HomeMy WebLinkAboutCity Council Packet 04-07-2009 BOEAgenda
City of Plymouth
Board of Appeal and Equalization
Tuesday, April 7, 2009
7: 00 p.m.
Council Chambers
1 . Call to Order.
2. City Assessor's Report.
3. Public Comments.
4. Adj ourn.
City of Plymouth
2009 Local Board of Appeal
Equalization
Tuesday, April 7
MEMO
CITY OF PLYMOUTH
3400 PLYMOUTH BOULEVAR-D- PLYMOUTH. MN 55447
DATE: April 7, 2009
TO: Plymouth Local Board of Appeal and Equalization
FROM: Janene Hebert, City Assessor
THROUGH: Calvin Portner, Administrative Services Director
SUBJECT: 2009 Local Board of Appeal and Equalization, April 7, 2009, 7:00pm
Attached for your review is a report on the 2009 Assessment prepared by the assessing
staff, The report introduces you to value adjustments, statistical measurements of our
work, and general information which the assessing staff utilizes to determine values for the
annual assessment. This will hopefully make your job, as a member of the Board of Appeal
and Equalization, easier to understand.
Market values are based on market activity, which fluctuates with general economic
conditions such as interest rates, inflation, supply and demand, and changes in tax laws.
By Minnesota State law, as property values change in the marketplace, the changes must
be reflected in the assessor's estimated market values.
The system involves the comparison of properties with actual market sales from the same
neighborhoods. All sales information collected by the assessor's office is closely analyzed,
and market values are adjusted by comparing properties that sold with properties that
have not sold. The comparison provides the basis for the assessor's estimated market
value.
The State Department of Revenue uses ratio studies to measure our assessment level.
They mandate the sales period which we use to set our values. The sales period for the
January 2, 2009, assessment was October 1, 2007, through September 30, 2008, During
this period, we saw a flat market through April of 2007 when the market started to decline
for single family residential properties. The result was a 4.8 percent decline in value of
single family properties for the 2009 assessment.
By law, the assessor must set values based upon historical sales, not by predicting the
future. The most common concern voiced is, "we cannot sell our home today for the value
you have it assessed." UnFortunately, the October 2008 to April 2009 sales are not valid
for this report and will be considered for the 2010 assessed valuation. Property owners
seem to understand the time frame but are concerned that the assessed value is higher
than the purchase price,
Sales of foreclosed properties are not considered an open market transaction by the
Minnesota Department of Revenue and were not considered in setting the 2009 values.
This is outlined in the joint MAAO and Department of Revenue Advisory on Foreclosures
and is available to the public to explain the valuation process.
The purpose of the Local Board of Appeal and Equalization is to hear property owner
testimony concerning the Assessor's 2009 estimated market value or property
classification based on documentation provided, This may be done in three ways:
1. In person
2. In writing
3. By property owner's representative.
At the conclusion of the meeting, the Board of Appeal & Equalization will recess. It will
reconvene on April 21, 2009 at 7:00 p.m. Decisions on all appeals will be made at that
time based on staff reports and information submitted by the property owner.
This year's Certification Form from the Department of Revenue asks the following
question:
Did the LBAE make changes to parcels owned by a member of the board, the
spouse, parent, son or daughter of a board member, or property in which a board
member has a financial or other interest in the property? If yes, please list the
parcel numbers of the properties that were changed on the back of this form.
Board Members have a right to contest their value the same as any other citizen.
However, I suggest the Board should recommend "no change" and have the County decide
the value or classification to avoid the appearance of a conflict of interest.
I invite you to read the information and feel free to call me at 763-509-5352 with your
questions or comments.
TABLE OF CONTENTS
Local Board of Review & Equalization Authority 1
Local Board of Review & Equalization Overview 2
City of Plymouth Assessing Staff 4
2009 Assessment Summary 5
2009Assessment Introduction 8
2009 Assessment Statistics 12
2009 Ratio Study 13
Appeal Process is
Maps is
Local Board of Review & Equalization
Minnesota Statutes, Section 274.01, states that the council of each city
shall be or shall appoint a Board of Appeal & Equalization. The Plymouth
City Charter requires the City Council to act as the Local Board of Appeal &
Equalization. The 2004 Legislative session enacted a bill that requires
members of the Local Boards to attend a training session that outlines their
duties and responsibilities. Council members Willis and Black have
attended the training session.
Assessments of property are made to provide the means for the measuring
of the relative share of each taxpayer in meeting 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 a percentage all of the assessments in the district of a given
class of property. The County Board of Equalization can make changes in
the aggregate assessments by class.
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. 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 a
clerical error or to the removal of a duplicate assessment.
