Why are assessments up when values are down?

By Larissa Chinwah
Daily Herald Staff Writer
Posted Monday, March 16, 2009

As property values tumble to lows not seen in a decade and home sales continue to falter, homeowners across the suburbs question how their property's value increased, at least in terms of its taxable value.

A record number of homeowners lodged complaints with county assessors for the 2008 assessment year, in some cases doubling the number of appeals filed in 2007.

When Jeff Seiler's assessment documents arrived in the mail late last year, the Sleepy Hollow resident thought there was an error in the numbers.

"The value to them ... it went up by $22,000 but I don't understand how they can raise property values in this type of market," Seiler said. "I know I could not sell my home for what they assessed it for last year, just by watching the sales prices. There's no question, property values have gone down."

Assessments are based on property sales data from the previous three years and the assessed value is one-third of market value. For the 2008 assessment, sales records and assessment date from 2005, 2006 and 2007 were used. Assessments, however, are not directly related to property tax bills, assessors said.

The purpose of averaging is to avoid wild swings in assessed values due to a fluctuating real estate market, said Donna Mayberry, McHenry County assessments supervisor. McHenry County appeals are estimated to hit 2,300 this year, up from 1,173 in 2007 and 984 in 2006.

When the property market experiences rapid declines, the three-year averaging process works against homeowners, Mayberry said.

"This is especially true for the 2008 assessment year that we are currently processing, since we still have that all-time high year of 2005 in the mix," Mayberry said. "Since the majority of the time we had an increasing market, we have seldom experienced this downside of the process."

That means even with the noted decline, many properties may not be as overassessed as one might expect.

"Just because the overall market may have declined a particular percentage does not mean that all assessments need to be automatically reduced by the same corresponding percentage," Mayberry said."We still have to look at an individual assessment and how it relates to the current market price and how equitable it is to other similar properties in the neighborhood."

If the downward trend in property sales continues, property assessments could follow suit, Kane County Supervisor of Assessments Mark Armstrong said.

"For assessments, continued lower sales will make assessments drop," Armstrong said. "The design of our system and the state-mandated, three-year, sales-ratio study means that values lag 12 to 18 months behind the market."

But tax bills can only be reduced if taxing bodies - such as school districts and local governments - levy fewer dollars than in the previous year.

In DuPage County, where a typical assessment went up between 4.8 percent and 8.8 percent, appeals were slightly lower for 2008 assessments compared to 2007 appeals, said Craig Dovel, the county's supervisor of assessments.

Dovel said once his office explains the assessment process to residents, people are generally satisfied and do not see fit to file an appeal.

Seiler, the Sleepy Hollow resident, successfully appealed his assessment for a slight decrease.

His appeal was one of more than 2,000 filed in Kane County. That number is up from 1,599 from last year. While the number of successful appeals for those filed in the 2008 tax year is not yet known, Armstrong said in the last two years residents have successfully appealed assessments 59 percent of the time.

Lake County's supervisor of assessments, Martin Paulson, said failed condominium conversions heightened the record number of appeals filed with the county. The total number of appeals reached 9,757 for the 2008 assessment year, Paulson said.