It's that time of year again. One might think that I am referring to the holidays and all of the wonderful cheer that ensues. But no, it is not the holidays that I am posting about. Tax statements. That is what is on my mind. Last week my statement arrived in the mail. I let it sit on the counter for a few days before opening it. I guess it was an attempt to delay the inevitable feeling of defeat that pours over me when I open the envelope only to find that yes, my taxes went up and my assessed value went down.

It’s like a kick in the midsection. Every year for the past four, I have watched the county assessed value drop, and drop, and drop. And, my taxes have gone up, and up, and up. Though this year, it was only by 1.6% compared to 11% & 12% increases of years past.

However – this year’s statement still packed an extra punch. The value, oh yeah, it went down, by almost 10%. So, I am scratching my head – because that is not even in line with market performance. I checked. Refer to The Southwest Minneapolis Monthly Market Report which shows that the Change in Median Sales price for the entire area which comprises 9 neighborhoods (approx. 22,000 households) only decreased by 6.8% YTD over the same period of time last year.

I decided to call the city of Minneapolis to try and find out what algorithm the city's assessors use to determine these values. And, much to my surprise, I was actually able to get the assessor who valued my house on the phone. His name is Tim and he was very nice. Nonetheless, Tim told me that the system is not perfect, and reading between the lines, I inferred from what Tim had to say, that the system is pretty much a mess. No rhyme or reason to it. Except there should be. They use the same sales data that the real estate industry uses. This would not bother me, except for the fact that buyers DO use tax-assessed values as a benchmark for determining value.

Whether or not anyone really wants to admit it, the gap between what a home sells for and how it is valued by the city is closing. I ran a search on the last 35 sales in my neighborhood over the past six months. (NOTE: outliers such as new construction and lender-mediated sales were eliminated from the sample since those sales account for less than 10% of the local market). I reconciled the final sales prices against the county assessed values. And, wouldn’t you know it, on average, homes in my neighborhood (Lynnhurst) sold for 97% of the county assessed values. If you would like to see the spreadsheet complete with my data samples, just send me an email. I cannot post it for compliance reasons. 

The long and short of it? My home is worth less than I thought. Happy Thanksgiving.