Nothing good ever comes from opening the mail anymore. (All the fun invites show up on email!) Last week I made the mistake of opening a letter from the County of Alameda Assessor's Office (that already sounds ominous) and choked on the "increased property assessment" of my home. You guessed it, per the county assessor, my home's value has gone UP (who knew?) - and so have my property taxes!
While rising values in our current economy should be cause for celebration (whoo hoo!) it seems inherently contradictory to current market indicators to raise taxes in what lending institutions have now deemed "a declining marketplace." (Have you tried to apply for an equity line recently?)
Like many of you, I bought and sold at the height of the market and like many of you, have experienced some depreciation in that number since. Not to worry, I plan on staying in my current home for a long time. (I know that real estate is a long-term investment and that eventually, my home is going to recoup any decline in anticipated appreciation - and then some!) Moreover, I believe the market has already hit bottom AND I expect the market to rebound in the very near future! Still, what to do about my impending "increased assessment?"
Or put another way - What is the value of a home in a declining marketplace?
That depends. For many of you needing to sell right away - your home has NOT depreciated in value (really!). You have remodeled and updated appropriately, your home is in "turn-key" condition and your expectations are realistic. While you may have lost some "anticipated appreciation," you haven't lost any "real value" (this is an important distinction.)
Lucky you - your home is in high demand!
For others, your home unfortunately, may now be worth less than you paid for it just a few years ago or less than you anticipate in a sale. You may need to sit tight and wait out the market (historically, time is on your side) or take a loss now and realize the greater gain on the "up leg" as one seller did who bought in San Francisco (her new Nob Hill residence has much greater appreciation potential than her previous East Bay home would have ever provided). For her, it made sense (and cents) to cut her short-term losses and potentially realize a greater return down the road. Define your goal and work in the market you are currently in!
There are real advantages of "buying up" in a "soft market" where favorable pricing and negotiable terms now rule the day - bigger house, better location and higher appreciation when the market kicks back in! The hard part of the equation is that you may need to sell your current residence at a "discounted value."
Remember, markets are relative. Sell high and you are likely to buy high. Sell low and you are likely to buy low. (Having done both, I vote for the latter.) In the meantime, I have appealed the tax increase. In the case of property taxes, "declining values" may merit a significant decrease in one's annual taxes that may well be worth pursuing.
Oh, and I have vowed to stop opening the mail . . .
Julie Gardner, has been writing The Perspective for 17 years and has published more than 650 essays. She is also a frequent contributor to the Sound Off column in the Real Estate section of The San Francisco Chronicle.