,000. Newly constructed townhouses average sale price was $245,428 in 1997. Newly constructed condominiums in 1997 sold on a average of $185,341. 0 1 Commercial/Industrial property values increased an average of 9% from 1997 to 1998. This increase was due to several factors: market sales, increasing rents and profits to owners, economic recovery which has created demand for new construction. The one year property growth does not represent the rate of inflation of the Consumer Price Index. 1998 Apartment property values increased an average of 13% from 1997 to 1998. The factors contributing to this increase were the market activity, increase in rents and the very low vacancy rates in Plymouth. The Legislature in its 1993 session passed a law imposing a limit on how much an assessor's estimate of market value is permitted to increase from one year to the next. Under the law, assessors are required to continue to estimate the market value of all properties. However, the law requires the use of a limited market value for purposes of determining property tax bills. Approximately 1100 parcels in the city qualify for a limited value. These properties are taxed on their limited market value, not their estimated market value. The value we place on the property is accomplished only after we have conducted thorough studies in the market place. Costs of replacement are checked with builders in the area, as well as cost manuals that are available, which are put together by experts in the field of building and appraising. Sales of property are constantly analyzed to see what is happening in the market place. The assessors/appraisers do not create value, they only measures its movements. Assessing property values equitably is partly science, partly judgment, partly communication skills, and largely a mystery to many property owners. Add to that the fact that property construction, financing and ownership are more complex today than ever before and the task becomes more difficult. Training cannot tell us how to find the "perfect" value of a property, but training can consistently produce the same estimate of value for identical property by different assessors. That, after all, is a working definition of equalization. The following pages contain information that hopefully will inform you and make your job as a member of the Board of Review a more productive one. 7 1998 ASSESSMENT STATISTICS Total City Parcel Count (01-02-97) 21,511 Total City Parcel Count (01-02-98) 21,775 Parcel Count Per Appraiser 1997 Assessment 4,302 Parcel Count Per Appraiser 1998 Assessment 4,355 Assessor's Industry Standard per Appraiser 3,000 1997 Total Estimated Market Value $4,137,400,500 1998 Total Estimated Market Value (Preliminary) $4,481,213,100 1996 to 1997 Total City Valuation Growth +9.7% 1997 to 1998 Total City Valuation Growth +8.3% 1996 Total Building Permits 2,216 1997 Total Building Permits 2,075 1996 Plymouth's Average Home Sale Price $190,300 1997 Plymouth's Average Home SaFe Price $192,800 1997 "Median" Sales Ratio (Assessment Level) 93.5% 1998 "Median" Sales Ratio (Assessment Level) 93.8% 1998 Hennepin County "Median" Sales Ratio 94.0% 1997 Coefficient of Dispersion (Assessment Accuracy) 5.80% 1998 Coefficient of Dispersion (Assessment Accuracy) 6.00% 1996 Approximate Number of Sales (including new construction) 1997 Approximate Number of Sales (including new construction) X 1,700 1,600 I ASSESSMENT TERMINOLOGY AD VALOREM TAX - A tax varying with the value of a good or commodity; a real estate tax based on the value of the property. APPRAISAL - An estimate or opinion of value. The act or process of estimating value. The resulting opinion of value derived from the appraisal may be informal, transmitted orally; or it may be formal, presented in written form. Usually it is a written statement setting forth an opinion of the value of an adequately described property as of a specified date, supported by the presentation and analysis of relevant data. APPRAISER - One who estimates value; specifically, one who possesses the necessary qualification, ability and experience to execute or direct the appraisal of real property. CAPITALIZATION - The process of converting into present value (or obtaining the present worth of) a series of anticipated future periodic installments of net income. In real estate appraising, it usually takes the form of discounting. CAPITALIZATION RATE - The sum of a discount and a capital recapture rate. It is applied to any income stream with a finite term over which the invested principal is to be returned to the investor or lender. CITY MARKET VALUE RATE - Established in 1996 (payable 1997 taxes) as a direct computation against the market value to offset the purchase of open space for nature areas and trails. CLASS RATE - Statutory percentage applied to the estimated market value of a parcel based on the parcel's classification. Formerly known as tax capacity rate or percentage. CLASSIFICATION OF PROPERTY - The classification of property after the valuation is complete to identify the property as residential, commercial, homestead, non - homestead, etc. Each class refers to a different statutory assessment rate. It is based on the use as of the assessment date. COEFFICIENT OF DISPERSION: (Assessment Accuracy) - In statistics, the measure of absolute dispersion to an appropriate average. A measure of relative dispersion. Sometimes referred to as an "index of assessment inequality". Under 10% is in the excellent range. COST APPROACH - That approach in appraisal analysis which is based on the proposition that the informed purchaser would pay no more than the cost of producing a substitute property with the same utility as the subject property. It is particularly 10 ASSESSMENT TERMINOLOGY (continued) applicable when the property being appraised involves relatively new