The last time the city performed a revaluation in 2009, property values declined by an average of 28 percent with the values of commercial and retail properties taking a bigger dip than residences.
This year, City Tax Assessor and Collector Ken Mallette expects the values will drop again, but not as much.
“I’m not optimistic with the way the economy is going. There’s no bounce back. It’s kind of leveled,” he said Tuesday. He expects property values to take another 10 to 15 percent decline in the statistical revaluation, which is in the preliminary phases of starting and should be completed by April of next year and in place for the 2013-14 tax bills in July.
Compared to full revaluations where field agents visit each property, a statistical valuation is based on recent sales that are then used to arrive at percentage changes by neighborhoods. Field agents will visit those homes that have been sold since July 1, 2011 and will use those in setting values.
Vision Government Solutions Inc., the company that performed the 2009 statistical revaluation, won a $420,000 contract for the work. Of that amount, 60 percent will be paid by the state. The next full revaluation will be done in 2015.
While commercial properties were the big losers in 2009, Mallette believes homes in the range of $300,000 and less will take the largest hit this time. And of residential properties, he expects multi-family units of two to six families to see the greatest decline.
“There’s a glut in the market and they were among the first to be under water [a situation where the value of the property is less than what it was bought for or the mortgages it is carrying],” he said. He cited an example of a Providence Street six-unit complex that recently sold for less than half of the $400,000 it had been bought for. Most of these multi-family properties are in the neighborhoods of Norwood, Oakland Beach, Conimicut and Apponaug.
The median value of a Warwick single-family home following the 2009 statistical revaluation was $206,000, a drop of $24,000 from 2006. Overall, real estate values for the city dropped from $11 billion to $9 billion.
“Where value has held seems to be on the waterfront,” Mallette said.
With 39 miles of shoreline, Warwick has a number of waterfront communities with many of the higher priced homes on Warwick Neck, Buttonwoods and Potowomut. Sales of these homes have slowed with the burst of the real estate bubble leaving few comparisons on which to base a statistical revaluation. That was the case on Warwick Neck in 2009 when houses on the east side of the peninsula were valued significantly higher than the other side, prompting a neighborhood outcry and a second look by Vision. A review was conducted and the values were adjusted.
Under the system, homeowners who have held their property for more than a year as of this July shouldn’t get a visit or hear from Vision until next March or early April when all property owners will be notified of values. They are then given several weeks to schedule a hearing with Vision personnel to review the value and to contest it. Values of all city properties will be online and in printed documents at the assessor’s office that can be used for comparative purposes.
If after this review a property owner remains unsatisfied, they can appeal to the board of assessment review. And from there, they can appeal to Superior Court.
In the 2009 revaluation, 1,200 property owners sought initial hearings with about half of that number appealing to the board. Mallette said about 70 carried their appeal to court, of which half remain to be settled or adjudicated.
Commercial values are frequently the most contested. Those values are largely based on income rather than comparative sales, and property owners are urged to complete forms reflecting income and expenses, which they should be receiving shortly.
Mallette, who with this as his third revaluation of his career, which is more than any other assessor, is well versed with the vagaries of the market. He has seen property values soar to peaks in the 2006 revaluation and then take a nosedive as they did in 2009.
He’s seen it on a personal level, too.
Mallette bought his house in 1987 for $120,000. At one point, he said, the bank was willing to loan him $260,000 using the property as collateral, which he is pleased he didn’t take.
Mallette believes he could get $120,000 on a quick sale now or $150,000 if he was prepared to wait, “which means the house has gone down,” he said.
Vision staff will carry a photo ID, a letter of identification from the Tax Assessor’s Office and will have their cars registered with the Warwick Police Department.