H
Local Board of Review & Equalization Overview
Over the past two years there has been a lot of publicity regarding the
volatile real estate market. Plymouth has experienced a downward swing in
the residential market but has continued to remain somewhat sheltered
from the foreclosure market. The Minnesota Area Association of Realtors
reported that Plymouth has a lower-than—average share of lender -mediated
properties; 16.6 percent compared to the total Twin Cities inventory at 32%.
Residential properties are no longer selling for inflated prices over their list
price. Houses are on the market for a longer period of time and are selling
for list price or below, The majority of properties in the City of Plymouth
saw changes in their estimated market value. The value changes range from
basically no change to substantial decreases and a few increases due to
locational market activity.
The decline in home prices coupled with lower interest rates make it a good
time to invest in the real estate market. The lender -mediated properties
took longer to sell in most cases due to their condition. The number of
listings is down but the number of pending sales is up. The average
percentage changes in valuation are as follows:
Property Type Value Percent
Change
fro m
2006 to 2007
Value Percent
Change
from
2007 to 2008
Value Percent
Change
F,^,"
2008 to 2009
Residential 2.3 % 2.8% 4.8%
Residential 13.0 % 2.0 % 3.9%
Lakeshore
Condominiums 2.3 % 5.7 % 6.0%
Townhomes 0 % 4.8% 6.0%
Apartments 14.2% 1.5% 6.4%
Commercial/ 18.4% 1.3 % 5.1 %
Industrial
F4
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 Appeal & Equalization assures the property
owner an opportunity to contest the valuation that was placed on the
property or to contest or protest any other matter relating to the taxability
of the property except the tax. The board is required to review the matter
and make any corrections that it deems just.
Exceptions to the above market value changes include new construction,
quintile areas, reappraisals, and/or other market adjustments.
The economy has taken a toll on all properties values and vacant land is no
exception. The sale of large tracts of land has tapered off and purchase
agreements have been retracted. Land outside the MUSA with no utilities
remains at $110,000 an acre. Land inside the MUSA with no utilities
remained at $160,000 an acre, Land inside the MUSA with utilities
remained at $200,000 an acre.
On March 6, 2009, 25,454 Value Notices were mailed to 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 2. The City of Plymouth continued to have a large quantity of
building permits for remodeling projects and repairs. This does not include
the 9,388 quintile parcels that were reviewed and re -appraised.
The 2009 assessment represents many hours of staff research and time.
We feel confident the 2009 assessment is fair and well equalized
throughout the City of Plymouth.
Respectfully submitted,
Assessing Department Staff
3
Plymouth Assessing Department
Janene Hebert SAMA
City Assessor
3an Olsson SAMA RES
Appraiser Supervisor
Michael VanderLinden CMAS
Appraiser
Cindy Bowman CMA
IN Appraiser
Paul Kingsbury CMA
Appraiser
Peggy Schulman
Assessment Technician
lake Pidde CMA
Commercial Appraiser
EI
2009 ASSESSMENT SUMMARY
The 2009 Assessment affects all property owners in the City of Plymouth.
As required by current state law, the Assessor is required to reassess all
property each year.
State Statute states that: 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 were notified of any change. Minnesota State Statute 273.11
reads:
All property should be valued at its m:arket value. It
further states that "in estimating and determinina
such value, the Assessor shall not adopt a lower of
different standard of value because the same is to
serve as a basis for taxation, nor shall he adopt as a
criterion of value that 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 that 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 Appeal & Equalization.
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.
5
The 2009 Assessment (not the 2009 taxes) reflects 4.1% overall valuation
decrease from the 2008 assessment (including new construction, quartile
adjustments, and/or market adjustments). The amount of new
construction between January 2008 and January 2009 was $85,615,200.
The market change, exclusive of new construction was -5.0%.
2008 2009 2009
TOTAL CITY VALUE TOTAL CITY VALUE PERCENTAGES
PRELIMINARY)
10,0121349,800 91599f8881000 4.1%
Total Value 412,461,800) 4.1%
Change:
Value of New 85,615,200 0.9%
Construction:
Change of
Existing Property 498,077,000) 5.0%
due to Market:
M
City of Plymouth Percentages
Total Market Value
10,000,000,000
8,750,000,000
7,500,000,000
CD
6,250, 000, 000
5,000,000,000
3,750,000,000
21500,000,000
93 '94 '95 96 '97 '99 '99 '00 '01 '02 '03 '04 '05 '06 407 '08 '09
2008 Assessment Introduction
The number of building permits nearly doubled in 2008. The increased
number of permits was due the magnitude of storm damage that occurred
the previous year. Many homes needed new roofs, siding and windows.
Each building permit was documented by a member of staff.
20% of all existing properties were physically reviewed during 2008 and
represent over 9,388 parcels, This is commonly referred to as the
Quintile." In the areas of re -inspection, new items that previously were
not on our records were added, or where applicable, deleted. Of all homes
reviewed, 57% were internally inspected. A preliminary sales study was
analyzed, prior to placing a final value on each property inspected.