improvements which represent the highest and best use of the land or when relatively unique or specialized improvements are located on the site and for which there exist no comparable properties on the market. DEPRECIATION - A loss of utility and hence value from any cause. An effect caused by deterioration and/or obsolescence. There are several types of depreciation. PHYSICAL DEPRECIATION - A reduction in utility resulting from an impairment of physical condition. For purposes of appraisal analysis, it is most common and convenient to divide physical deterioration into curable and incurable components. PHYSICAL CURABLE DEPRECIATION - Physical deterioration which the prudent buyer would anticipate correcting upon purchase of the property. The cost of effecting the correction or cure would be no more than the anticipated addition to utility, and hence ultimately to value, associated with the cure. PHYSICAL INCURABLE DEPRECIATION - Physical deterioration which in terms of market conditions as of the date of the appraisal is not feasible or economically justified to correct. The cost of correcting the condition or effecting a cure is estimated to be greater than the anticipated increase in utility, and hence ultimately in value, of the property that will result from correcting or curing the condition. FUNCTIONAL DEPRECIATION - Impairment of functional capacity or efficiency. Functional obsolescence reflects the loss in value brought about by such factors as over capacity, inadequacy and changes in the art, that affect the property item itself or its relation with other items comprising a larger property. The inability of a structure to perform adequately the function for which it is currently employed. ECONOMIC OBSOLESCENCE - Impairment of desirability or useful life arising from factors external to the property, such as economic forces of environmental changes which affect supply -demand relationships in the market. Loss in the use and value of a property arising from the factors of economic obsolescence is to be distinguished from loss in value from physical deterioration and functional obsolescence, both of which are inherent in the property. Also referred to as Location or Environmental Obsolescence. 11 ASSESSMENT TERMINOLOGY (continued) EDUCATION HOMESTEAD CREDIT - The new education homestead credit reduces school district taxes on residential homesteads and on the house, garage and one acre of land for farm homesteads. The funds go directly to the state determined general education fund of each school district. ESTIMATED MARKET VALUE - The value which the Assessor has estimated the property to be worth. EQUALIZATION - The adjustment of assessed valuation of real property in a particular area to establish a more equitable division of the total tax burden within the area. FISCAL DISPARITIES - Program which provides for the sharing of 40 percent of the growth of the commercial/industrial tax base in the seven county metro area since 1971. A percentage of the property tax on each commercial/industrial parcel is calculated at the seven county uniform rate. GEOCODE NUMBER - A geographically related parcel numbering system. The number contains thirteen digits made up of section, township, range, quarter -quarter and parcel. The first seven digits, based on the public land survey, geographically locate the section in which the property is located. The next two digits will designate in which quarter - quarter the property is located. The ten through thirteen digits indicate the parcel within the quarter -quarter. The parcels will be numbered consecutively beginning with 0001. When a division is made, the next consecutive available number(s) will be assigned, and the old number(s) will be retained for historical data. GROSS TAX CAPACITY - A parcel's estimated market value multiplied by the gross class rate for that type of property. Formerly known as assessed value. HIGHEST AND BEST USE - That reasonable and probable use that will support the highest present value, as defined, as of the effective date of an appraisal. HOMESTEAD AND AGRICULTURAL CREDIT AID (HACA) - Replaces homestead credit and agricultural credit. The state gives this aid directly to the local units of government. HOMESTEAD FULL YEAR - Property is granted a lower assessed value if the owner lives in and owns the property as of January 2. If a person owns and occupied their home up until December 1, they receive a mid year homestead which carries the full homestead benefits payable the following year. For example, the January 2, 1997, classification affects the taxes payable in 1998. 12 ASSESSMENT TERMINOLOGY (continued) NON -HOMESTEAD - Residential property that does not qualify for a full year or half year homestead. The tax capacity is higher, hence a higher tax. INCOME APPROACH - That procedure in appraisal analysis which converts anticipated benefits (dollar income or amenities) to be derived from the ownership of property into a value estimate. The income approach is widely applied in appraising income-producing properties. Anticipated future income and/or reversions are discounted to a present worth figure through the capitalization process. LEGAL DESCRIPTION - The formal way to describe a parcel of property typically metes and bounds, lot and block or government survey. LOCAL TAX RATE - Rate of tax applied to the tax capacity of property to calculate the tax due. Formerly known as tax capacity rate, mill rate. MARKET VALUE - The most probable price in terms of money which a property will bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. MASS APPRAISAL - A method used in valuation of a jurisdiction for tax purposes. As the term implies, it is a method of appraising a large number of properties at one time by adopting standard techniques, and giving due consideration to the appraisal process