RE: "In Florida assessed values for tax purposes lag market prices by at least two years. They are not just rear view mirror, they are more like history books."
Assuming the point you're trying to make is that assessed values tend to be on the conservative side, I would agree with you on that point from what I've seen in my own area over the years.
On the flip side, the argument I keep hearing is blue sky theories that a home someone bought 5 years ago, and which hasn't been market tested since, is somehow worth less now than it was last year. I say prove it.
Obviously, the best proof would be to put the same house on the market once a year to see what it'll fetch in an arms length transaction. Equally obvious is that such a test would be absurd. Your next best bet would be to have a professional appraisal done once a year, which is still too expensive and awkward to make the prospect less than silly. One step down the ladder from there would be to have an experienced agent do a market analysis once a year. That might almost be practical if you can find an agent who wants to do free market analysis just for grins, but I suspect most agents as well as home owners would consider it a waste of time if there's no interest in putting the house on the market.
That leaves you with assessed values as the only statistical universe available to test the theory that home values are in decline. If there's anything to Chicken Little's theory that the sky is indeed falling, that the reversal is severe, and that it has been taking place for some time, then it should be showing up in assessed values as home owners begin to balk at paying taxes on inflated valuations, which are not supported by real world market conditions.
I don't see that happening and I don't see anyone claiming to be an analyst, or claiming to quote an analyst, seeing that happening either. On the contrary, everyone is seeing appreciation in the assessed valuations of their homes and I'd say the consensus is that most homes are in fact worth more than the assessed values.
I have a friend who bought a condo in Alaska during the oil boom in the 80s. The boom busted and he was upside down on his mortgage for the following two decades. He finally broke even and unloaded it a couple of years ago. I don't think there has ever been a time when similar boom bust cycles weren't taking place somewhere, and condos seem to be especially susceptible to such cycles. Being able to point to a pocket market going through such a cycle is NOT an indication the sky is falling.
Any dummy who has studied even entry level statistics knows better than to draw conclusions from anecdotal data. You can't draw a trend from anything less than a statistical universe, and you have to have data that is comparable on an apples to apples basis. You can't use medians and you can't use averages. You absolutely have to have good information that isn't skewed by other factors.
While I agree assessed values tend to lag a fast moving market, it's the probably the best data available that that could be used as a statistical universe.
Alternately, it might be possible to crunch numbers on a selling price per square foot basis. You'd have to use averages in that case, but if the sample was big enough, it would probably still be somewhat useful. Totally worthless for establishing the value of a particular house in a particular market, but you could probably pull a useful moving average out of it to identify relatively short term trends in the big picture.
So, show me the numbers. If the RE market is truly crashing, there is certain to be hard data of a reliable nature to support the theory. If you can't prove it, it probably isn't so. |