Plymouth's preliminary residential median ratio entering the 2009
assessment was 99.2. Hennepin County determines this ratio. They
compare the January 2, 2008, estimated market values to sales occurring
from October 1, 2007, through September 30, 2008. The average
residential decrease for the January 2, 2008, assessment was —4.8%. This
was determined by comparing the January 2, 2008, estimated market
values to the same sales, thus establishing the 2009 estimated market
values at a median sales ratio of 94.5 and a mean ratio of 94.7 with a
coefficient of dispersion of 4.8. In accordance with the results of this sales
study, certain areas of the city, certain styles, and certain sizes of houses
were adjusted in value, either lower or higher than the prior year value, to
more properly reflect actual market values.
The 2008 average sale price of existing residential housing stock (off the
lake) was $366,800; this price does not include townhouses or condos.
This is extracted from the Hennepin County Ratio Study of all arms -length
transactions involving single family homes.
Lakeshore in Plymouth was adjusted according to the sale activity on each
lake. Average lakeshore property received a decrease of approximately
3.9% The average sale price of existing lakeshore property in 2008 was
714,525.
Various townhome and condominium complexes were adjusted according to
market activity as well as studied to determine if the number of bedrooms
per unit affected the sale prices. Townhomes and condominiums also
decreased in market value. The average sale price of condominiums was
168,911, The average town home sale price was $255,861.
E-111
Commercial and multifamily real estate is working through a market
transition against the backdrop of an unsteady economy, rising inflation and
a credit crunch. The year 2008 will be remembered for the many
difficulties in the economy witnessed by the subprime lending imbroglio, the
bursting of the housing market bubble, difficulties in the financial markets
and employment declines, to name a few. In this time of uncertainty, there
is an underlying fear that what happened to the residential market may also
happen in the commercial market. It is important to realize while the credit
crisis has affected the debt markets for commercial real estate (as it has
with the residential market), the commercial real estate (low -leverage)
equity market has not been impacted to the degree anticipated by
investors, and we do not expect it to go the way of the residential market.
Commercial
We recognize there is a correlation between job losses and vacancy in
commercial properties. This has led to more vacancies and space available
for sub -lease, more concessions, and a decrease in net rents. Overall, these
weakened fu ndamentals have eroded property values resulting in a 4.3%
reduction in commercial values.
Retail
While all of the markets are feeling the pinch of the economy, retail
continues to be the most impacted. The housing market slump, credit crisis,
rising unemployment, and stagnant corporate growth have all impacted
consumer spending, making it difficult for retailers to stay in business. As a
result, vacancies increased, net rents went down, and cap rates went up
resulting in a 6.3% reduction in retail values.
Office
As the fundamentals of the office markets weakened, so did expectations
about future rents and prices adjusted downward for investors to achieve
the same yields. In addition, cap rates are generally up 40-50 basis points
from a year ago. While submarkets varied slightly, the overall office market
declined 4.0%.
Office Condo
The office condo market didn't fair quite as well. Plymouth saw a 9.1%
decline in this property type. This was due in large part to the effect the
economy had on the regular office market.
The industrial market activity demonstrated a rise in cap rates from the low
7's to the low -to -mid 8"s, and Real Estate Investment Trust sellers were
even willing to carry short-term seller financing to close sales. The average
VS.
Price per square foot declined from 2008 and private investors made a
majority of the acquisitions. The bulk of the sale activity occurred in the
first half of the year, with owner/user buildings in the highest demand.
Overall, the industrial market declined 4.6%.
Apartments
The apartment market in Plymouth seemed to have lost the resiliency that
the market demonstrated in previous recessionary periods. Historically,
Plymouth properties commanded much higher prices than other suburban
properties. In 2008, the pricing was readjusted for both property specific
issues as well as market conditions resulting in a 6.4% decline in the
overall market for apartments.
The value we place on properties is accomplished only after we have
conducted thorough studies in the marketplace. Costs of replacement are
checked with local builders, as well as cost manuals which are created by
experts in the field of building and appraising. Sales of property are
constantly analyzed to see what is happening in the marketplace. The
assessors/appralisers do not create value; they only measure its movement.
Equitably assessing property values is part science, part judgment, part
communication skills, and largely a mystery to many property owners. The
task becomes more difficult because property construction, financing and
ownership are more complex today than ever before.
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 helpful information that will make your job as
a member of the Board of Appeal & Equalization more productive.