so that uniform or equality of values may be achieved between all properties. METES AND BOUNDS - A description of a parcel of land by reference to the courses bearings, that is, the angles east or west of due north or due south) and distances (usually in feet or chains) of each straight line which forms its boundary, with one of the corners tied to an established point; that is the bearing and distance from an established point; such as a section corner or to the intersection of the center lines of two roads, etc. If one part of the boundary is on a curve, this part is described by showing the number of degrees of the central angle subtended by the curve (arc), the length of the radius, and the length along the curve. PARCEL - A piece of land, with or without improvements, in one ownership. PRICE RELATED DIFFERENTIAL: (Assessment Difference) - A statistic used to measure the assessment differences that may exist between higher priced properties vs. 13 ASSESSMENT TERMINOLOGY (continued) lower priced properties. 100 points is ideal. Within 10 points of 100 is considered excellent. PROPERTY TAX REFUND - All homeowners with household income below $61,930 OR where the property taxes increased more than 12% over last year, may be eligible for a property tax refund. SALES COMPARISON APPROACH - Traditionally, an appraisal procedure in which the market value estimate is predicted upon prices in actual market of value in a static or advancing market (price wise), and fixing the higher limit of value in a declining market; and the latter fixing the higher limit on any market. It is a process of analyzing sales of similar recently sold properties in order to derive an indication of the most probable sales price of the property being appraised. The reliability of this technique is dependent upon a) the availability of comparable sales data, (b) the verification of the sales data, (c) the degree of comparability or extent of adjustment necessary for time differences and (3) the absence of non -typical conditions affecting the sale price. SALES RATIO (Assessment Level) - The ratio derived by dividing a property's sale price into the Assessor's estimated market value. SALES RATIO ANALYSIS - Study of the relationship between the Assessor's values, sales prices and the deviations resulting from differences between the two. The purpose of such an analysis is to determine the efficiency, equity, quality and fairness of assessing activities of a particular neighborhood or jurisdiction. SCHOOL MARKET VALUE RATE - Established in 1995 (payable 1996 taxes) as a direct computation against the market value after the passing of school bond referendums. SPECIAL ASSESSMENT - Street, sewer, water, curb, or other infrastructure costs that are incurred by a city/township and assigned to benefiting properties. THIS OLD HOUSE" - The Legislature, in its 1993 session passed a law to exempt from the property tax all or a portion of the value of improvements made to homes 35 years of age or older (Article 5, Section 13 of the Omnibus Bill). The law is designed to provide owners of older and deteriorated homes with an incentive to restore or renovate their homes. In turn, is hoped that this will ultimately lead to the preservation of aging homes in rural communities. To qualify for the exemption of improvements from the property tax, the property must be 35 years of age or older at the time the improvements commence and it must be 14 ASSESSMENT TERMINOLOGY (continued) receiving the homestead classification or will be receiving the homestead classification by December 1 st of the year the improvement is made. Only the improvements made to the residence and garage, or the construction of a new garage qualify for the exemption. An application must be made to the Assessor's Office for the exemption. Improvements such a swimming pools and yard improvements are not included. Only improvements which contribute to increase the value by $1,000 or more may be eligible for the exemption. If more than 50 per cent of the square footage of the house or fifty percent of the value is increased, it shall constitute a new home and not qualify. All homes valued at $150,000 or more do not qualify. To qualify for exemption, the homeowner must have obtained a building permit. The exemption shall be applied to no more than 3 separate improvements made to the house, or garage. The homeowner has the right to pick which 3 permits to have exempted, but once it has been selected it cannot be repealed or replaced by a later improvement. The total qualifying value is dependent upon the age of the residence. Houses that are less than 35 years of age, do not qualify. The qualifying value of houses that are at least 35 years of age, but less than 70 years, is limited to one-half of the value of the improvement up to a maximum exemption of $25,000. Houses that are 70 years of age, or older, are eligible to have the actual value of any improvements excluded, up to a maximum of $50,000. The valuation of the improvement shall be calculated and determined by the Assessor and shall be based on the increase in market value of the year period and once the value of the improvement is established by the Assessor, it remains frozen during the ten year period of exclusion; however, the inflationary trend for the total value of the property, including that portion attributable to the addition, will be eligible for taxation. Under the law beginning April 1, 1994, owners must disclose to prospective buyers whether any improvements made to the home are exempt from property tax. Owners are also required to notify buyers that the exemption will terminate when the property is sold. The exemption for the value of the improvement remains in effect for 10 years beginning with the initial assessment year in which the improvements contributed to the value of the house or garage. After the 10 year period has expired, the exemption is reduced each year by one-fifth or 20 percent of the total value of the improvement. This amount is added back to the taxable value of the property. By the end of the 15th year, the full value of the improvement is subject to the property tax. The following pages discuss the methodology and our 1998 Sales Ratio Study. We are fortunate in Plymouth to have a very active market with numerous sales to be able to accurately measure our assessment. 