Many county residents got a shock earlier this month when they opened their property tax assessments and discovered their homes are worth much less than they were a few years ago.
But while homeowners might be disappointed to see a drop in value, real estate brokers and others involved in the housing market say the news isn't entirely bad.
Why values are dropping
"The sobering news is that while we are selling more properties [than in 2009], the average price is lower," said Bob Crosby, governmental affairs director for the Sun Valley Board of Realtors. "If you look at the county as a whole, volume is up and prices are down."
Property values are assessed using home sale prices, and extremely low prices such as those seen in foreclosure or short sales can bring down values in an entire area. Crosby said these below-market sales made up a higher-than-normal percentage of all sales in 2010.
"The lower prices are making up a larger percentage of the sales, so they tend to reduce the prices," Crosby said. "If you live in a neighborhood where your neighbor is in foreclosure, even though your property isn't under stress, you have to deal with that comparatively lower price if you want to sell."
Though average prices in some neighborhoods may have risen slightly since the beginning of the year, county assessor Valdi Pace said the county cannot use data from recent sales in its assessments.
"We can only use sales from 2010," she said.
Sales after Jan. 1 would impact property assessments for 2012, not the current year.
Pace said her office has seen a "steady" stream of calls from homeowners wanting to appeal their property assessments since the values were released on June 1. The deadline to file an appeal is June 27. Five appeals have been filed as of press time, far fewer than the 30 appeals filed last year.
Pace said she gets calls from homeowners who feel their assessments are too high, as well as those who feel they're not high enough.
"There were people that didn't see a drop, and we've had a few calls on that," she said. "We've had people call and request us to raise their values, which is not anything we can do. We're analyzing the market and we've assessed as the market has indicated."
Michelle Griffith, executive director of the ARCH Community Housing Trust, said falling property values have actually helped the trust. Griffith said that though the value of the property the trust holds has gone down, it has no intent to sell and therefore is financially unscathed.
But lower property values mean more opportunity for ARCH to acquire property, such as a home the trust recently procured in west Ketchum.
"It's a home in a neighborhood that we would not have been able to purchase four or five years ago," Griffith said. "It presented an opportunity for us to take a former market-rate home and keep it affordable in perpetuity."
Crosby said the recent sale and auction of the Chilali condos in Ketchum is an encouraging sign that investors are interested—for the right price.
"You can never eliminate risk from a transaction, but prices are such that it seems like it's a great time to buy," Crosby said. "If I had a bunch of free cash lying around, I'd be a buyer for sure."
Pace said that now is a great time to invest, but the news is not as good for those who already own homes. Homeowners also saw a drop in the Homeowners Exemption Tax Credit this year, which is based on a federal calculation. The credit reduces the taxable value of a home by the lesser of either $92,000 or 50 percent of the home's value.
"Hopefully, you're not one of those people who mortgaged their house too high," Pace said. "There are plenty of local people who have managed to keep their homes. They'll see things turn around eventually, but not anytime soon."
Crosby and Pace agreed that the market will turn eventually, but neither was certain when or what would prompt it. Pace said she thinks values would drop slightly before rising again.
"There are some areas that will probably see another decrease, but I don't think it will be as substantial as what we've had," she said.
Crosby said the market needs to be cleared of "stressed" properties before prices can rise. Once the market has been cleared of foreclosures and short sales, or once those below-market sales make up a lower percentage of sales, prices and property values should rise.
Crosby said that there are signs the market is turning around.
"The good news is that we're selling a lot more properties," he said. "The market is doing what it needs to do to rebound."
While there is no way of knowing when prices will rise, Crosby predicts that when they begin to turn, investors will flood the market and boost prices even higher.
"When the price correction begins, I think it will be rapid," he said. "People hate to lose a bargain."
Katherine Wutz: email@example.com
County residents have until 6 p.m. on Monday, June 27, to file an appeal of assessed property values. To file, call the county Assessor's Office at 788-5542.