10
DISTRIBUTION OF 2009 ESTIMATED MARKET VALUE BY
PROPERTY TYPE
APARTMENTS 6%
COMMERC
INDUSTR
ES1 NTIAL 740/b
2009 EMV
Residential $ 7,134,652,800
Commercial/
Industrial $ 1,911,302,500
Apartments $ 553,932,700
Tota 1 $ 9,599,888,000
11
2009 ASSESSMENT STATISTICS
Total City Parcel Count (01-02-08) 25,366
Total City Parcel Count (01-02-09) 25,454
Parcel Count Per Appraiser 2009 Assessment 4,227
Assessor's Industry Standard per Appraiser 41242
2008 Total Estimated Market Value 10,012,349,600
2009 Total Estimated Market Value (Preliminary) 9,599,888,000
2007 to 2008 Total City Valuation Growth (2%)
2008 to 2009 Total City Valuation Growth (5%)
2007 Total Building Permits 3,972
2008 Total Building Permits 6,533
2006 Plymouth's Average Home Sale Price $380,100
2007 Plymouth's Average Home Sale Price $365,100
2008 Plymouth's Average Home Sale Price $366,800
2008 Plymouth's Median Home Sale Price $335,000
Does not include townhouses or condos)
2008 "Median" Sales Ratio (Assessment Level) 94.6%
2009 "Median" Sales Ratio (Assessment Level)
94.5%
2008 Coefficient of Dispersion (Assessment Accuracy) 4.3%
2009 Coefficient of Dispersion (Assessment Accuracy) 4.8%
2007 Approximate Number of Sales (including new con- 1?158
struction)
2008 Approximate Number of Sales (including new con- 959
struction)
12
2009 SALES RATIO STUDY
The equalization of values is done through the process of sales studies.
Sale studies compare the Assessor's value with that same property's actual
sale price. The comparison gives us ratio indicators that are recognized by
the County and the Minnesota 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. The 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.
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. Corrective action may cause everyone in the
jurisdiction to suffer.
Our coefficient of dispersion in this year's study is 4.8%, anything under 10
is considered excellent. This is comparable to other jurisdictions of our size
in Hennepin County. 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.
The figures below are based on the sale of existing homes that meet the
state criteria for arm's length transactions for the 2009 assessment.
Hennepin County Sales
STYLE OF SALES AVG.SALE
PRICE
MEDIAN RATIO
Ramblers 63 298,602 948
Splits 94 295,432 950
Two Stories 148 439,003 920
Rambler -Cluster
Homes
9 436,534 935
Splits -Cluster
Homes
7 367,552 931
Two Stories -Cluster
Homes
5 318,400 932
Condominiums 102 168,911 940
Townhomes 101 255,861 946
I TOTAL 5291 1
13
PLYMOUTH 2009 RESIDENTIAL PROPERTY VALUE
VALUE PERCENT OF HOMES
Under $100,000 1.3% 294
100,001 to 20.9% 4,681
200,000
Unit Breakdown
200,001 to 34.6% 7,741
300,000
OF UNITS OF UNITS
300,001 to 23.4% 5,219
400,000
15,737 15,892
400,001 to 10.50/0 2,334
500,000
2,824 2,862
500,001 to 7.311/o 1,642
700,000
32 29
Over $700,001 2.0% 437
Total 100% 22,348
z
W
UJ12'
UNDER S100.001 S200.001 S"01001 S400JI01 S5041,001 O%-tr
S100,006 TO TO TO TO TO S700,001
200,000 S300,000 M00,000 S500,0U0 S70U,000
VALUE
Living Unit Breakdown
TYPE OF DWELLING 2008 ASMT 2009 ASMT
OF UNITS OF UNITS
Apartments 7,190 7,190
Single Family Homes 15,737 15,892
Duplex 72 68
Condominium 2,824 2,862
Townhomes 3,226 3,513
Permalease 32 29
Mobile Homes 59 59
Farm Houses 12 10
Seasonal Recreation 6 6
Co -Op Units 210 210
TOTAL LIVING UNITS 29,468 29,839
A increase of 371 living units over the 2008 assessment. Total number of homesteads 1/1/09 20,992.
14
APPEAL PROCESS
VALUATION NOTICE
DISCUSS VALUE WITH THE
ASSESSOR'S OFFICE
LOCAL BOARD OF
APPEAL & EQUALIZATION
DENY CHANGE
APPEAL VALUE
HENNEPIN COUNTY BOARD
OF APPEAL & EQUALIZATION
STATE TAX COURT
15
ADMINISTRATIVE
REVIEW
APPROVE APPEAL
I DENY APPEAL I
rp)City of
Plymouth
Adding Quality to Life
Frequently asked questions
Why are my property taxes going up when the value of my home is staying the
same or declining? I thought there was a "levy limit" that froze the property tax
rate on my home! Why did the taxable value of my home increase even though
the market value stayed the same?
These are just a few of the questions that we've received during this time of stalling or
falling home prices.
Property taxes in Minnesota are a complicated and often confusing topic for residents. We
hope the following information answers some of your questions.
