Rising values

Property appreciates across county despite lingering effects of the coronavirus pandemic

Residential property values across Oakland County will rise an average of 4.89% for tax purposes this year.

Preliminary assessment changes by community indicate all of Oakland County’s communities are seeing average value increases, the result of historically low interest rates and low inventory relative to demand that have continued to spark real estate activity, even during a pandemic.

The county assessor’s office updates assessed value changes annually based on rolling twoyear sales studies. Notices of assessment changes will go out to homeowners in February in advance of local tax boards of review meetings in March for those

who want to protest assessment changes.

The county uses assessment changes to anticipate future government revenues since residential taxes account for about 76% of values in the county.

But the full impact of the coronavirus pandemic on the real estate market isn’t likely to be known for another year because the county’s two-year sales study ran from March 2018 to March 31, 2020, just a few weeks into the pandemic that shuttered businesses, idled workers, and affected the national and state economies.

That means it’ll be another year before assessors know the effect of the pandemic on the real estate market, but assessors closely monitor real estate activity in between sales studies and have some clues how next year might look.

“We’re experiencing increases in property values throughout the calendar year of 2020 with low inventory and strong demand assisted by historically low interest rates,” said Dave Hieber, manager of Oakland County Equalization,

the county tax assessing arm. “For the first part of the pandemic, real estate was shut down. It has picked up significantly better than what we thought it would be.”

Assessed values

Assessed values are onehalf of market values.

Just because a community’s overall assessed values rise, doesn’t mean property taxes will rise by the same percentage.

Michigan’s property tax limitation laws limit property tax increases to 5% or the rate of inflation, whichever is less.

This year, the rate of inflation is 1.4%. For property owners who stay in their homes for a period of years, that means property taxes will rise significantly less than a property’s assessed value might.

The exceptions are new construction and recent sales, which uncaps the taxable value and resets it to the assessed value.

Assessors note that just because a community’s assessed values rise on average, it doesn’t mean values will change by the same percentage from property to property.

By community

For this year, the twoyear sales studies indicate

the higher demand and value increases have occurred in older communities that have traditionally lower property values relative to some of their neighbors or which suffered the most after the Great Recession that began in 2008 and crushed housing values for a number of years.

By community, the biggest value increases are in Oak Park, 14.13%; Royal Oak Twp., 13.43%, Hazel Park, 12.3%; Pontiac, 10.6%; Clarkston, 9.7%; Southfield, 8.89%; Madison Heights, 7.34%, Lathrup Village, 7.06%; and Ferndale, 6.51%.

“Those communities have been strong for a couple years,” Hieber said. “Some of them fell the most during the Great Recession, so they’ve rebounded from the low points for sure.”

Meanwhile, some of the county’s more affluent communities are seeing the smallest jump in assessed values.

They are Lake Angelus, 1.14%; Bloomfield Hills, 1.14%; Huntington Woods, 1.49%; West Bloomfield Twp., 1.66%; Orchard Lake Village, 1.74%; Oakland Twp., 1.8%; Northville, 2.01%; Lyon Twp., 2.22%; Groveland Twp., 2.22%; and Novi, 2.35%.

Looking ahead

Among the questions in the coming year are the effect that residential foreclosures might have on future property values.

The CARES Act passed by Congress last March put a stop to mortgage foreclosures to help people offset the loss of employment.

For most of the year, that has meant no residential foreclosures in Oakland County when the normal range in another year is between 600 and 1,000.

“Hopefully, with rising property values we’ll continue the trend of low foreclosures,” Hieber said. “We’ve been hovering in the 650 range. I would call that a normal level. I don’t believe we’ll go back to 2007 to 2013 but you just don’t know who has been impacted by the pandemic and isn’t making their mortgage payments.”

Another unknown in Oakland County is whether businesses that have shut down during the pandemic will appeal their tax assessments to seek relief.

While residential property owners start at local boards of review in March, commercial and incomeproducing property owners appeal directly to the Michigan Tax Tribunal later in the year.

“We’ve been told to expect a higher number of challenges,” Hieber said.