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HomeMy WebLinkAboutCity Council Packet 04-17-2001 BOEAgenda City of Plymouth Board of Review Meeting Tuesday, April 17, 2000 7:00 p.m. Council Chambers 1. Call to Order 2. City Assessor's Report 3. Public Comment 4. Adjourn II 0 MEMO CITY OF PLYMOUTH 3400 PLYMOUTH BOULEVARD, PLYMOUTH, MN 55447 DATE: April 17, 2001 TO: Plymouth Board of Review FROM: Nancy Bye, City Assessor SUBJECT: 2001 BOARD OF REVIEW The following report explains 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 2001 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 2001 estimated market value or classification questions. At the conclusion of the meeting -the Board of Review will recess, and will reconvene on May 1, 2001 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. Nancy Bye Extension #5351 E-mail NBye@ci.plymouth.mn.us TABLE OF CONTENTS DESCRIPTION LOCAL BOARD OF REVIEW AUTHORITY 2001 BOARD OF REVIEW SUMMARY INTRODUCTION TO THE 2001 ASSESSMENT INTRODUCTION TO PLYMOUTH ASSESSING DIVISION 2001 ASSESSMENT STATISTICS ASSESSMENT TERMINOLOGY 2001 SALES RATIO STUDY DISTRIBUTION OF MARKET VALUE SINGLE FAMILY HOUSING BREAKDOWN 2001 ASSESSMENT SALES STATISTICS RESIDENTIAL VALUE DISTRIBUTION APPEAL PROCESS LAKESHORE STUDY ADDENDUM PAGE# 1 2 4 8 9 10 18 19 21 22 23 25 26 27 LOCAL BOARD OF REVIEW AUTHORITY Minnesota Statutes, Section 274.01, provides that the council of each city shall be or shall 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 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 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 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. A new piece of legislation was added in the 1999 legislative session and affects the Local Board of Review. Effective May 26, 1999 for taxes payable in 2000 and thereafter: Chapter 243, Article 5, Section 24 Allows property owners to refuse to allow an assessor to inspect their property. The refusal must be verbal or in writing. The assessor may then estimate a property's value by making assumptions believed appropriate concerning the property's finish and condition. If the assessor is refused entry, the local board of review may not adjust the market value or classification in a way that would benefit the property. iJ 2001 BOARD OF REVIEW SUMMARY The majority of properties in the City of Plymouth saw changes in their estimated market value. The 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 13% 14% 13.5% 13.6% 13% 5.8% 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 16, 2001 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 2d. The City of Plymouth continued to have a high quantity of building permits for new construction and remodeling projects. This does not include the 5,600 quartile parcels that had to be reviewed and re- appraised. 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 for taxation. 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 18,175 parcels in the City qualify for a limited value. These properties are taxed on their limited market value, not their estimated value. $262,569,300 of estimated market value is not being taxed due to the limited taxation law. With the ongoing conversion of our computerized system for property appraisal,. certain workloads shifted. A . computerized mass appraisal system requires extensive time verifying the accuracy of the converted data as well as sketching to scale each property into the new system. 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 2001 assessment is a direct result of this computerization. 7 The assessment just completed for 2001 represents many hours of staff research and time. We feel confident the 2001 assessment is fair and well equalized throughout the City of Plymouth. Respectfully submitted Assessing Department Staff 3 INTRODUCTION TO THE 2001 ASSESSMENT The 2001 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 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 2001 Assessment (not the 2001 taxes) reflects an increase of 14% overall valuation over the 2000 assessment (including new construction, quartile adjustments, and/or market adjustments). This can be demonstrated as follows: 2000 TOTAL CITY VALUE 2001 TOTAL CITY VALUE PRELEMINARY) 2001 PERCENTAGE 5,421,670,100 6,192,181,500 Total Value Increase: 770,511,400 14% Value of New Construction: 151,603,000 3% Appreciation of Existing Property: 618,908,400 11% 4 TOTAL PERCENT OF VALUE GR0VVIlH IN THE CITY OF PLYMOUTH E 14% IWA gi r..-* ' ? ' SI ' s ; kit 5 , .s.. 4r t% k S •,,"', y„;".f. d^a"vt 't„ ^ .:t ' is •r k n,.s kg 9.8% 8 61%l - 5F, s u. it ;. ivaiR k= t` fV4, owl il` s a 1994 1995 1996 1997 1998 1999 2000 2001 YEARS 2001 ASSESSMENT INTRODUCTION During this past year, our staff has concentrated on collecting data on field property cards. 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 2000 and represent over 5,600 parcels, excluding 2,500 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. 61 % of all homes reviewed 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 2000 assessment was 83.8%. This is determined by Hennepin County comparing the January 2, 2000 estimated market values to sales occurring from October 1, 1999 through September 30 of 2000. The average residential increase for the January 2, 2001 assessment was 13%. This was determined by comparing the January 2, 2001 estimated market values to the same sales,, thus establishing the 2001 estimated market values at a median sales ratio of 94.9 and a mean ratio of 94.7 with a coefficient of dispersion of 7.1. 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. This past year the appreciation on existing homes was again in the double digits. The average 2000 mean sale price of existing housing stock in the City was $243,300, this 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 individual lake. The average lakeshore property received an increase of approximately 14%. The average sale price of existing lakeshore property in 2000 was $363,600. Various townhouse and condominium complexes were adjusted according to market activity as well as studied to determine if the number of bedrooms per unit affected the sales prices. - The average increase to the townhouses and condominiums was approximately 13.5 % to 13.6 %. The sale activity of condominiums and townhouses remained brisk in 2000. The average sale price of condominiums was $117,100. The average townhouse sale price was $156,300. Commercial/Industrial property values increased an average of 5.8 % from the 2000 assessment to 2001 assessment. The continued increases in value are due to several factors: continuing rent increases, shortage of supply with a strong demand for new commercial and industrial space and the continuing growth of the economy. One year of property growth does not represent the rate of inflation of the Consumer Price Index, but rather reflects the trend of movement in the local real estate market. Apartment property for the 2001 assessment increased an average of 13 % from 2000 to 2001. The factors contributing to this increase were the market activity, increase in rents and the very low vacancy rates; less than 2% in Plymouth. 