15 1998 SALES RATIO STUDY Equalizing is done in today's procedures through ratio studies. These studies compare the Assessor's value with that same property's actual sale price. This comparison gives us ratio indicators that are recognized by the County and the State Commissioner of Revenue. The ratio indicators must reach acceptable levels or they will trigger corrective action for general across-the-board adjustments by the County Assessor or the Commissioner of Revenue. These general corrections are essentially a "shotgun blast" type correction that affects the adequate and inadequate values alike, and although they correct equalization across jurisdiction lines, they do just the opposite within a jurisdiction by increasing inequity. In Plymouth, this type of correction was done to Commercial/Industrial properties for the 1988 assessment. (+5% to building value.) Fortunately it has never been done to residential properties. The 1998 sales study recently completed by our staff and Hennepin County places our overall median ratio at 93.8%. Hennepin County's average median ratio is 94.0% which puts Plymouth below the average and dictates that jurisdictions at or above the median carry a slightly greater share of the load. We want to be the leader in most other areas, however, in equalization ratio studies we certainly don't want to be at or near the top. The Commissioner of Revenue and the Hennepin County Assessor have mandated that any jurisdiction falling below a 90.0% plateau will be forced into corrective action, and then everyone suffers. Our coefficient of dispersion in this year's study is 6.00%. This is comparable to other jurisdictions of our size in Hennepin County. (Anything under 10 is considered excellent.) This is a direct result of our computerization of the appraisal process and demonstrates our ability to administer fair and equalized valuations at both ends of the value spectrum. Our price related differential fluctuated between 99 and 101. This also shows our ability to treat higher priced homes as equally as the lower priced homes. It is currently at 100.2 100 is consideredep rfect.) DISTRIBUTION OF ESTIMATED MARKET VALUE BY PROPERTY TYPE 1998 5% APARTMENTS ESTIMATED MARKET VALUE 1998 Residential 70.28% $3,149,395,900 Commercial/Industrial 24.57% $1,101,253,200 Apartments 5.15% $230,564,000 TOTAL EMV $4,481,213,100 17 1997 2,983,569,600 948,586,700 205,244,200 4,137,400,500 DATE: March 23, 1998 TO: Assessing Staff FROM: Nancy D. Bye, City Assessor SUBJECT: SINGLE FAMILY LIVING UNIT COUNT BREAKDOWN (TOTAL CITY) The following is a listing of the type and the number of living units for each that is on the tax rolls for assessment year January 2, 1998 TYPE OF DWELLING 1998 ASMT ls 79 11141 Y KI' Apartment Units 5,294 Single Family Homes 14,670 Condominiums 2,143 Townhomes 2,055 Permalease 64 Mobile Homes 62 Farm Houses 25 Seasonal Res. (Cabins) 8 TOTAL LIVING UNITS: 24,321 1998 Assessment represents an increase of 390 living units over January 2, 1997. 18 MEMO CITY OF PLYMOUTH 3400 PLYMOUTH BOULEVARD, PLYMOUTH, MN 55447 DATE: February 17, 1998 TO: Nancy Bye, City Assessor Jt FROM: Jan Olsson, Senior Appraiser SUBJECT: 1998 ASSESSMENT - HENNEPIN COUNTY STUDY SALES STATISTICS OVERALL SALES RATIO 1998 Estimated Market Values were used on all sales) STYLE OF SALES AVG. SALE PRICE MEAN RATIO Ramblers 134 163,600 930 Splits 257 162,400 932 Two Stories 244 242,100 945 Rambler - Cluster Homes 5 218,500 984 Splits - Cluster Homes 14 157,400 947 Two Stories - Cluster Homes 4 213,000 943 Condominiums 186 71,400 935 Townhomes 101 112,700 942 TOTAL 945 The above figures are based on the sale of existing homes that meet the state criteria for arm's length transactions. This past year we have begun to track the sale of single family homes that are structured with a townhome concept called cluster homes. Approximate Number Homes Sold Including New Construction 1,600 Average Sale Price of Single Family Homes $192,800 cc: Appraisal Staff 19 Sheet1 PLYMOUTH RESIDENTIAL PROPERTY VALUE DISTRIBUTION 1998 VALUE PERCENT OF HOMES UNDER $50,000 2.49 473 50,001 TO $100,000 15.57 2,963 100,001 TO $200,000 57.01 10,850 200,0001 TO $300,000 19.20 3,655 300,001 TO $400,000 4.64 884 400,001 TO $500,000 0.87 166 OVER $500,000 0.22 42 TOTAL 100.00 19,033 20 60 50 40 z 30 20 100- 0 0 0 0 0 C 0 0 0 C 0 0 0 C 0 c:) 0 0 0 W 0 0 0 0 0 00CD 0 wo z 0 00 0 00 0 00 0 0 0 0 0 0 o uw o 0o w VALUE 0 0v 20 Sheet1 PLYMOUTH RESIDENTIAL PROPERTY VALUE DISTRIBUTION 1997 VALUE PERCENT OF HOMES UNDER $50,000 3.36 625 50,001 TO $100,000 16.85 3,125 100,001 TO $200,000 57.27 10,623 200,0001 TO $300,000 17.52 3,250 300,001 TO $400,000 4.18 775 400,001 TO $500,000 0.64 119 OVER $500,000 0.18 33 TOTAL 100 18,550 21 60 50-: 40 '. z a 30 20 10 0 0 0 0 0 0 0 0 CD x WC--3 OO 64 O Oo R O Op 6M4 O Oo p O Op Vii O p o i/•l W pO O OO O OOO OO O OO O O M O_ fb? OpN VALUE OM4Q OViq 21 MARKET VALUE APPEAL PROCESS NOTICE OF MARKET VALUE DISCUSS WITH ASSESSOR'S OFFICE LOCAL BOARD OF REVIEW DENY APPEAL I I CHANGE VALUE COUNTY BOARD OF EQUALIZATION STATE TAX COURT 22 ABATEMENT PROCESS ADMINISTRATIVE REVIEW) APPROVE APPEAL DENY APPEAL DATE: February 25, 1998 TO: Nancy D. Bye, City Assessor S FROM: Jan Olsson, Senior Appraiser SUBJECT: 1998 PROPERTY TAX SUMMARY The 1998 tax extension rates have recently