Assessor's Values Lag Behind The Market.
Property taxes payable in 2009 are based upon the property's estimated market value as
of ]an. 2, 2008. This value is based upon the Assessor's analysis of market trends during
2007. Thus, when you pay your 2009 tax bill, your property's valuation is already two
years old.
But That's Not Fair!
Remember, during a rising real estate market, property owners benefited by the Assessor's
valuation that lagged behind the true value. In a stable or declining market, the reverse is
true. In either event, all properties are rising or falling with the market and, in general
terms, the tax burden of an individual property is not affected by the lag in values - either
in an up market or a down market.
When Values Rise, The City Collects More Taxes. So, Isn't There An Incentive For
The City To Increase My Property Value?
Property taxes are fundamentally different than income taxes or sales taxes. In those
cases, the tax rate is fixed and the taxes collected are determined by multiplying the rate
by income or the value of goods purchased.
With property taxes, the property tax rate is determined each year after the city, the
county and the school district make their budget decisions. Property valuations are then
used to allocate the tax burden in an equitable manner across all properties.
A rising real estate market does not generate more tax revenue nor does a flat or declining
market result in less tax revenue for the city. Property valuation determines how the tax
levy will be spread out and your share of your community's property tax bill. If your value
increased more than the average value increase of other properties in the city, you will
assume a greater burden of the tax bill - and vice versa.
How Does The Value Of Non-residential Property Figure In?
Plymouth has a stable commercial/industrial tax base that benefits residential taxpayers.
However, for many years, the value of residential properties in the City increased at a
faster pace than non-residential properties and the tax burden fell more heavily on
residential taxpayers. The reverse is now occurring and commercial/industrial properties
have a greater share of the burden compared with last year.
i".
Why Wasn't The School District's November Referendum Included In My Truth -
In -Taxation Notice?
The Truth -in -Taxation process is tightly regulated by the state. According to law, Truth -in -
Taxation notices must be mailed by the county before the November referendums, so the
approved school district levy was not included in parcel -specific notices. This is the case in
all communities that had a November referendum.
Plymouth Assessing Department
763-509-5360
17
MAPS
ARTICLES
MI.,
0
Distribution of Foreclosures
Year 2008 Total
Hennepin County
IS
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be's 0
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0 Foreclosure (Total Records: 7.348)
Commissioner District Boundary
Count of Foreclosures
Foreclosures 2008 Commissioner District Total
0-149 1 2,023
2 1.718
150-299
3 519
442 4 1,010
1,002 5 642
3,162
6 493
7 688
1 2 4 6 8 10
Miles
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0 ov 0
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Fr. SNELLING
Data Source:
2008 Sales Extract, Hennepin County Sheriffs Office Map Produced by Hennepin County
Total Records: 7,348 Taxpayer Services Department
Records Successfully Geolocated: 7.293 (99%) Survey Division
Records Unsuccessfully Geolocated: 55 (1 %) January B. 2009
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GIS TECHNICIAN 763.509.5349
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GIS TECHNICIAN 763.509.5349
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G15 TECHNICIAN 763.509.5349
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GIS TECHNICIAN 763.509.5349
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GIS TECHNICIAN 763.509.5349
S,PHOJECTS,ASSESSING Foreclosures',Fo?ecias
NIEDI-A-N HOME PRJCES ARE LNCREASING IN SOME COM-MUNITIES
kledian prices of traditional homes have increased in 19 MLS districts since 2006, when home
prices peaked in the Nl=ieapollis-St. Paul area. Traditional homes, those not in foreclosure.
represent 95 percent of the homes in the Metropolitan Area. Nletropolitan Area median home
sales price was S-230,000 'in 2006 and fell to S221,000 in 2008, a decline of only 3.9 percent.
This is Lood news when compared to the misleading decline of 23 perc,-nt for aU homes that
combine sales of traditional and lender -mediated homes 'in a smigle comparison. This
calculation, while mathematically accurate, is extremely misleading since foreclosed homes
represent only five percent of the homes but accounted for 60 percent of the transactions 'in the
most recent period.
Traditional home median sales prices 'increased by more than 12 percent in three 11VILS areas —
Maple Grove., -'Osseo (13.9 percent), Prior Lake (1333 percent), and Chaska (121.8 percent), as
shown in Table 1. Price increases of five to ten percent were recorded in six NILS areas and
traditional ho me prices increased by one to five percent 'in 10 areas.