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 measure 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 Plymouth Assessing Department City Assessor Nancy D. Bye CAE Senior Appraiser Commercial Appraiser Jan Olsson RES Earl Zent CAE Appraiser Appraiser Appraiser Bev Moos CMS I FJoan McCormick CMA Paul Kingsbury CMA Part-time Appraiser Joann Lowrie Assessment Technician Cindy Bowman 8 Accounting Clerk Joyce Kirkham 2001 ASSESSMENT STATISTICS Total City Parcel Count (01-02-00) 22,176 Total City Parcel Count (01-02-01) 22,785 Parcel Count Per Appraiser 2001 Assessment 4,557 Assessor's Industry Standard per Appraiser 5,000 2000 Total Estimated Market Value $5,421,670,100 2001 Total Estimated Market Value (Preliminary) $6,192,181,500 1999 to 2000 Total City Valuation Growth +12% 2000 to 2001 Total City Valuation Growth +14% 1999 Total Building Permits 2,620 2000 Total Building Permits 2,500 1998 Plymouth's Average Home Sale Price 206,300 1999 Plymouth's Average Home Sale Price 231,300 2000 Plymouth's Average Home Sale Price 243,300 Does not include townhouses or condos) 2000 "Median" Sales Ratio (Assessment Level) 94.1% 2001 "Median" Sales Ratio (Assessment Level) 94.9% 2001 Hennepin County Median Sales Ratio 95.3% 2000 Coefficient of Dispersion (Assessment Accuracy) 6.7% 2001 Coefficient of Dispersion (Assessment Accuracy) 7.1% 1999 Approximate Number of Sales (including new construction) 1,950 2000 Approximate Number of Sales (including new construction) 2,200 9 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 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 value of a parcel based on the parcel's classification. Formerly known as tax capacity rate or percentage. CLASSFICATION 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 CAPCITY - 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 tax 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 midyear homestead which carries the full homestead benefits payable the following year. For example, the January 2, 2000, classification affects the taxes payable in 2001. 12 ASSESSEMENT 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. LIMITED MARKET VALUE - 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 for taxation. 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 18,175 parcels in the City qualify for a limited value. These properties are taxed on their limited market value, not their estimated value. $262,569,300 of estimated market value is not being taxed due to the limited taxation law. 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 termimplies, 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 comers 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. 13 D01 LIMITED MAR a w -Q -E , 18,175 PAR ASSESSMENT TERMINOLOGY (continued) 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. lower priced properties. 100 points is ideal. Within 10 points of 100 is considered excellent. The PRD for the 2001 assessment is 100.247. 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 predicated 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 (d) 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) 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 1999 session, passed a law to alter the current exemption to property taxation on older homes. The property must now be 45 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. 15 3 { r 0 City of Plymouth, Minnesota This represents a compilation of information and data from city, county, state and other sources that has not been field verified. Information should be field 4A verified and compared with original source documents. w`R ' TF 306,000 NOT TAXED 128 PARCELS H I ; f y 1 } e C IR- T I T 1. y f k PLj If ih did ffl r 1 1i n (' [.-- tiV Ill.. 3 { r 0 City of Plymouth, Minnesota This represents a compilation of information and data from city, county, state and other sources that has not been field verified. Information should be field 4A verified and compared with original source documents. w`R ' TF 306,000 NOT TAXED 128 PARCELS ASSESSMENT TERMINOLOGY (continued) To qualify for the exemption of improvements from the property tax, the property must be 45 years of age or older at the time the improvements commence and it must be receiving the homestead classification or will be receiving the homestead classification by December V 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 as swimming pools and yard improvements are not included. Only improvements which contribute to increase the value by $5,000 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. Properties valued to $450,000 may qualify. To qualify , for exemption, the homeowner must have obtained a building permit. There is no limit to the total numbers of building permits to be considered, only the total dollar amount of each improvement. The total qualifying value is dependent upon the age of the residence. Houses that are less than 45 years of age, do not qualify. The qualifying value of houses that are at least 45 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 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. The following pages discuss the methodology and our 2001 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. 17 2001 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 received on Industrial properties for the 1998 assessment (-5% to building value). Fortunately it has never been done to residential properties. The 2001 sales study recently completed by our staff and Hennepin County places our overall median ratio at 94.9%. Hennepin County's average median ratio is 95.3 % 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 7.1 %. 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 is currently at 100.2 This shows our ability to treat higher priced homes as equally as the lower priced homes. 