been released from Hennepin County. Tax statements are scheduled to be mailed by March 2. To better prepare ourselves to respond to citizen inquiries, we have updated our charts, graphs, and comparison data attached). Market values on most residential properties were increased approximately 3% affecting a amble 1998 taxes (excluding quartile areas). Commercial/Industrial properties were increased approximately 12%. For the third year, Plymouth has had additional property taxes levied due to the passing of school bond referendums. Three of the four school districts in Plymouth passed bond referendums in 1995 which affect the 1998 taxes. In addition to taxes calculated using the tax extension rates, a tax is calculated against the market value of individual properties to allocate for the school bond referendums. This money goes directly to the school districts. This is the second year Plymouth has had a city referendum market rate. This is calculated directly against the estimated market value of individual properties in the same way as the school referendum rates. The referendum is to offset the purchase of open space to be preserved for nature areas and trails. The county solid waste fee continues this year at a rate of .01840%. This fee is calculated directly against the market value of each parcel. New this year is the education homestead credit. The new education homestead credit reduces school district taxes on residential homesteads and on the house, garage and one acre of land for farm homesteads. The credit rate is 32% of the school district initial tax rate for state determined general education levy purposes. The rate is uniform within a 23 school district. The maximum credit is $225 and cannot be greater than the total school district tax. The funds go entirely to the state determined general education fund of each school district. To illustrate, the taxes on a $150,000 home in the Wayzata School District would be calculated as follows: RESIDENTIAL HOMESTEAD PARCEL owner occupied single unit, duplex, or triplex house) Taxable Market Value: Net Tax Capacity Calculation: 75,000 @ 1% 75,000 @ 1.85% Total Net Tax Capacity Tax Capacity Base Rate Total Net Tax Market Value Rates: School Market Value Rate Tax: 150,000 @.23527% City Market Value Rate Tax: 150,000 @.00474% Solid Waste Market Value Rate Tax: 150,000@.01840% New Education Homestead Credit 2,137 @ 12.218% Total Tax: 150,000 750 1,387 2,137 x 111.676% 2,387.00 353.00 7.11 27.60 225.00 2549.71 Even though the legislative changes make property tax calculations more cumbersome, it is interesting to note, in most cases, market values have increased and the taxes have decreased. A surplus in the state budget has also resulted in a property tax rebate to be issued to the majority of Minnesota residents for taxes payable in 1997. 24 Our contribution share to the fiscal disparities pool for Commercial/Industrial properties decreased from 31.9684% last year to 31.8616% this year. However, the seven county area wide rate has increased from 139.376% in 1997 to 155.082% for 1998. cc: Dwight Johnson, City Manager Kathy Lueckert, Assistant City Manager Dale Hahn, Finance Director Assessing Division 25 26 EFFECTIVE TAX RATES FOR PAYABLE 1998 City of Plymouth Commercial and Industrial Effective Tax Rates School District Sewer 1 st $150,000 District LOW RATE CLASS Over $150,000 and Non -qualifying pro erties 270 1 3.6285% 5.3405% 279 3 & 4 3.6800% 5.3504% 281 1 & 4 3.6573% 5.4071% 284 4 3.6471% 5.2786% 284 1 &2 W. S. #3 3.6592% 5.2966% Apartment Effective Tax Rates NOTE: On "T" Property Type, the building value is multiplied by the "T" Property Type rate and the land multiplied by the "A" Property Type School District SEWER "A" Property Type "T" Property Type District 270 1 3.575% 2.488% 279 3 & 4 3.576% 2.532% 281 1 & 4 3.649% 2.524% 284 4 3.497% 2.492% 284 1 &2 W. S. #3 3.516% 2.505% NOTE: Vacant commercial\industrial land (LC, LI) have same tax rate. School districts 270, 279 & 284 have additional market value rate included in tax rate. Solid waste management fee is included in all rates (applied against market value). Revised 3/24198 turchart\98PLYTR.WK1 26 1998 PLYMOUTH Real Estate Taxes on Commercial and Industrial Property Example rate is for School District 284, Sewer District # 4 & Watershed District # 0. Tax Rates Local Rate 111.6760% Fiscal Disparities or Area Wide Rate 155.0820% Market Value Rates (School & City) 0.2400% County Solid Waste Fee 0.0184% City Percentage of Fiscal Disparity 31.8616% Procedures for calculation of tax caaacity and tax. Estimated Market Value (EMV) X 4.00% = Tax Capacity Tax Capacity Tax Capacity Estimated Market Value x 0.681384 x 0.318616 x 0.0025841 Local Tax Capacity = Area Wide or Fiscal Disparity Rate = Market & Solid Waste Fee Tax x 1.11676 x 1.55082 Local Tax Capacity = Fiscal Disparity Tax Local Tax + Fiscal Disparity Tax + Market Value Tax + Solid Waste Fee = Total Tax Payable Total Tax / EMV = Effective Tax Rate EXAMPLE: Commercial or Industrial Building with an EMV of $1,000,000 1,000,000 EMV x 4.00% _ $40,000 Tax Capacity 40,000 Tax Capacity $40,000 Tax Capacity $1,000,000 Estimated Market Value x 68.1384% x 31.8616% x 0.0025841 Market Rates & Waste Fee 27,255 Local Tax Cap. _ $12,745 Area Wide Tax Cap. _ $2,584 x 111.6760% Local Tax Rate x 155.0820% Area Wide Tax Rate 30,438 Local Tax = $19,765 Fiscal Disparity Tax 30,438 Local Tax + $19,765 Area Wide + $2,584 Market & Waste Fee = $56,877 Total Payable Tax Total Tax Effective Tax Rate 5.2786% Note: Commercial & Industrial property owners may qualify for a reduced tax capacity rate on the first 150,000 of market value Dualifying Property: 1st $150,000 EMV x 2.70% Remainder EMV x 4.00% Tax Capacity wrkshts\51 48\taxcha rt\98cha rt 27 1998 RESIDENTIAL LAKE SHORE SALES STUDY 1997 SALES) NUMBER NAME 1 YEAR PRELIMINARY AVERAGE AVERAGE OF OF OF RATIO LOT SALE PRICE PARCELS LAKE SALES VALUE Ili Bass 2 89 $80,000 TO $203,40( Before increases) Hennepin County Sales Study of all Residential Lake Shore Sales in Plymouth for the 1998 Assessment: TOTAL SALES: 13 MEAN RATIO: 93.9 (after increase) Lakeshore properties were given the city wide average increase, then attention was paid to the location of the lakes, the similarity of the lakes, and the market activity in the last year in the various neighborhoods surrounding each lake to determine if further adjustments were necessary. 