Responding to the devastating economic impact of the “Great Recession,” the Assessor’s Office reported to local school districts and cities, a record number of reductions in assessed value. While not final until the assessment roll is completed on July 1, 2010, the initial analysis indicates approximately 118,000 properties will receive assessment reductions totaling $21.4 billion; $4 billion larger than last year. This reduction in assessed values is in addition to the $6.3 billion reduction (announced in February) caused by the negative California Consumer Price Index (CCPI).
Responding to the devastating economic impact of the “Great Recession,” the Assessor’s Office reported to local school districts and cities, a record number of reductions in assessed value. While not final until the assessment roll is completed on July 1, 2010, the initial analysis indicates approximately 118,000 properties will receive assessment reductions totaling $21.4 billion; $4 billion larger than last year. This reduction in assessed values is in addition to the $6.3 billion reduction (announced in February) caused by the negative California Consumer Price Index (CCPI).
“There is little doubt that the number of reductions in assessed value will far exceed the number of increases,” said County Assessor Larry Stone. “I am a taxpayer concerned about public schools and other public services funded by property taxes. But as the Assessor we must respond to the serious decline in real property values. The last 36 months is by far the worst economy I’ve experienced in the 45 years, since I left graduate school for Wall Street,” he said.
Included are 36,750 condominiums reflecting a reduction of $4.4 billion, and 79,800 single family residences with a reduction of $13.9 billion. The remaining 1,890 properties include duplex residential, commercial, industrial, retail and all other income properties.
In addition, a disproportionate number of high-end properties, especially cities in the northern part of Santa Clara County, recorded significant reductions in value. “Until last year, the market value of higher end properties in established neighborhoods recorded few foreclosures. “Nearly one-half of the $4 billion in additional reductions this year, are properties located in basic aid school districts which rely almost exclusively on local property taxes,” said Stone.
To assist local agencies in planning for the decline in property tax revenue, the Assessor’s Office sent out a special report notifying officials in every city and basic aid school district in Santa Clara County of the potential financial impact. “We recognize that these results will further compound the budget challenges faced by local governments. We hope this early warning will assist them in preparing for the loss of property tax revenue,” said Stone.
“If there is any silver lining to this news it is that homes are more affordable now than they have been in more than a decade. With nearly 118,000 homes valued below their purchase price, more first time homebuyers can afford to live here. That is good news for the high technology companies who will ultimately lead us out of this economic crisis. We need local companies to start hiring again, and high housing costs have always been an impediment,” said Stone.
In the Silicon Valley Leadership Group’s recently published CEO survey, “high housing costs for employees” was cited once again, as the number one business challenge and remains one of the top five concerns for Silicon Valley CEO’s.
The total number of properties impacted as well as the amount of the reduction, increased by approximately 30% over last year. However, that increase was far less than the prior year, when the number of properties receiving an assessment reduction more than doubled.
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