From the Assessor

From the Spring, 2009, Wayne Township Newsletter

Michael E. Musson, C.I.A.O.
(630) 231-8900 Fax: (630) 231-9534
e-mail: assistance@waynetownshipassessor.com
Website: www.waynetownshipassessor.com

Housing Market
The real estate market continues to stagnate. Some of the homes on the market have been foreclosed. As I have attempted to explain in recent newsletter articles, the nature of the property tax assessment system, as mandated by Illinois statute, makes it difficult for assessors to immediately react to sudden changes in the market. Assessments are calculated based on the prior three years of sales. The state does not consider foreclosure sales when conducting sales ratio studies.

The use of a three year sales ratio study prevents drastic increases when the market takes off, but also prevents sudden decreases when the market grinds to a halt. The 2008 assessments, which were completed last fall, were based on sales between January 1, 2005, and December 31, 2007. Because the sales ratio included 2005 and 2006 sales, assessments required a 1.05 equalization factor for 2008.

The 2009 assessments will be based on sales that occurred between January 1, 2006 and December 31, 2008. Based on the preliminary sales ratio study, assessments are expected to be flat for 2009. If the market does not improve during 2009 or 2010, assessments will likely begin to drop in 2010. When the market begins to increase again, it will take a few years for those increases to begin to impact the assessments.

Please keep in mind that across-the-board assessment increases or decreases do not raise or lower tax bills. Tax rates fluctuate inversely with assessed values. If all assessments were reduced by 10%, the tax rate would increase by 10%, and taxing districts would collect the same tax dollars from property owners. To reduce taxes, taxing districts such as schools, villages, libraries and park districts must reduce their spending.

We have been receiving calls from property owners who are refinancing or opening home equity lines of credit. Some callers are expressing concerns that the appraisals used by lenders are significantly lower than the market values indicated by their assessments. These bank appraisals tend to be extremely conservative, and the comparables used by bank appraisers may include foreclosure sales and current sales, both of which the assessor cannot consider.