28 175,000 37 Gleason 1 85 60,000 to 215,000 130,000 48 Hadley 3 94 70,000 to 328,300 165,000 33 Lost 2 91 66,000 259,700 141 Medicine 1 85 105,000 242,000 43 Mooney 3 95 70,000 to 279,200 170,000 53 Parkers 1 1.00 62,000 315,000 8 Pike 0 0 75,000 0 60 Schmidt 0 0 91,000 0 530 13 92.2 Before increases) Hennepin County Sales Study of all Residential Lake Shore Sales in Plymouth for the 1998 Assessment: TOTAL SALES: 13 MEAN RATIO: 93.9 (after increase) Lakeshore properties were given the city wide average increase, then attention was paid to the location of the lakes, the similarity of the lakes, and the market activity in the last year in the various neighborhoods surrounding each lake to determine if further adjustments were necessary. 28 ADDENDUM 29 1995 BOARD OF REVIEW ATTENDEES THAT HAVE SINCE SOLD THEIR PROPERTY Alina Vrabel - 19-118-22-31-0006 - Sold 11/95 for $142,000. Local Board did not change the 1995 estimated market value of $145,300. The County Board of Equalization changed the value to $129,000 Camile Jahnke - 21-118-22-33-0195 - Sold 3/96 for $71,000. Local Board upheld 1995 value of $68,500. David & Jayne Douglas - 29-118-22-11-0020 - Sold 7/95 for $341,250. Local Board upheld 1995 value of $329,800. Thomas & Jean Hillstrom - 30-118-22-42-0024 - Sold 11/96 for $149,000. Local Board upheld value of $147,000. Marcello & Erika Andrade - 29-118-22-14-0072 - Sold 12/97 for $219,500. Local Board upheld value of $206,300. Gregory Moroshek - 11-118-22-14-0015 - Sold 9/97 for $137,000. Local board upheld value at $112,200. James & Leslie Driscoll - 29-118-22-11-0031 - Sold 8/97 for $326,000. Local Board lowered value to $289,000. Lee Larson - 34-118-22-31-0022 - Sold 4/97 for $107,000. Local Board upheld value at $92,000. 1996 BOARD OF REVIEW ATTENDEES WHO HAVE SINCE SOLD THEIR PROPERTY LaVonne Wanha - 32-118-22-11-0009 - Sold 10/96 for $102,900. Local Board upheld 1996 estimated market value of $113,000. Dee Bloch - 16-118-22-23-0081 - Sold 8/96 for $174,500. Local Board upheld value of $157,300. Jill Sakin - 08-118-22-44-0019 - Sold 5/97 for $260,000. Local Board upheld value at $261,000. NO 1997 ATTENDEES HAVE SOLD THEIR PROPERTY. PioneerPlanet - Plymouth BREAKING STORIES P* ]EV Alphnbetized list of communities YOUITown Plymouth Area: 35.7 square miles Population: 60,344 Diversity: 95 percent white; 1.6 percent black; 2.4 percent Asian or Pacific Shopping: Islander; 0.4 American Indian; 1 percent Hispanic Median Age: 31.9 Median 51,314 Household Income: Housing Units: 23,931 Median Home 155,000 Value: Taxes on That 2,9.67 Home: Rental Units: 5,708 Rental Median: 578 Parks: 39 parks and more than 70 miles of trails Shopping: Rockford Plaza, Waterford Plaza and Four Seasons Mall Best of Plymouth: strategic location, rapid development with diverse economic base and housing stock, rising property values, considerable low densityhousing, preserved open space, low crime, new high school. High cost and small supply of developable land, limited affordable housing to rent or own, lack of downtown (although new city centerareaisbeingdeveloped), city split among four school districts results somewhat ambiguous identity. Worst of Plymouth: in STAR TRIBUNE • PAGE D3 Real estate Value of homes is rising faster than inflation rate Northeastern market bucking the trend, but Midwestern owners seeing increases Associated Press WASHINGTON, D.C. — The value of most Americans' homes is rising faster than inflation, ex- cept in such Northeastern cities as Hartford, Conn., and Syracuse, N.Y., and a few other scattered metro areas. Nationally, the median price of existing homes increased by 4,700 to $123,700 in the April - June quarter, meaning half sold for more and half for less, the National Association of Realtors said Tuesday. The 3.9 percent gain from the same quarter a year ago was well ahead of the 2.3 percent inflation rate during the period. Median price has risen fairly steadily in the Twin Cities area, too, reaching $115,000 last month and averaging $113,000 for the first seven months of the year. That's an increase of 4.6 percent from the $109,900 median in July 1996 and 3.8 percent from 108,900 for first seven months of last year, according to data from the Regional Multiple Listing Service. The national Realtors presi dent, Russell Booth, said the strong economy and job market are supporting consumers' confi- dence and helping the housing market. Of 133 metropolitan areas sur= veyed by the Realtors, only 25 reported price declines. And three of the country's four re- gions saw gains even better than the national figure. The median price fell 3.5 per- cent in Syracuse, 3.2 percent in Hartford, 0.6 percent in Boston, and 1.1 percent in Buffalo, N.Y.; was unchanged in Newark, N.J.; inched just 0.7 percent higher in Providence, R.I., and rose a mod- est 1.8 percent in New York. Some of the strongest gains in the country came in the Midwest, particularly Michigan, Nebraska and Missouri. The median rose 10.7 percent in Lansing, Mich.; 10.5 percent in Kalamazoo, Mich., 7.8 percent in Grand Rap- ids, Mich., and 6.7 percent in Detroit. It increased 9.2 percent in Lin- coln, Neb.; 7.4 percent in Omaha; 7.6 percent in St. Louis, and 7.5 percent with Kansas City, Mo. Economist Mark Zandi of Re- gional Financial