100 is consideredep rfect. 18 DISTRIBUTION OF ESTIMATED MARKET VALUE BY PROPERTY TYPE 2001 Apartments 6% Residential Commercial/Industrial Apartments TOTAL EMV Percentage 70.00% 24.00% 6.00% 2001 4,366,089,700 1,471,638,800 354,453,000 6,1929181,500 19 nesiaennai lu ro MIX 3,766,941,500 1,355,916,500 301,812,100 5,421,670,100 2001 RESIDENTIAL PROPERTY VALUES Total Estimated Market Values According to Assessor Records Market Value Ranges 50,000 & under City of rh $ 50, 001 to $100, 000 Plymouth, Minnesota ® $100,001 to $200,000 200,001 to $300,000 N $300,001 to $400,000 This represents a compilation of information and W E 400001 to $500,000 data from city, county, state and other sources that has f 1 not been field verified. Information should be field Over $500, 000verifiedandcomparedwithoriginalsourcedocuments. 3 MEMO CITY OF PLYMOUTH 3400 PLYMOUTH BOULEVARD, PLYMOUTH, MN 55447 DATE: April 17, 2001 TO: Assessing Staff FROM: Nancy 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, 2001. TOTAL LIVING UNITS: 25,953 2001 Assessment represents an increase of 636 living units over January 2, 2000. Total number of homesteads (1/2/01) 19,652. 21 2001 ASMT TYPE OF DWELLING OF UNITS Apartment Units 5,667 Single Family Homes 15,147 Condominiums 2,281 Townhomes 2,593 Permalease 44 Mobile Homes 59 Farm Houses 22 Seasonal Res. (Cabins) 7 Co -Op Units 133 TOTAL LIVING UNITS: 25,953 2001 Assessment represents an increase of 636 living units over January 2, 2000. Total number of homesteads (1/2/01) 19,652. 21 MEMO CITY OF PLYMOUTH 3400 PLYMOUTH BOULEVARD, PLYMOUTH, MN 55447 DATE: February 01, 2001 TO: Nancy Bye, City Assessor FROM: Jan Olsson, Senior Appraiser SUBJECT: ASSESSMENT - HENNEPIN COUNTY STUDY SALES STATISTICS OVERALL SALES RATIO 2000 Estimated Market Values were used on all sales) STYLE OF SALES AVG. SALE PRICE MEAN RATIO Ramblers 133 202,800 922 Splits 194 207,100 947 Two Stories 237 297,700 974 Rambler - Cluster Homes 10 271,900 965 Splits - Cluster Homes 12 207,200 941 Two Stories - Cluster Homes 4 221,300 1.00 Condominiums 242 117,100 948 Townhomes 133 156,300 957 TOTAL 940 The above figures are based on the sale of existing homes that meet the state criteria for arm's length transactions. Approximate Number Homes Sold Including New Construction 2,200 Average Sale Price of Single Family Homes $243,300 cc: Appraisal Staff 22 PLYMOUTH RESIDENTIAL PROPERTY VALUE DISTRIBUTION 2000 10 0 UNDER 550.000 550.001-5100.000 S100.0014200.000 $200.001-$300.000 S300.001-5400.001 5400.001-$500.000 OVER $500.001 Value VALUE UNDER $50,000 50,001 TO $100,000 100,001 TO $200,000 5200.001 TO $300,000 300,001 TO $400,000 5400,001 TO $500,000 OVER $500,000 TOTAL PERCENT # OF HOMES 1.58 311 8.98 1,765 52.57 10,333 26.89 5.286 7.42 1,458 1.90 373 66 129 100.00 19,655 23 PLYMOUTH RESIDENTIAL PROPERTY VALUE DISTRIBUTION 2001 VALUE PERCENT OF HOMES UNDER $50,000 50 94 50,001 TO $100,000 5.30 1,062 100,001 TO $200,000 46.61 9,335 200,001 TO $300,000 31.77 6,363 300,001 TO $400,000 10.85 2,172 400,001 TO $500,000 3.66 739 OVER $500,000 1.31 262 TOTAL 100.00 20,027 50%] 45%- 40% -- 5% 40•/. 35% 30•/. 25•/. 20% 10% 5% zZ 0 0 35%-- r^ m o 30%-- O W O r 25%-- Cl O 20%- C20 O O ClO OO O O O O 10%-- 5% 0% i 24 zZ 0 0 o 0o r^ m o Cl X O N O W O rr Cl OCl C20 O O ClO OO O O O O 24 0 0 o m ClO ClCl Cl X O N r r r OO Cl O O O O O COO OO ClO OO VALUE MARKET VALUE APPEAL PROCESS NOTICE OF MARKET VALUE DISCUSS WITH ASSESSOR'S OFFICE LOCAL BOARD OF REVIEW DENY APPEAL COUNTY BOARD OF EQUALIZATION CHANGE VALUE STATE TAX COURT 25 ABATEMENT PROCESS ADMINISTRATIVE REVIEW) APPROVE APPEAL DENY APPEAL 2001 RESIDENTIAL LAKE SHORE SALES STUDY 2000 SALES) NUMBER NAME 1 YEAR AVERAGE AVERAGE OF OF OF LOT SALE PARCELS LAKE SALES VALUE PRICE 115 Bass 5 121,000 TO 456,500 200,000 37 Gleason 1 95,000 TO 259,900 230,000 48 Hadley 3 120,000 TO 495,000 175,000 33 Lost 2 90,000 TO 337,450 120,000 141 Medicine 2 135,000 TO 237,500 210,000 43 Mooney 2 120,000 TO 662,500 320,000 53 Parkers 0 0 0 8 Pike 0 0 0 60 Schmidt 3 120,000 TO 361,333 150,000 530 18 Parcels Sales Hennepin County Sales Study of all Residential Lake Shore Sales in Plymouth for the 2001 Assessment included: TOTAL SALES: 8 MEAN RATIO: 85.5 Preliminary Ratio After increases MEAN RATIO: 98.9 Lakeshore properties were given a 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. 26 F 1 LI1 jUM 27 The Published monthly except combined issues for May - June, July -August and November -December. Minneapolis Area Association of REALTORS'', 5750 Lincoln Drive, Minneapolis, MN 55436 Telephone: 952.933.9020 Fax: 952.933.9021 Office hours: 8:00 a.m. to 4:30 p.m., Monday through Friday, except holidays. Subscription rate: Members: 12 a year paid with dues. Others: $30 a year. USPS 351160 ISSN 1054-9684 Periodicals postage paid at Minneapolis, Minnesota and additional mailing offices. POSTMASTER: Send address change to: The REALTOR*, P.O. Box 9570, Minneapolis, ND! 55440-9570 Minneapolis Area Association of REALTORS'* Fran Davis President Budd Batterson, GRI President-elect Jon Perkins, GRI Secretary Robin Peterson, GRI Treasurer Mark D. Allen Chief Executive Officer MINNEAPOLIS' w.. uv.w....a REALTORS rmt/arcwmafW Stocks, Rates Take Heat Out of Bidding Wars" he nationwide torrid housing market is cooling off declared a recent USA Today headline. Nationally, sales of existing and new homes are down six percent from the record setting standard of 1999. This stands in stark contrast to the Twin City housing market, which is keeping pace with the hot markets of 1998- 1999. The decline in the national housing market is being directly attributed to rising mortgage interest rates, currently at a five year high. In addition, evaporating wealth caused by the Nasdaq sell-off has had a chilling effect on many would-be homebuyers. While you cannot debate that the local housing market has kept pace with the past two years, local consumers will be hearing reports from the national news media that the market has slowed down. Local REALTORS® will need to recognize this and educate their con- sumers on local housing market condi- tions. May MLS statistics verify the Twin City residential real estate market has definitely kept up an active pace. There were 5,311 pending sales in May, up 1.0 percent from 5,260 pending sales in May 1999. Brisk pending sales com- Listings Processed bined with the low listing inventory continues to drive up prices of Twin City real estate. In May the average sale price of a closed home stood at 168,100, up 