While the housing market has shown some recent signs of life, with an uptick in the number of sales and median price, home and business values across the city will drop between $1 billion and $2 billion since the last city revaluation, Ken Mallette estimates.
The city’s tax assessor and collector said that Vision Government Solutions, which is conducting the $427,000 statistical revaluation, is winding down the field portion of the program and is on schedule to have valuation notices to property owners by mid March 2013. The last revaluation was done in 2009, a year after markets crashed, sending the state into an extended recession.
For the last six months, the Vision team has visited properties sold in 2010, 11 and 12, as well as checking recent building permits, to establish a foundation for valuing other similar properties. More recent sales are of greater interest, as they are closer to the Dec. 31, 2012 date that will be used on the valuation. But not all the sales are being used. The high volume of foreclosures and short sales make that difficult.
Mallette said teams are “verifying what are at-length good-quality transactions to base their market analysis on.” That information is then used to arrive at the assessed value of properties that didn’t sell since 2009, or are considered incomparable.
When completed, Mallette expects overall values will drop between 10 and 15 percent. The city has about $11 billion on its tax rolls, of which $2 billion is tax exempt. About $1.7 billion of tax-exempt property is state property that includes the airport and the community college. The rest is made up of churches and non-profits.
No sector of the market has been immune to the slide in values.
Mallette said the condo market has “been hit hard” and he has found business rents are down. Office space that was renting at $12 and $15 a square foot has bottomed out at $10 and less, he said.
The exception, he said, is medical space that is doing better. Mallette expects commercial property values to slip about 15 percent from where they were in 2009. He forecasts a decrease of about 10 percent in residential values, which is a slower decline from the 22 percent hit residential properties took from the assessment as of Dec. 31, 2006. There has been new construction such as Nordstrom’s Rack and Jordan’s Furniture at the Warwick Mall and on Metro Center Boulevard but nothing like the heydays of the late ’90s. There are some promising signs that prices, and hence values, are on their way back up. In 2011, the city recorded 316 foreclosures. As of this week, that number was 249. “We’re beyond that point where we have that glut,” Mallette said. What he is seeing is that banks are more willing to do short sales to avoid the costs and delays of foreclosures. Mallette, who is active among tax assessors across the state, says Warwick is not in a unique position. “Everybody is seeing the same thing,” he said.
As for neighborhoods within the city where values have not slipped as dramatically, Mallette said waterfront property continues to sell at a premium. With 39 miles of shoreline and a number of ponds, Warwick has a large number of waterfront properties, although Mallette couldn’t fix a figure to it.
He doesn’t believe the storms of the past three years – the floods of 2010, Tropical Storm Irene and Hurricane Sandy this year – have impacted waterfront property values. Nor does he see predictions of a three- to five-foot rise in sea level by the end of this century because of climate change as altering values at this point.
As for single home sales that make up the largest sector of the Warwick market, Mallette said most are in the range of $200,000. He said there are very few sales in the range of $500,000 and even fewer of the “jumbos” at $650,000 and higher. This is going to make it difficult to set values in some of the higher value neighborhoods, such as sections of Warwick Neck and Cowesett.
Once notified of valuations, property owners will have the opportunity to review them in hearings with Vision representatives. If they are not satisfied with the outcome of those reviews, they can appeal the valuation to the board of tax review after the tax bills are issued in June. If still unhappy with the outcome, they can appeal to Superior Court.