How will the appraisal districts view real estate values for tax year 2008.

Based on our previous blogs we at P.E.Pennington & Company, Inc. believe property tax valuations should level off and / or drop in tax year 2008.  We believe it is save to say that appraisal districts will not agree with our opinion with the exception of single family residential  valuations.  Appraisal districts are well aware of the Sub-Prime Crisis and in-general believe that residential values are declining.  In our opinion however appraisal district’s will argue that their sales information does support the assumption that commercial real estate markets are cooling off.  They will argue that if any cooling off occurs it will appear in sales which occur in tax year 2008.  Thus it will be reflected in their 2009 valuations.

You might ask why would appraisal district’s be reluctant to accept the current state of the commercial real estate.  To answer this question you must ask who do appraisal districts answer to?  They answer to the counties; cities and school district are heavily dependant on the tax rolls provided by the appraisal districts.  These entities adopt budgets and establish tax rates.  Then they assess the valuations on the tax rolls which generates revenues for the municipalities use to provide services.  Thus, it is not in the appraisal districts interest to recognize timely shifts in real estate markets.