10.2 percent over May 1999. Year-to-date pending sales through May are at 22,296 units, down 1.6 percent from 22,653 units through May 1999. The number of new listings processed through May is at 27,149 units, up 1.8 percent over the same time period in 1999. The average price of a closed home in 2000 is $162,700, an 8.2 percent increase over the 150,400 average during the first five months of 1999. As previously forecasted the Twin City residential real estate market is right on track to finish a couple percentage points behind 1999. Moving into the future, the unknown factor is how the interest rate hikes by the Federal Reserve along with the correction in the stock market will impact local real estate sales. The next few weeks will be critical in determining how Con- sumer Confidence is impacted by these events. Sources: The Real Estate Outlook, NAR, Realty Times, Inman News, USA Today. J:Year to tmte-,Z 1999 20_00 change 1999, ;2000 change; 6,065 1 6,454 6.4 Q 26,656 27,149 1.86 Pending Sales_.. _.._:...5,26 Current Listings 13,666 Closed Sales, 4,149 Closed Sales 4,644 Dollar Volume ; $632,722,500 Average Price $152,500 Median Price9? $130.900 Web page: mplsrealtor.com d°ntlaio"M sr''condo'0115 .w**0m. - N pMedY tip- sin& Camay, condo, Wwnhome. W*thoms. dtrpbx. moble home, rarmsmobbr farm, k"stment and k)Waaeage. eased on data hom the RegWW MWb* Listing Service. 2 - The REALTOR* - July / August 2000 5,311 1.0 U 22,653. 22,296 1 6 13,437 1.7 V 4,830 16.4 Q 16,715 18,1513 8 6 Q r.__.....,.... Y,.,. _,.•.. z 5,416 16.6 U 18, 799Y 20,674 10.0 Q 811,923,000 128.3 V 514,345,200 2,954,137,600 17 5 Q ° 168,100 10.2 U V 150,400 162,700 1391100 8.2 "lJ 9 0 +Q145,000 10.8 128,400 Web page: mplsrealtor.com d°ntlaio"M sr''condo'0115 .w**0m. - N pMedY tip- sin& Camay, condo, Wwnhome. W*thoms. dtrpbx. moble home, rarmsmobbr farm, k"stment and k)Waaeage. eased on data hom the RegWW MWb* Listing Service. 2 - The REALTOR* - July / August 2000 The Published monthly except combined issues for May - June, July -August and November -December. Minneapolis Area Association of REALTORS, 5750 Lincoln Drive, Minneapolis, MN 55436 Telephone: 952.933.9020 Fax: 952.933.9021 Office hours: 8:00 a.m. to 4:30 p.m., Monday through Friday, except holidays. Subscription rate: Members: 12 a year paid with dues. Others: $30 a year. USPS 351160 ISSN 10549684 Periodicals postage paid at Minneapolis, Minnesota and additional mailing offices. POSTMASTER Send r address cThangDe to: R1 4e REALTOR% P.O. Box 9570, Minneapolis, MN 55440-9570 Minneapolis Area Association of REALTORS® Mran Davis President Budd Batterson, GRI President-elect Jon Perkins, GRI Robin Peterson, GRI Treasurer Mark'33. Allen Chief Executive Officer lINNEAPOIJS REALTOR w - T 01 RII S FORA FAWhafsa' Web page: mplsrealtor.com 39.5 billion dollars in 1999 residential brokerage commissions id you generate your share of revenues in 1999? REAL Trends publication recently projected there were 10,721,880 broker controlled U.S. residential real estate sides in 1999. These transactions reflected $720 billion dollars worth of residential real estate and resulted in 39.5 billion dollars of residential brokerage commissions paid according to REAL Trends estimates. While their projections may be debated (i.e. they are showing an average sale price of 68,000), the significant point is the real estate brokerage industry gener- ates billions of dollars in commission revenue. There were 3,912 pending sales in September, up 3.7 percent from 3,772 pending sales in September 1999. Year- to-date pending sales through the third-quarter are at 39,767 units, down 2.2 percent from 40,655 units through the third quarter of 1999. The average rice of a closed home in 2000 is 172,400 a 9.9 percent increase over the $156,900 average during the first nine months of 1999. The Twin City 2000 residential real estate market continues on pace to finish slightly behind 1999, as forecast at the beginning of the year. Residen- tial real estate is projected to finish the year with 48,500 pending unit sales for the third highest total in history. The national housing market made a good comeback following a slowdown earlier this year. The National Associa- tion of REALTORS° is projecting home sales to remain strong for the balance of the year, with existing home sales falling 4.2 percent behind the record volume of 5.2 million sales in 1999. Looking forward the market will be vulnerable to current international economic and political issues. According to Dr. David Lereah, NAR's chief economist, "Higher fuel prices could result in inflationary pressure and higher interest rates, and continued volatility in the stock market can readily affect consumer confidence. The good news right now is that the funda- mentals of the U.S. economy are healthy." New construction continues to be a booming market. While planned hous- ing units are about 4 percent behind 1999's record, they are still at least 10 percent ahead of previous highs. According to the Builders Association of the Twin Cities, the following cities are the most active in planned construction units: Maple Grove, Apple Valley, Shakopee, Lakeville and Woodbury. Sources: The Rte( galuk Oat k, ppb REpL Vends, Builders Association of the l vin Cities aU Slrcd oarnal 2 • The REALTOR' November / December 2000 ColERCP LyRSTATE A':.I FdAJ1V rr4• . Strong demand for office space is reported in western suburbs By Melissa Levy Star Tribune Stafff'Writer Office tenants have been ac- tively leasing space in the western and southwestern suburbs of the Twin Cities area, where several new, high-end buildings have opened this year. Overall, nearly 3 million square feet of office space will be ab- sorbed in the metro area in 2000, double the 1.5 million square feet absorbed last year, according to a year-end market report released Wednesday by United Properties, a Bloomington -based commercial real estate firm. Absorption is the amount of space occupied minus the amount vacated. It's a healthy environment not just ,for owners, but for tenants," said Mike Ohmes, vice president of brokerage services at United Properties. With more than 4 million square feet of newly constructed office space added to the market Supply outpaces demand in office space The amort of mndti-ter"A office space in the Twin Cities increased nearly 7Pmentinthepastyear. with the additl0rnal space pushing the vacancy rate to10peroertfrom8percentin1999. It is the first time vacancy rates have beenaship,Jils 10 percent snce 1994. 