Associates in West Chester, Pa., said the strength of Midwest housing markets is explained by "nearly non-existent" , unemployment rates in many cities —1.7 percent in Lincoln, for instance. Economic strength and buyer confidence have been credited by officials of the home-building and residential real-estate indus- tries with keeping the Twin Cit- ies -area housing market strong and stable for several years. Executives of the Builders As- sociation of the Twin Cities and the Minneapolis Area Association of Realtors say the metropolitan area enjoys considerable eco- nomic diversity that helps pre- vent steep peaks and deep valleys of employment and home -sales activity that afflict other areas of the nation. Mortgage -interest rates that have remained favorable, in his- toric terms, and a low unemploy- ment rate have helped keep de- mand strong for new homes and existing homes. Demand for homes for first-time buyers — es- pecially homes priced below 100,000 — outstrips supply., which Realtors say helps account for the rise in median price. Staff writer Neal Gendler contributed to this report. PAGE D2 • STAR TRIBUNE The economy Value of homes rising at fastest rate in 6 years; South, Midwest top gains Median price of Twin Cities area home rose 4.6 percent in 4th quarter to $118,700 Associated Press WASHINGTON, D.C.—Ameri- cans are seeing the value of their homes increase at the fastest rate in six years. Cities in the South and Mid- west dominated the list of big gains in 1997. The largest increase for exist- ing homes, from the fourth quar- ter of 1996 to the fourth quarter of 1997, came in Charleston, S.C., the National Association of Real- tors said Wednesday. Charleston's median home price — meaning that half sold for more and half for less — jumped 16.7 percent to $110,500. Economist Kim Kennedy of Cahner's Economics in Newton, Mass., said prices have been pushed up by retirees' moving there. As is typical, the Twin Cities metropolitan area experienced much more moderate increases. The median price of homes sold from October through December last year was $118,700, 4.6 per- cent higher than during the same three months of 1996. Throughout the year, the me- dian sale price of homes sold was 114,900, 4.9 percent higher than during 1996, when the median sale price was $109,500, showed the Regional Multiple Listing Ser- vice, which ,reports numbers for the Minneapolis Area Association of Realtors. Year-end data from the service showed that 43,528 residential transactions were reported closed in 1997. Most in 11 years Nationally, the median price rose 6.2 percent to $124,800. That was nearly double the 3.3 percent rise a year earlier and the biggest fourth -quarter -to -fourth-quarter gain in six years. Adjusted for inflation, it was the most appreci- ation in 11 years. Of 134 cities surveyed by the real estate group,only 10 regis- tered declines. in their median prices. The median slipped 10 percent in Honolulu to $300,000; for the first time since 1989, it lost its status as the nation's most expensive housing market. It was supplanted by San Fran- cisco, where prices rose 14.1 per- cent to $304,600. The high-tech and computer boom has helped San Francisco's economy, while a, dropoff in Japanese investment has hurt Honolulu's in rece. t years. Other cities with large gains included Des Moines, 15.5 per- cent; Fort Myers and Sarasota, Fla.; Lexington, Ky.; Champaign and Peoria, Ill.; Memphis; Can- ton, Columbus and Youngstown, Ohio; Dallas and Beaumont, Tex- as; Orange County, Calif.; South Bend, Ind.; Boston; Fargo, N.D., and Kansas City, Mo. After Honolulu, cities with de- clines included Richland, Wash., 7.1 percent; Trenton, N.1.; Syra- cuse and Albany, N.Y.; Charles- ton, W.Va.; EI Paso, Texas; Springfield, Mass.; Rockford, Ill., and Sioux Falls, S.D. By region, prices last year rose 7.4 percent in the West, 7 percent in the Midwest, 6.9 percent in the South and 4.6 percent in the Northeast. Orange County, Calif., with a median of $237,400, was the na- tion's third -most -expensive mar- ket. Least expensive were Water- loo, Iowa, $64,200; Ocala, Fla., 66,700, and Saginaw Bay, Mich., 70,900. Recovery lagged Markets in California, which lagged the country in recovering from the 1990-91 recession, final- ly are coming back, Kennedy said. But California's recovery has dampened price appreciation in the Pacific Northwest, which ear- lier prospered from an inflow of Californians looking for better economic prospects. Many cities in the Midwest have done well because manufac- turing has led the U.S. economy. Although Boston's housing mar- ket is flourishing, the economies of many communities in the Northeast are trailing the rest of the country. Nationally, price gains were supported by a record 4.73 mil- lion sales of existing single-family homes, condos and co-ops in 1997. Those in turn were fueled by low mortgage rates and strong employment gains. We saw phenomenal growth last year in real estate," said R. Layne Morrill, president of the real estate group. Staff writer Jim Buchta con- tributed to this report. The RESIDENTIAL0REPORT Number of sales down, median and average prices up MLS members reported fewer pending" and "closed" sales through the first five months of the year as compared to the record highs of 1996 [see chart below]. The number of "pending" sales reported through May this year were down 7% when compared to the same period in 1996. However, when compar- ing 1995 pendings 16,663] this year's total was up 11.45%. Pend- ings is an important statistic because most of them become "closed" sales 60 to 90 days after being reported. Also, the number of residential closings through May were down slightly, 2.6% this year, from a year ago. Yet when compared to 1995 through May the number of closed sales [11,972] was up 15.08% this year. Listings Processed 