Friday, August 17, 2007

What is a Home Worth?

Darren G. Mire
1st M.D.
Claude T. Mauberret
2nd M.D.
Erroll G. Williams
3rd M.D.
Betty Jefferson
4th M.D.
Thomas L. Arnold
5th M.D.
Nancy J. Marshall
6th M.D.
Henry F. Heaton
7th M.D.

Recently the reassessments and the mess at the assessors office have been much in the news.

I've generally lumped the problem into two major groups, those who apparently object to paying their fair share, since they never had to do it before, and serious errors and inequities.

I don't think that any person should be able to evade paying taxes because they say "can't afford it". On the other hand the assessment should be fairly and equitably determined. I heard one person on the radio who admitted to appealing his assessment because all of his neighbors did and he didn't want to pay more than they did. He even admitted he didn't think his assessment was unreasonable. That's squarely in the first group.

Most of my neighbors don't feel their assessments are unreasonable but all are worried that someone else will get their taxes reduced so that they will end up paying a disproportionate share.

As usual I ran some numbers.

Our house has been appraised a number of times. In 1999 when we bought it, in 2001 when we refinanced in 2005 for the Road Home and by the assessor just now. I decided to see if these values were in any way comparable, so I decide to apply the Office of Federal Housing Enterprise Oversight Home Price Index (HPI). There are several such indexes but I decided to use this one because it was the one the Road Home uses.

Here are the numbers calculated using the most recent HPI.

Price Appraisal Refinance Road Home Assessment
6/30/99 125.11 $195,000 $205,000

6/30/02 142.56 $222,198 $233,592 $237,000

6/30/05 175.93 $274,209 $288,271 $292,476 $238,000
3/31/07 213.32 $332,486 $349,537 $354,635 $288,581 $317,000

We always felt we got the house for a good price since the seller was "motivated" and the house didn't show well.

One interesting observation is that in the last two years the value of houses in New Orleans has risen 21%. I think Katrina has distorted that by limiting sales to the most desirable houses, although the value of damaged homes sold to speculators should also be included in the index as well.

The conclusions I draw are that;
  1. My assessment is a little below market value, except my house if still gutted and I can't live in it.

  2. The Road Home is incompetent.

  3. The Assessor is incompetent.

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