44. r - .: Mul&tenant office space Mritirtertent feet) n riA= of squarearcar rates ' , ' ' +:r <<jc i{ 67.5 45.3' r 30 26 F!i 1576 ;10% 10 .. t ' 95 '001900S5 '95 • '- SaiocUHGedproperties this year — in both single -user and multi -tenant buildings — va- cancy rates have increased to 10 percent, from 8 percent last year. Rental rates have remained flat in most areas of the market. United Properties' brokers said. Another 5.5 million square feet of owner -occupied and multi-user office space is under construction in the Twin Cities area. OFFICES contimms on D2- 2— 81 percent occupancy in west. OFFICES from D1 Vacancy rates expected to be at the same level as this year Of the office buildings under construction, 1.7 million square feet of space is scheduled to be completed in 2001. Ohmes said that absorption should be in the 1.6 million- to 1.8 million -square - foot range next year, with vacan- cy rates at the same level as this year. This year, the west and south- west markets will account for more than 60 percent, or 1.8 mil- lion square feet, of the metro ar- ea's total absorption. . In the western suburbs near Interstate Hwy. 394, about 842,000 square feet of office space has been absorbed this year. That is more than in the past sixyears combined, said Jim Jetland, vice president of office brokerage at United Properties. The four major new office de- velopments in the Twin Cities' western region "saw tremendous absorption • and success," with combined occupancy of .81 per- cent, he said. But the new projects in the southwestern suburbs near Inter- state Hwy. 494 haven't leased up as quickly, jetland said. Qf the 924,000 square feet added to t southwestern region this year. percent has been reserved. 1 said. Another 815,000 square fe of space is 'set to be added to tl region in 2001. I think people are cautious optimistic about the [southwec market going forward," Jetlai said. In downtown Minneapolis. 4 million square feet of office spa is under construction. There ha been varied estimates of he high the central business di trict's vacancy rates will peak the space comes online over tl next couple years. United Properties' forecast for vacancy rates to peak at abo 13 percent in 2002, said Bre Erickson, senior associate of c fice brokerage. A recent report - the local chapter of the Natior. Association of Industrial and C fice Properties predicted rates downtown Minneapolis for Cl!a A, or high-end, office space cou reach as high as 17 percent 1 2002 Melissa Levy can be contacted at mlevy@starlF une_ca;n Builders say land scarce in area Land shortage is contributing to rising housing costs By Kim Johnson Sun Newspapers The amount of land available for building houses and com- mercial developments on in the Twin Cities is dramatically less than original estimates from the Metropolitan Council indi- cate, according to a recent study by the Builder's Association of the Twin Cities (BATC). That land shortage is con- tributing to the rising cost of housing in the area, the study continued, adding that land prices are 20 percent to 35 per- cent of total housing costs. Using aerial photographs of the metropolitan area, the Met Council estimated in 1999 that about 97,000 acres of vacant/agricultural land exist within the Metropolitan Urban Services Area (MUSA). The esti- mate did not specify that all that land was developable. The MUSA line, as estab- lished by the Metropolitan Council, restricts how far cities can expand their public utili- ties. The BATC study states that less than half of that 97,000 acres can support residential or commercial development. The Met Council figure did not factor into account what parcels were dedicated for parks, or what property was al- ready owned, and therefore un- likely to be developed, by busi- nesses, families or churches, said Wendy Danks, BATC's marketing director. In the BATC study, conduct- ed by Dahlgren, Shardlow & Uban Inc. of Minneapolis, re- searchers talked to city officials and developers from 23 commu- nities straddling the MUSA line. Some of the cities surveyed included Chanhassen, -Chaska, Eden Prairie, Inver Grove Heights, Lakeville, Orono, Ply- mbuth, Rosemount, Shakopee and Woodbury. Parklands and other va- cant/agricultural property un- likely to be developed were sub- tracted from the Met Council LAND: To Page 25A I FSrom Page ILA figure. The BATC study identified about 21,500 acres available for development in the 23 cities it targeted. However, the as- sociation is beginning an even more de - tailed -study, which could further reduce that number Phase two ofthe studywill identify areas where pobieat coalitions, steep grades and railroad and ttreet right-of-ways would limit, ifnot rule out development -- - We thinkthis'is an impoitant region- al growth- issue,' said Tom Mc4lveen, BAWa director ofpublic policy He added. that a precise measurement of what land is available for both commercial and res idential development is important when trying to avoid urban sprawl. The BATC is working with the Met Council, state legislators and city officials, = is to increase the amount. of laW avaf hoping a. development master plan can be ' -. able to development, and a second is t created, McElveen said. The master'plan• revamp cities' building fee structures. would. include areas not to be developed, BATC officials. presented their fine such as forests and wetlands, and it would ings to the Mayors Regional Housin identify regional transportation needs. Task Force, which recently stated one c The environment matters ... to the builders," its objectives should be.to study cities' fe community and to the structures. McElveen said, adding that a transports- The BATC's recommendations t tion plan would also help determine counteract the area's land shortage is t where. new developments should go and : extend or even eliminate the MUSA Linc what they, should be. which affects what land is available fo The BATC isnot contending that the development land shortage is the. only thing tliatdis . Our policy is -that- [therMUS-A-hnel i causing housing costs to increase, -Dinka - not working for the region," McElvee. said, addingthat there are numerous fac- said. `At the end of the day, you mayy-nc tors contributing to rising housing prices. need a MUSA line at all.' However, there are two things region- The BATC land study is available at th al -and local government agencies can do organization's Web site 'at www bateor. to improve the situation, she added. One line.org/bate land study.html. - Tuesday JANUARY 30, 2001 A'p'''artm for rent N tol 1:,Ike State's -rental vacan is among: lowest in' " By Jean H4fe :s7_ ger the Twin Star Tribune Stafj'Writer In 2001 It may be more difficult to vacancyc In th find rental housing in Minneso- , income h to than in nearly any other state: cult rentE in the nation according to apartmer new report on. Minnesota's af- percent i fordable housing predicament. median r Only two states, Vermont percent," and New Jersey, had significant- is sched ly lower rental vacancy rates ' today. than Minnesota in 1999. And, according to the report by the HOUSING legislative Auditor's office, only — The rel three of the nation's 75 largest mends metro areas had significantly• the situ lower rental vacancy rates than PAGE AB • STAR TRIBUNE ** HOUSING from Al Law on affordable housing called `marginally successful' In addition, the current va- cancy rate is unusually low at 1.5 percent." the report said. 