Table I
CU:k-NGE IN NIEDLkN SALES PRICES OF
TR-ADITIONAL HOMES BETWEEN 2006 AND 2008
Price Chan2e
Number of
TvILS Ar as
10 P !rcent or 'More 3
5 to 9.9 Percent 6
1 to 4.9 Percent 10
0 1) (o 0 9) Percwi is
5.0) to (9.9) Percent
10.0) to (14-9) Perceut
15.0) to (19.91 Percent
20.0) Percent orXfore 6
Suurc!- Nfinneipo6 Area A cciation uf Rzaltors,
Price declines of less than ten percent have occurred *in 45 MLS areas and 10 to 14.9 percent in
23 MLS districts. Median sales prices have declined by 15 percent or more -in only 12 districts.
This is a far different picture than presented by a median sales price of S 150,000 when traditional
and lender -mediated home prices are combined. Median sales prices of traditional homes were
be1mv S 150,000 in only five MLS districts.
The above tale was compiled from 2008 median sales prices of traditional hornes contained in
Table 2. Homeov,-neTs of the 19 MLS areas with increasing prices ,N-111 undoubtedly be
cricouraged by reports ofincreasing prices. Homeowners in the 76 NILS areas with median price
decreases can be comforted by the fact that most traditional homes have declined bv far less than
the 23 percent reported in a recent news article. Median sales prices have declined by 23 percent
or more 41 only five MLS areas.
This analvsis was prepared ulillzmig ulformation collected by the Nfinneapolis Asca Association
of Realtors.
Table 2
2006 MEDIAN SALES PRICES COMPARED TO
2008 TRADITIONAL HOINIE MEDIAN SALES PRICES
2006 2008
Median Median
Sales Price Sales Price Percent
Code MLS Area Total Traditional Change
365 Maple Grove/Osseo S247,000 S 281,400 13.9 %
642 Prior Lake 279,900 317,000 113
397 Chaska 234,900 265,000 12.8
302 Mp1s. - Central 270,000 296,519 9.8
386 Hopkins 205,900 222,083 T9
368 Hennepin - Northwest 375,000 403,300 7.5
385 Edina 385,000 410,000 6.5
741 St. Paul - Downtown/Capital Hts 195,000 205,500 5.4
727 Still-,vater/Bayport 299,000 315.000 5.4
373 Golden Valley 268,000 280,000 4. _5
610 Eagan 237,800 247,000 3.9
392 Eden Prairie 288,950 300,000 3.8
726 Woodbury 281,000 287,700 2.4
740 St. Paul - Crocus Hill 266,000 272,000 2.3
6,40 Shakopee 218 000 222,500 11
396 Chanhassen 293,500 298,000 L5
387 Minnetonka 271,768 274,900 1.2
391 St. Louis Park 234,500 237,000 1.1
309 MPIS, - Southwest 287,000 290.000 1.0
614 Apple Valley 2 2' 6. 0 0 0 1-15,000 0A)
374 Plymouth 2937000 291,500 0-5)
748 St. Paul - To,. -,-n & CountryiMierriarn Park 275,500 273,500 0.7)
750 St. Paul - Mac/Groveland/River Road 278,000 275,500 0.9)
304 Mp1s. -Nokomis 225,000 222,750 1.0)
626 Lakeville 278,950 272,768 2.2)
612 Burnsville 233,375 227,900 2.4)
3300 Mpis. - Calhoun Isles 263.590 257,250 2.4)
380 Bloomington West 247,000 240,000 2.8)
708 White Bear Lake 245,000 237,500 3. 1)
746 St. Paul - St. Anthony/Midway 206,350 200.000 3.1)
725 Pine Springs/Lake ElmoiOakdale 227,000 219,900 3.1)
765 Arden Hills/Shoreview 242,500 234,750 3.2)
303 MpIs. - Longfellow 207,500 200,000 3.6)
752 St. Paul - Highland Area 274,400 263,700 3.9)
616 Rosemount 248,200 238.450 3.9)
766 Moundsville/NiewBrighton/St. Anthony 225,000 215,000 4,4)
617 Hastings 202,000 193,000 4,5)
608 Inver Grove 205,450 195,000 5.1)
709 Forest Lake Area 240,250 226.950 5.5)
644 Savage 266,950 252,000 5.6)
707 Harn Lake 340,000 320,930 5.6)
772 Lexington/Circle Pines 192,000 18 I'l 3 5 5.6)
Table 2 (conL)
2006 MEDIAN SALES PRICES COMPARED TO
2008 TRADITIONAL HOi'%,[E MEDIAN SALES PRICES
2006 2008
Median Median
Sales Price Sales Price Percent
Code MLS Area Total Traditional Change
394 Carver County S243.150 S 229,000 5.8) %
744 St. Paul - Como 216.250 203,500 5 9)
728 St. Paul - Riverview/Cherokee 187,686 176.250 6. 1)
738 St. Paul - Home Croft/W. 7th 180,290 168,950 6.3)
367 Hennepin- North 289,950 270,000 6,6)
624 Farmington 233,000 217,000 6.9)
702 Falcon Heights/LauderdalefRoseville 246,750 229,500 7.0)
360 Robbinsdale 199,950 185.450 7.3)
