Grand County property values drop by 18 percent
June 27, 2011
Real property valuations in Grand County have declined overall by 18.04 percent, according to the latest reassessment taxpayers found in mailboxes in May.
Reassessments of property values take place every odd year. The most recent values are based on sales that occurred during an 18-month period starting in January 2009 and ending in June 2010, a period considered to be at the heart of the recession.
“The market was down. There weren’t a whole lot of sales,” said Grand County Assessor Tom Weydert. “What sales we did have were lower than before.”
Grand County’s values, which are now close to 2005-2006 assessments, are in line with market conditions throughout the state and a major portion of the nation, Weydert said. “Pretty much everybody is down in about the same degree.”
For taxing entities, the valuations translate into 16.5 percent less taxes to be collected in January 2012 than were collected last year, which were based on valuations from about the height of the market.
Since many taxing districts, municipalities and the county anticipated this decrease, their budgets were adjusted accordingly starting in 2011. Grand County’s budget cutbacks resulted in a 20 percent reduction in budget expenses.
Property owners will be paying less taxes, but “that puts a stronger demand on services,” Weydert said, meaning taxing towns and districts need to operate with less money.
How the decline in assessed valuations may affect market prices is yet to be seen.
“There’s not a good answer to that question,” said Doug Doudna of Grand Lake, who has appraised property in Grand County for 18 years .
Some lenders, he said, may look at assessed values when determining loan amounts, especially with riskier mortgages. And in some cases, county assessments could influence presumed market values scraped by online data aggregators compiling raw information for big lenders and banks.
And with the market flooded with foreclosures, short sales and distressed sales, there’s “no true definition of the ‘market value’ happening in today’s market,” Doudna said. So, “(county) assessments may play a larger role.”
In the business of real estate, such markets are called “undisciplined markets,” he said.
Factors such as fraud and easy loans with zero money down allowed the market to overheat.
“We went through nice gradual sustainable increases in values, starting in 1992, at 5 to 7 percent a year, until the mid-2000s, and then all hell broke loose,” Doudna said.
After the boom of 2007 and into the first half of 2008, the market became riddled with foreclosures and other distressed property sales.
Weydert’s office couldn’t ignore such sales in the recent reassessments, he said.
“What happened for us and throughout the state was those were the only sales,” Weydert said. “We had to include them.”
But the office did make a few exceptions for properties that had documentation proving something extraordinary might have taken place, such as fraudulent activity, he said.
Jack Gerstein, agent at Coldwell Banker Mountain Properties, finds that many times sellers tend to “chase the market down,” or price at what they think a property is worth before discounting it to meet market realities.
“A lot of people who own real estate are, I think, in a bit of denial on what real market values are in resort communities and across Colorado,” Gerstein said.
A recent Denver Post article reported that most assessors in Colorado resort communities devalued homes by more than 20 percent.
“There’s a lot of work for the real estate community to educate our sellers on where values have adjusted to,” Gerstein said.
Market values today are deemed to be similar to those from around 2003-2004. As far as the height of the boom in 2007-08, Gerstein said: “I hope in my lifetime I see it return to those levels.”
In Grand County, lending on reasonably priced condominiums seems to be loosening up, Gerstein said, and there is some movement in townhomes and residences, although land sales remain stagnant.
“When a property finds its sweet spot in pricing,” however, “it does sell,” Gerstein said. “The dreams and desires of families of having a second home in the mountains still exist. There’s a saying out there: It’s better to own real estate and wait than to wait and own real estate.”
– Tonya Bina can be reached at 970-887-3334 ext. 19603