'Min- nesota's rental market has been tighter than most other markets for at least 10 years." The study looked at the rea- sons for the shortage of afford- able housing in Minnesota, a subject of growing interest at the Legislature. But the report makes no recommendations on how to remedy the situation. It found that Minnesota's af- fordable housing problems are rooted in wages that haven't kept pace with housing costs, in state efforts to build housing — such as the Livable Communities Act that have more incentives than teeth, and in high land, labor and materials costs that make build- ing homes expensive. The report defines as 'afford- able' a house that sells for 140,000 or less in the metro area or for $95,000 or less outstate. For renters, 'affordable" translates into $738 or less for a two-bed- room apartment in the metro area or $495 for that apartment outstate. The report found that the number of Minnesota households having a hard time affording housing maybe increasing. Workers who earn the median wage in 14 of the 25 fastest -grow - mg occupations — including home health aides. cashiers and retail sales — would have to spend more than 30 percent of their income on rent for an aver- age one -bedroom apartment in the Twin Cities. The 30 percent benchmark is typically used to determine if housing is af- Snmaable. For example. the average rent for a one -bedroom apartment in the Twin Cities is about $664 a month, the report said. But a re- Uil sales clerk who worked full lime and earned the statewide median wage of $8.06 an hour, mad lived alone. could afford about $397 a month for rent. That amounts to about 30 per- cent ofthe cImVs income. hat sales clerk would have to cam about SI277 an hour in or- der to afford the average Twin Cities apartment, the report said. Those most likely to have problems paying for housing are low-income people, senior citi- zens, single parents, renters and minority members, the report said. About one in four Minneso- ta households spent at least 30 percent of their income on hous- ing in 1989, the last year for which data are available, the au- dit said. Meanwhile, the law designed to increase affordable housing in the metro area, the Livable Com- munities Act (LCA), has only been "marginally successful," the report said. The reason: It has few teeth. The Metropolitan Council, which monitors the housing built under the law, can- not reject an affordable housing plan proposed by a municipality and the action plans are not le- gally binding, the report said. In addition, few municipalities are meeting their LCA housing goals, the report said. If munici- palities met their goals, about 77,000 new affordable units would be added to the region between 1995 and 2010, the Met- ropolitan Council has estimated. But it estimates that only 84 per- cent of those units will be .built by by 2010, and even that num- ber is probably too high, the re- port said. Nonetheless, the LCA has prompted some Twin Cities com- munities to focus more attention on providing affordable housing. About 104 of the metro area's 186 municipalities participate in the program, including Minneapolis and St. Paul, the audit said. The report also found: Home prices rose faster than income from 1990 to 1999. The median home sales price went up 61 percent statewide. and home prices in the lowest 10 percent of the market soared 80 percent. Median household in- come went up 50 percent during the same period. In 70 of Minnesota's 87 counties in 1999, median -priced homes in -the county were con- sidered affordable. That included Average rents for Twin Cities -area apartments, 1999 and 204( 1999 2000 Percent change Al ... ' S678..-.:.. $751 1196 Efficiency $465 $504 x 8 Or>e#eedroom ' V$603'r ` Z, $664;,_ Two-bedroom $753 $815 8 3; L,__ 1A90M. Source: Office of the Legislative Auditor Twin Cities communities producing most housing, 1998 Affordable Affordable units as qty Units units percent of total Lakeville 680 97 14 x'64,3.38$<. Blaine 587 252 43 a, f Maple Grove 450 67 1- 15 Hennepin and Ramsey counties. The 17 counties where the medi- an -priced homes weren't afford- able generally surrounded Hen- nepin and Ramsey counties. The report found that develop- ers of affordable housing patch together an array of funding sources to build their projects. concludes that: 'Increasing th production of affordable housin may require government inter vention. lean Ropfensperger can be con- tacted at hopfenfstartribune.con Area home sale's jump up 14 . 75% By Neal Gendler Star Tribune Staff Writer The hot Twin Cities real estate mar- ket defied flagging national activity in February as the number of existing home sales shot up 14.75 percent — and the total value soared almost 30 percent — from February 2000. Nationally, sales last month fell 0.4 percent from January and were off 2.6 percent from February 2000, although they remain "exceptionally high," the National Association of Realtors said HOMES from D1 Median home sale price rises 50 to $157,750 in February That makes a "fast and flu- id" market, he said, so 'it's' critical that buyers have a strategy planned before going to look at homes. Buyers need to be preapproved for a loan, determine what they're look- ing for, where they want to look and how they will re- spond to a bidding war, said Batterson, an Edina Realty agent. 'On the vast majority ofhomesthatarewellpriced, the buyer is likely to be facing multiple offers." Well priced*. doesn't mean a . bargain price, he said. 