341 Wrigght County (Ext Buffalo) 216,000 200,000 7.4)
361 Crystal 197,700 183,000 7.4)
604 Mendota/Lilydale 330,200 305,000 7.6)
722 Newport/St. Paul Park/Cottage Grove 227,400 210,000 7.7)
600 W. St. Paul 200,500 185,000 7.7)
308 Mpls. - Powderhom 183,700 lK000 8.0)
362 New Hope 229,000 209,297 8.6)
340 Buffalo 215,000 195.850 8.9)
764 Blaine 229,900 209,000 9.1)
648 New Prague/New Market Elko 250,000 227,000 9.2)
310 Mpts. - University 240,000 217,500 9.4)
758 Northwestern Anoka Cty 232,000 209,900 9 5)
381 Lake Minnetonka 462,000 417,500 9.6)
660 Goodhue County 174,675 157,675 9.7)
646 Jordan 250,000 225,000 10.0)
366 Champlin 233,500 210,150 10.0)
760 Ramsey 229,900 206,900 10.0)
762 Andover 272,475 245,000 10.1)
378 Richfield 223,750 200,000 10.6)
756 Elk River 2301.000 204,750 11.0)
602 S St. Paul 196,700 175,000 11.0)
712 Maplewood/North St. Paul 222,000 196.000 11.7)
306 Mpls. - Northeast 210,000 184,900 12.0)
711 Southern Chisago County 211,900 186,200 12.1)
705 Lino Lakes/Hugo/Centmille 262,000 230,200 12.1)
379 Bloomington East 2215,000 197,000 12.4)
767 Coon Rapids 105,900 179,900 12.6)
650 Belle Plaine 214,125 186,975 12.7)
398 Victoria 477,500 414.968 13.1)
770 Hilltop/Columbia Heights 189,300 164,500 13.1)
364 Brooklvn Park 230,825 200,000 13.4)
771 Spring Lake Park 199,850 172,900 13.5)
630 Northfield 220,000 190,000 13.6)
706 North Central Suburban 264,900 228,250 13.8)
Fable 2 (cont.)
2006 INIEDIAN SALES PRICES COMPARED TO
2008 TRADITIONAL HOME INIEDIAN SALES PRICES
Source: MinneapolisArea Association ofRealton.
2006 2008
Median Median
Sales Price Sales Price Percent
Code MLS Area Total Traditional Change
720 St. Paul - Southeast St. Paul S 21T,000 S 186,750 13.9) %
721 LakelandYAfton/Dentnark 35U00 300,000 143)
768 Fridley 209,900 179,900 14.3)
769 Anoka 200,873 170,000 15.4)
713 Bethel 240500 203,023 15.6)
632 Rice County 187,650 155,000 17.4)
716 St. Paul - Hillcrest/Hazet Park/Daytons Bluff 176,000 145,000 17.6)
710 Northeast Anoka County 279,950 229,900 17.9)
780 Sherburne County 214,950 175,000 18.6)
714 St. Paul - Phalen 176,450 143,020 18.9)
363 Brooklyn Center 192,925 151,500 21-5)
754 Big Lake Township 211,000 161,000 23.7)
307 Mpls. - Phillips 191,580 140,000 26.9)
742 St. Paul - Central 153,000 107,000 30-1)
301 Mpls. - Camden 164,000 112,000 31.7)
305 Mpls. - North 153,000 65,000 57.5)
Source: MinneapolisArea Association ofRealton.
BUILDERS
ASSOCIATION
OF THE TWIN CITIES
PAVESSIRMAL ME 111LIERS i RIMBIRER& NEWS /, e I e tZ d e
FOR IMMEDIATE RELEASE Contact: Wendy B. Danks, Director of Marketing
Builders Assoc. of Twin Cities
Phone: (651) 697-1954 e Cell (612) 296-5551
95 PERCENT OF TWIN CITIES HOMES HAVE RETAINED MORE THAN 96 PERCENT OF THEIR VALUE
New Study Reveals that Reports of Substantial Declines in Local Home Values is Extremely Misleading
Roseville, MN (March 29, 2009) —A new study reveals that almost all Twin Cities homes have not suffered the double-digit
declines in median home prices often reported. Traditional homes, those not in foreclosure, represent 95 percent of the
homes in the Metropolitan Area and show a median sales price decline of just 3.9 percent.
Horne prices in the Twin Cities area are either up, down or stable in the Twin Cities, depending on a range of factors, all of
which affect price," explains Jim McComb, president of McComb Group Ltd., a Minneapolis-based real estate research firm.
Unfortunately, none of these important factors have been taken into account in the multitude of news articles that report a
steady drum beat of double digit declines in home values,"
Chief among these frequently ignored factors which influence home prices are whether or not there is actual foreclosure or
an imminent threat of being foreclosed; the home's location, type and physical condition; the number of homes in the im-
mediate area listed for sale, and the number of for -sale homes that are in foreclosure.
