Kerry Hall Singe comes dangerously close to exposing the lie at the center of local real estate values by noting that this former IBM office park in University City just sold for 33 percent of its official county tax value of $125m.
Even more shocking is that the $42m. purchase price struck by BECO Management for the 200 acre Meridian Corporate Center is only 37 percent of the $114m. price point it sold for back in 2002.
Again, if you don’t think property owners are going to en masse contest the county’s on-going revaluation when new values hit their mailboxes next year, you are out of your mind. The 2010 market bears no relationship to the 2006-07 peak — or even the previous 2003 reval.
Residential real estate nationwide remains in the crapper, with good reason to expect another 20 percent downward correction.
Update: Kerry wisely doubled back to this story to probe the tax valuation issue with county officials:
Chuck Hicks, the county appraiser heading the revaluation team, said commercial properties are struggling with rising vacancies and falling incomes – other factors that affect values. Sales prices also affect values.
“We don’t know where they’re going to end up relative to 2003, but they are definitely off from the peak in 2006,” he said. “It’s been a downward trend ever since. If the trend continues, then things are looking rough for commercial real estate.” … Hicks said the county commissioned an outside study to help ensure its value calculations match “the market reality.”
Of the Meridian deal, he said: “I’m not going to say it’s a benchmark, that it shows how far commercial property values have fallen, but … it merits close scrutiny.”
In other words, if you bought property in the 2006-2008 window your valuation almost certainly will be too high. And more recent than that, there simply may not be enough data in the way of comps to make an informed appraisal. It is also plain that county officials understand that they are in uncharted waters, trying to reval in a declining market.
Again, the significance of the Meridian sale is that it is so very far below a 2002 price point that was used to set the 2003 valuation. The lesson for city and county officials should be this: Expect no windfall or Stealth Tax Hike from the current reval process.