'It means a house that feels com= fortable to a buyer in compar- ison with the others the buyer has seen." He added that buy- ers 'know that quite often, the listing price on a house be- comes the floor at which they might be.able to buy it." Marketwide, the result is'a continuing price increase, es- pecially in lower brackets. Al- though the 4,750 new listings processed last month were up p from a year earlier, that was up only 1.6 percent from January. The $365 mil- lion in February sales closed was..aow in Januaj cent froi February' Monday.Locally, however, strong de- mand continues to fuel the market's pace and price. As we're into the third consecutive hot spring market, the good news is that this year the number of homes on the market is up — but the numbgr of buyers in the market is also up," said Budd Batterson, president of the Min- neapolis Area Association of Realtors. HOMES continues on D4: 1 Median price hits $157,750. Price rise pinches entry-level buyers. The median price — where half sold for more, half for less rose to $157,750 in the Twin Cities last month, only 50 mom thaainJan, but A -13:5 -percent increase from 13000 -in-February2000. The data, compliea"f m, broker reports to the Regional Multiple Listing Service, are for sales of single-family, townhouse, condominium and co-op sales in the 13 - county metropolitan area. Batterson said rising prices also push inventory out of reach for entry-level b . ers. Me. number of entry- evel homes' we're "seeing - — 100,000 to $150,000 — is slim," he said. Move -uphomesinthe $350,000 -to - move -up in second- and third -ring suburbs. That's. still a strong market," but sales take "a number of days or a few weeks." The number of listings for all property types was 13,073 at month's end, an increase of 10 percent from last February. Batterson said interest rates a bit below 7 percent are helping to spur sales, "but I don't think it's a pure interest - rate play." He said jobs attract people to the Twin Cities area. and people not only want to own but also want 'the invest- ment return that homeowner- ship provides. For many peo- ple, the investment return on their house has been the best - performing part of their port- 94o.in thelast year;..:.. . Neal CeRdleiY Home sales dip ; but housing is , stilla' mainstay Associated Press WASHINGTON, D.C. — Sales of new and existing homes each dipped slightly in Feb- ruary, but demand remained strong as housing continued to demonstrate few ad- verse effects from the slowdown in the over- all economy. Sales of new single-family homes fell by 2.4 percent last month after a steeper 5.4 percent decline in January, the Commerce Department reported Monday. SALES continues on D5: Mortgage rate drop props up sales. New home:sales Seasmla ad)JSW "uw rate; i.ttausands of oohs 00 Feb. goo edo a MAM JJASONO J l ,°7 sw='CaMerenoe Boal AssaaaoeQ Ras _ • tNSiDE: Dow industrials rebound continues.. D4 SALES from D1 Mortgage rate drop helps keep home sales healthy Even with the back-to-back declines, sales of new homes remained at a healthy annual rate of 911,000 units in Feb- ruary. eb- ru Ukewise, sales of existing homes were down slightly in February, a dip of 0.4 percent, following an increase of 5.3 percent in January. The small February decline left sales at a strong annual pace of 5.18 million homes. In the Twin Cities area, res- idential building permits were off 15 percent from February 2000, but builders still enjoyed the third-best February in more than a decade. The 132 metro -area cities tracked by the. Keystone Report issued 627 permits, down from 736 a year earlier, but ahead of Feb- ruary 1999 by more than 10. Ft. orr the first two months, permits were off about 15 per- cent from the 2001 period but remained a little ahead of those months in 1999 and 1998. Jeff Schoenwetter, presi- dent of the Builders Associa- tion of the Twin Cities, called the local new -home. market very hot" and said he expects to see strong numbers in about 10 weeks, when permifs are issued for homes pur- chased during the Parade of Homes Spring Preview. In the midst of all the eco- nomic mess, housing is put- ting in a remarkable perfor- mance," said David Seiders, chief economist at the Nation- al Association of Home Builders. Analysts attributed the continued strength to declin- ing mortgage rates. David Lereah, chief econo- mist for the National Associa- tion of Realtors, which com- piled the existing -home -sales report, said the drop in 30 - year fixed-rate 'mortgages since a peak in May 2000 means that an additional 300,000 households can quali- fy to buy a typical home. Although . the slowing economy is causing a little drag on the market, consum- ers who are confident about their own future are going ahead with big-ticketpur- chases like homes and cars," Lereah said. According to a nationwide weekly survey of rates, 30 -year fixed rate mortgages dropped to 6.89 ppercent last week sig- nificandy below the peak of 8.64 percent hit in May. In that month, the Federal Reserve Board pushed up short-term interest rates for a sixth time in an effort to slow an economy that at the time was growing at a sizzling pace. However, with economic growth slowing dramatically at the end of last year, the Fed switched course. The central bank has now cut interest rates three times since Jan. 3. reducing them at the fastest pace in 16 years. Despite the quick turn. around, a number of critics contend that the Fed waited too long to cut rates. signifi- cantly pushing up the risks of an outright recession. The National Association of Business Economists said Monday that 34 percent of a panel of 267 of its members believed that the Fed had been too restrictive with mon- etary policy, the highest read- ing since February 1996. Economists are looking for the Fed to ease rates further in coming months, helping to. keep mortgage rates low and the economy out of a re= cession. Sciders forecast that sales of new homes this year should total 875,000, a solid perfor- mance but a drop from recent highs of 907,000 in 1999 and 903,000 last year. But he said that forecast could be off the mark if the stock market continues to plunge and consumers sud- denly decide to stop spending. If the stock market goes into another tailspin and con- fidence levels continue to erode, then almost no mort- gage rate is likely to keep peo- ple in the market," Seiderss said. 11:. 