6,701 Pending Sales 4,338 Current Listings Book#22) Closed Sales 3,847 Closed Sales 4,320 Dollar Volume $496,263,000 Average Price Median Price The latest forecast from the National Association projects a "fairly steady" market over the next few months throughout the nation. The Mortgage Purchase Applications index, a leading indica- tor of home sales, and consumer confidence both remain high. NAR expects mortgage rates to continue to slowly rise during the next couple of months. Millions of untie 4s However, 42asthe economy 4.0 cools a bit, 3 a 30 -year 3 ° rates will 3 • trend back 3-2 I'' Idownto3.0 11 slightly ie under 8.0% by the end of year. The average and media sales price based on dat reported by MLS mem- bers shows a gain this year as compared to the first five months of 199E The average sales price of all "closed" sales in tl regional MLS area through May was 130,000 [up 3.6%] and the median price was 112,000 [up 3.7%]. 12341234123412341234123412341234 1991 1992 1993 1994 1995 1996 1997 1998 Source: May 1997 Real Estate Outlook: Market Trends and Insights, National Association of REALTORS* 6,218 1 7.8 U 4,531 I 4.3 4 4,092 6.0 4,565 5.40 526,231 , 2001 5.7 V l._ Year to Date 997 1996 change 28,012 28,209 7 18,571 i 19,967 7.0 13,777 14,138 2.6 1 5,543 15,909 n 12.3 v 1,797,898,500 $1,781,388,000 129 000 $128,600 .3 Q $130.500 112,7001 $110,300 2.20 $112,000 126,000 108,000 3.7 Q Residential only: single family, condo, townhouse, twinhome. All property types: single family, condo, townhouse, twinhome, duplex, mobile home, farms/hobby farm, investment and lots/acreage. Based on data from the Regional Multiple Listing Service. July/ August 1997 The Published monthly except combined issue for May - June, July -August and November -December. 4011- 10*10" MINNEAPOLIS AREA ASSOCIATION OF REALTORS`A YOUR PROFESSIONAL EDGETM 5750 Lincoln Drive, Minneapolis, MN 55436 Telephone: 933.9020 Fax: 933.9021 Office hours: 8:30 a.m. to 4:30 p.m., Monday through Friday, except holidays. Subscription rate: Mem- bers: $12 a year paid with dues. Others: $30 a year. USPS 351160 ISSN 1054-9684 Periodicals postage paid at Minneapolis, Minnesota and I additional mailing offices. POSTMASTER: Send address change to: The REALTOR®, P.O. Box 9570, Minneapolis, MN 55440-9570 1998 Officers John Anderson, GRI, CRS, President Kevin Ries, GRI, President-elect Frances Davis, Secretary Craig Johnson, GRI, CRS, Treasurer Lee Doucette, CAE, Chief Executive Officer 113 REALTOR 1997 ends with strong metropolitan housing market Although this is being written early in December, there is every indication that 1997 will end up being another outstanding, perhaps even a record, year for residential real estate. Members of the Regional MLS reported total dollar volume of nearly $5.4 billion for closed residen- tial sales during the first 11 months of 1997, which is an increase of 9.3% from the $4.9 billion reported for the same period in 1996. The number of closed residential sales reported moved up 3.8% in 1997, for a total of 40,164 for the first 11 months as compared to 38,699 for the same period in 1996. There were several major factors that have helped to sustain a strong market last year. On a national level, 30 year fixed mortgage rates continued to slide, recently reaching levels as low as 7.26%. One year adjustable rates remain relatively flat. Fixed rates are at their lowest level since February 1996. Inflationary pressures pose some risk to the mortgage rate forecast. However, a severe hike in interest rates due to news indicating lack of continued economic strength is not likely. Existing home sales are expected to reach 4.18 million units when all reports are received for 1997. If this comes about it will surpass 1996's record level of 4.09 million units. Fourth quarter resales are likely to continue the robust pace of the year. For the begin- ning of this year, existing home sales are expected to average 4.1 million units. i .1 —willuut iyyr near cSrare vur/ooK: Manret irenas and Insights, National Association of REALTORS® LISTING SERVICE MORTGAGERATES 12% Quarterly Average g,7'.,}a',.x ,{ +7 a ..,., rt. M 'a 1 / M ws RP 'hS. Y lj At . t ovember Y r to I J 1996'chan a 1'"" 1997 ** X996' n change 10% 30 -Year Fixed Pending Sales"' r 2,513' .. `2 541. 1 1 , 40,n2 40,648 9 Mortgage Rate- ate6% 1 1 L 6% Closed Sales 3 570 3 521 1 4 Q7 6% Hs ... r.. _,... Closed Sales 3,984 3.971 .3 Q 4% 1 -Year Adjustable 2% Mortgage Rate 133,900 $127,200 5.2 Q 0% Histo Foremost 12341234123412341234123412341234 All property types: single family, condo, townhouse, twinhome, duplex, mobile home, farms/hobby farm, investment and lots/acreage. 1991 1992 1993 . 1994 1995 1996 1997 1998 Source: Freddie Mac, NAR Forecast i .1 —willuut iyyr near cSrare vur/ooK: Manret irenas and Insights, National Association of REALTORS® LISTING SERVICE REPORTMULTIPLEACTIVITY Based on Regional MLS data g,7'.,}a',.x ,{ +7 a ..,., rt. M 'a 1 / M ws RP 'hS. Y lj At . t ovember Y r to I J 1996'chan a 1'"" 1997 ** X996' n change Listings Processed 3,264 3,340 ; 2.3 w 60,697 i 59,220 2.50 Pending Sales"' r 2,513' .. `2 541. 1 1 , 40,n2 40,648 9 j.l £'*t^7}i: .1V/ n :i.'4'S.z 'i •i 9. Current Listings `20,918 19152x4 7.1 ilnr 1 1 L Book #48) Closed Sales 3 570 3 521 1 4 Q7 40,164 38,699 3.8 Q Hs ... r.. _,... Closed Sales 3,984 3.971 .3 Q 44,721 43,212 3.5 Q Dollar Volume $486,948 000 $455,617,400 6.9 Lt 5,377,959,600 922,512,8'06- 9.3 Q Average Price $136,400 $129,400 1 5.4 Q 133,900 $127,200 5.2 Q Median Price $116 000 $109,400 6.0 V 114,900 l $109,200 15.2 Q Residential only: single family, condo, townhouse, twinhome. All property types: single family, condo, townhouse, twinhome, duplex, mobile home, farms/hobby farm, investment and lots/acreage. Based on data from the Regional Multiple Listing Service. 2 • The REALTOR' • January 1998