The McComb Group report was released jointly today by the Minnesota Builders Association, the Builders Association of the
Twin Cities and the Minnesota Association of REALTORS during their annual Builders Day on the Hill and REALTOR Day at
the Capitalat a rally in the Capital Rotunda in Saint Paul.
McComb said that there are actually two distinct home markets in theTwin Cities Metro area. "One of them, and by far the
larger of the two, is the market representing 'traditional' homes, homes that are not in foreclosure, making up more than 95
percent of all of the homes in the two cities and their surrounding suburbs."
The other market, representing a mere 5 percent of all homes in the metro, are those which are 'lender mediated,' and are
either already in foreclosure or are threatened with foreclosure," according to McComb.
McComb Group's just released study of actual home price trends in the metro area reveals major differences between the
two markets. "Our analysis uncovered the facts that the national home price surveys has largely failed to notice, " McComb
said. "Median sales prices of traditional homes—those not in foreclosure and not in danger of being foreclosed--- declined
by a mere 2.6 percent in the metro area between the 4th quarter of 2007 and the end of 2008, and in several areas, such
as Edina and Woodbury, they actually increased,"
MORE
Twin Cities Median Home Values Report 2-2-2-2-2
Although there is no way to accurately compare the median sales price of lender mediated, or foreclosed, homes with their
former sales prices in a normal market, the McComb Group study found that as a group, these homes may have declined by
30 to 40 percent during the same period.
Price performance has also varied greatly depending on the type of home involved. The decline in median sales price has
been lowest for traditional single family homes, down 3.5 percent, followed by condominiums, down 4.7 percent and town -
homes, down 63 percent.
The same home types, when lender mediated, showed significantly larger value losses, with single family homes down 30
percent from a year earlier,- condominiums down 17 percent; and townhomes down 15.2 percent. The difference between
traditional and lender mediated townhomes and condominiums was -30 and -50 percent respectively.
The McComb study shows that where homes are located in the community has also had a large effect on prices. The heavi-
est concentrations of foreclosed, or lender -mediated homes, are in north and south Minneapolis, with far fewer located in
Calhoun -Isles, Southwest and Edina. This difference in the concentration of foreclosed homes has had a dramatic impact on
prices of both traditional homes and lender mediated homes in each of the areas studied.
Lender mediated sales prices of $162,000 in the 4th quarter of 2007 were about 30 percent below traditional home me-
dian sales prices of $227,000. One year later, at the end of 2008, the lender mediated sales prices had fallen another 10
percent, to 40 percent of the traditional median home sales price. But McComb cautions that these price declines of 30 to
40 percent still only apply to a small fraction of all homes in the Twin Cities.
The high proportion of foreclosed homes in Camden and North Minneapolis is clearly depressing the price of traditional
homes along with those which are lender -mediated. Overall median sales prices have declined by as much as 44.4 percent
in North Minneapolis, 27.6 percent in Camden, and by smaller percentages in Calhoun -Isles (11 percent) and Southwest (7.9
percent), while they have actually increased by 6.5 percent in Edina.
Of the top 100 Minneapolis Area Association of Realtors areas, sales of traditional homes have increased in 17. Median
sales prices of traditional homes have declined by less than 10 percent in 58 MAAR areas, while traditional home prices
have declined by more than 15 percent in only 11 MAAR areas. In the 17 MAAR areas with increasing traditional home
prices, fewer than 33 percent of the listed homes are lender mediated, or in foreclosure.
The fact that lender mediated homes currently represent only 5 percent of all homes but are a much larger proportion of
closed sales is distorting the changes in home prices for traditional homes, while that fact understates the decline in sales
prices of lender mediated homes," McComb said, "The current market for traditional homes, which make up 95 percent of
the Twin Cities housing stock, is clearly much stronger than is indicated by such widely quoted national home price surveys
as the Case -Schiller Index and Zillow."
MORE
Twin Cities Median Home Values Report 3-3-3-3-3
Key conclusions of the McComb Group study:
Traditional homes are a separate market from foreclosed or lender mediated homes, and currently represent 95 percent
of all homes in the Twin Cities metro area.
Foreclosed and lender mediated homes, although making up just five percent of all homes, constitute a far larger per-
centage of closed sales.
Areas with a high proportion of foreclosed homes are experiencing greater declines in median sales prices of both tradi-
tional and lender mediated homes.
A copy of the complete report is attached.
The Builders Association of Minnesota and The builders Association of the Twin Cities represent over 4,800 builders, remod-
elers and firms that do business within the homebuilding industry across the state of Minnesota.
MN REALTORS represents 19,500 real estate brokers and agents throughout the state of Minnesota.