5.4 percent drop in new -home sales in February existing home dipped 0.6 per - cent to $174,700, according toreflectedweaknessintheMid- the Realtors' report. west and West. The median price for a new The small decline in sales home, the point where half of existing homes reflected weakness in the Northeast, the homes sold for more and. half for less; was $210,900 in where sales dropped 3 per-' February, up 3.2 percent from cent, and the South, where sales dropped 2.8 percent. January's median price of 204,400. Sales of existing homes ac - The average price of a new tually rose 3.1 percent in the West to an annual rate of 1.33homewasupaslight0.1 per- million units and were up 1.8centto $167,000 in February. The median price of an percent in the Midwest to an ex- isting home was up 1.2 per- . annual rate of 1.16 million. Staff Writer Neal GendlercentinFebruaryto $138,800, while the average price for an contributed to this report. Turn5our tax business into big business. Published Sunday, April 1, 2001 Home market is lightning-fast despite economic pessimism Neal Gendler / Star Tribune startnum.com For the third consecutive spring, too many Twin Cities area home buyers are chasing too few Business homes for sale. They're apparently undeterred by gloomy national economic forecasts. i Maud buyer competition leads to multiple offers and bidded-up home prices, which normally Maud rim would make it more difficult for first-time buyers to get into ownership. But Budd Batterson, an Edina Realty agent who's president of the Minneapolis Area Association of Realtors, said A glance at Budd Batterson the market isn't normal. The reasons are a strong local economy, low rental vacancy rates and prosperous home buyers. QWhat's happening in the market? AThe market is very, very strong, with a lot of buyers. We're not seeing the signs of recession and things of that nature that have been predicted so often lately. We've been blessed with a very diverse economy in the Twin Cities area, and while there are layoffs occurring across the country, we're not seeing them. Most people here who are facing that prospect have little trouble replacing a job. QWhat's making the local market so active? AThere are more buyers than homes. That's because it's a natural desire for people to want to own a home. A lot of people who have not owned have seen others getting tremendous appreciation and want to get in on that. And it's a very tight rental market, the cost of rent reaching a point that makes buying more attractive. Rents often equal what first-time buyers would pay to own. QWhat does the competition for homes do to the ability to buy? APrices at the bottom of the market are rising, which moves everyone up. What's happening is that the bottom rungs of the ladder are further from the ground — that first step has gotten steeper. QWon't that price people out of the market? AIt makes people want to get on that ladder now. Pricing people out is something we're going to have to work on as an entire region. rim hoping were wise enough with our land use and planning to avoid that problem QHow does land use affect existing -home prices? ARising land prices have driven up the cost of new construction, and as new home prices rise, existing homes rise with them I think it becomes paramount that all of the players in the housingmarket come together to make sure we can create affordable housing, housing options, so that we keep the first rung of the ladder within reach. The Met Council is mindful of this; I think there's good leadership there. Land prices clearly are one of the biggest challenges. Density and the cost of [governmental building] approvals are two other challenges. In some communities, high density is five units per acre; in others, high density is 15 or 20 units an acro. httpJ/webserv5.startribune.com/stOnLinelcgi-binlarticle?tbisSlug=HEAD01 &dated -Apr -20(... 4/3/01 Home market is lightning -fast despite economic pessimism Page 2 of 2 QIs this year's inventory shortage worse than in the previous two springs? Al saw some statistics that said there were more houses on the market this year compared to last year, but it feels like last year in certain market areas and certain price ranges. Particularly in city neighborhoods and in first -ring suburbs, we're seeing a rapid rise in prices. There's been a renewed interest in living in the city or in first -ring suburbs. I think we're going to see more and more of that. For example, [Minneapolis'] Phillips [neighborhood] is having a tremendous increase in values. QAre low interest rates causing refinances that cut inventory? ARefinances have played a role in the inventory shortage in a couple of ways. One is that many people have refinanced their equity out of their houses and used it for cars, boats and bills, and they no longer become sellers; they're not moving up because they've used their equity. Another way is that with the length and duration of this seller's market, many people who were going to make the optional moves have made them. Some of those equity eaters, if they refinanced nearly three or four years ago, may again have enough equity to make elective moves. QThis is the third consecutive spring like this. How long can it go on? AWe're in the eighth year of a seller's market and we've had three hyper -sellers markets. I don't have a crystal ball. Had you asked me would it be a strong spring, I'd have said yes. Had you asked me would it duplicate the last two springs, I'd have said no. QWhat do you foresee with the economy and its effect on buyers? AThe problem is on the inventory side. If the economy slows, it may slow down the number of homes that come on the market. People become more hesitant to make a move even though they're employed. Last year we saw a lot of stock -market -fueled buying. None of us is as wealthy as we felt a year ago. But this year, even without the go-go market, we're seeing a lot of buyers in the marketplace. The first-time buyer is buying $160,000 and $180,000 homes. To Halated item get a house in the suburbs, that's becoming the necessary level. Often it's two buyers together. A glance at Budd Batterson Lenders have done a good job of addressing the issue of affordability by creating programs with low down payments, expanded ratios and basing their loan decisions on credit scores — which give a good idea of whether people will repay their loans — rather than just basing their Q startribune.com decisions on income. Business Neal Gendler can be contacted at r eudle ra.;7artribune conr http://Webserv5.startribune.com/stOnLine/cgi-binlarticle?thisSlug=HBAD01 &date=01-Apr-20(... 4/3/01