The real estate market for homes has deteriorated for years in north-central Ohio. But you'd never know it when dealing with the tax man.
Even as the average sales price of a home sold in the Sandusky area has fallen year after year, the Ohio Department of Taxation has kept up pressure on Erie County to keep home valuations steady, correspondence between a state official and Erie County auditor Tom Paul shows.
MLS sales listings compiled by the Firelands Association of Realtors, which includes Erie, Ottawa, Huron, Sandusky and Seneca counties, show the average sales price in its service area was $141,505 in 2005. The price has fallen every year since then. So far in 2009, the average sales price is $108,090.
Those sales figures do not include foreclosure sales, such as the sheriff sale auctions, said Ruth DeHenning, chief executive officer for the group.
"We have no way of tracking those sales," she said. "If it's not listed and sold by a realtor, we don't have the figures."
Although the values of homes sold in the area have fallen, valuations for real estate have remained essentially flat, and in some areas even risen.
According to figures released in late October by the Ohio Department of Taxation, Erie County's land values for tax purposes declined 0.72 percent from 2006 to 2009. They rose 2.98 percent in Ottawa County and 0.74 percent in Huron County.
All three counties carried out triennial updates this year of their 2006 property tax valuations.
An Erie County real estate agent, who asked not to be quoted by name because he works with county officials, said it's difficult to understand why property taxes never seem to fall.
The realtor said he's had to work with clients to persuade them to lower their expectations -- and their home prices -- to fit the realities of the current market. And that's a difficult argument when the tax man values their homes so highly.
"Nobody's real estate taxes have been decreased at all," he said.
John Kohlstrand, a spokesman for the Ohio Department of Taxation, said residential valuations that are essentially flat are a big change in Erie County, where residential valuations jumped up 17.9 percent in 2003 and 12.2 percent in 2006, although those increases were fueled also by new construction.
He said tax officials and realtors use two different sets of statistics.
"I'm not saying the realtors are wrong," he said.
For example, 2009 has seen an especially large plunge in the average sales price of homes in the Sandusky area -- 14 percent so far this year.
That's largely a result of government policy. The federal government, trying to restart the housing market, has offered tax credits of up to $8,000 for first-time home buyers, who tend to buy less expensive houses.
That would drive down the average price of a home, Kohlstrand said, but the only number the auditor is interested in whether there is a gap between a home's sales price and how it is valued.
Kohlstand said valuations also tend to lag actions in the market. While auditors revalue property every few years, a decline in the value usually isn't recorded right away.
If somebody buys a new home, check on the assessed valuation, Kohlstrand suggested. If it sold for much less, "that may be an occasion to go in and file a complaint. The auditor is not going to automatically adjust based on sales prices. There is a bit of a lag."
Paul said Wednesday that valuations are based on market values, and said the numbers his office arrived at are lower than the numbers he was instructed to come up with when the Ohio Department of Taxation wrote him in March.
Shelley Wilson, executive director of the Tax Equalization Division, told Paul there should be no change in the value of residential property. Paul was told to increase the value of commercial property by 4 percent.
Paul and Pam Ferrell, real estate supervisor in Paul's office, said they rejected both suggestions.
The county's new valuations for 2009, awaiting approval from the Ohio Department of Taxation, shows that residential valuations in Erie County were cut 0.63 percent from 2008. Commercial values were raised 0.65 percent.
Residential values were not raised anywhere, and in pockets where the real estate slump hit especially hard, values were lowered about 3-4 percent from a year ago, Ferrell said. Values remained steady along the Lake Erie waterfront, she said.
Paul said he told the state its proposed 4 percent hike for commercial property was nonsense.
"I told them there was no way commercial property went up 4 percent," he said.
Kohlstrand said state tax officials thought Erie County's commercial property had been undervalued in the past, but accepted Paul's recommendation.
"We will be keeping an eye on commercial property in future years, such as the full reappraisal scheduled for 2012," Kohlstrand said.
Ferrell said the office spent a year analyzing "valid sales" in 700 county neighborhoods to come up with the new valuations.
A valid sale, for assessment purposes, means a willing buyer and a willing seller arriving at a market price, Paul said. Valid sales exclude foreclosures, sales of homes by relatives and assumption of mortgages, he said.
Real estate and property tax revenue has remained steady in Erie County even as sales tax revenue has plunged and investment income fallen, said Pete Daniel, Erie County's finance officer.
Sales tax revenue has fallen about 7 percent in Erie County through September, compared to the like period of 2008, a decline of about $900,000.
But real estate and property tax revenue in the county's general fund is up 1.3 percent through September, Daniel said.
Real estate taxes tend not to fluctuate as much as sales taxes, Kohlstrand noted.
He said homeowners should check their valuation from the assessor against what they think they could actually get if they sold their homes. If the two don't appear to match, file an appeal, he advises.
Paul said appeals to the Board of Revision over property tax valuations will be accepted from Jan. 1 to March 31 next year.
He said the board, consisting of the auditor, treasurer and one county commissioner, handled a record 758 appeals in 2007 following the 2006 revaluations and said he expects a new record in 2010, driven by news reports about the decline in the real estate market.
"I have every expectation we'll break the record of appeals because of what you are writing about, how the sky is falling," he said.