Silicon Valley home values saw double-digit appreciation in the past year, outpacing the nation’s rebounding real estate market.
Santa Clara County Assessor Larry Stone last week released a detailed breakdown of single-family home and condo prices. The report of prices in 25 South Bay neighborhoods shows growth in single-family home values ranging from 4 to 24 percent, and 13 to 46 percent for condos.
While several reports have recently noted the Bay Area’s surging housing market, the assessor’s report provides more specifics, noting the recovery rates neighborhood by neighborhood instead of citywide.
Color-coded maps show a stark disparity in rising single-family property values over 2012 between Mountain View (3.5 percent) and Sunnyvale (22.9 percent). Countywide, values rose 12.9 percent.
Condo values rose more sharply, up 41.9 percent in San Jose’s Berryessa neighborhood, 39.3 percent in south San Jose and 24.1 percent countywide.
The data is an early bellwether of market growth in virtually every area of the county, Stone says.
The assessor’s office will use the info to revise property values at the end of June, which will translate to higher property taxes. That’s the price of recovery.
“The information is great news for property owners whose home is likely their single most valuable asset,” Stone says. “A significant increase in homeowner equity is always welcome news. Property owners who received temporary reductions in assessed values in prior years to reflect declining market values, will likely experience corresponding increases in property taxes to reflect improvement in market values.”
Assessed value won’t jump more than 2 percent, though, to stay in line with the California Consumer Price Index limit imposed by Prop. 13 (which you can read more about here).
The Great Recession slashed equity for most homeowners, but the county says only a quarter saw declines dramatic enough to push them underwater—that’s when the mortgage is worth more than the home’s market value. Those homeowners got temporary reductions in property taxes, thanks to Prop. 13’s twin initiative, Prop. 8. (If you’re inclined to become an armchair expert in housing law, then, by all means, read about it right here).
To sum it up quickly, Prop. 8 requires the county assessor to reduce a home’s assessed value to reflect lower market value. But as the market heals, the assessor is obligated to restore assessed values temporarily reduced during a downtown.
So, that’s about to happen, although the same law at least entitles homeowners to the lower of fair market value as of Jan. 1 this year. Or the base year value as recorded at purchase or construction.
“For example, I live in Sunnyvale and purchased my home nearly 40 years ago,” Stone says, offering himself as a case-in-point. “My assessed value has remained far below the market even after the collapse of the residential real estate market. Consequently, I never received a reduction in property taxes commensurate with the decline in market values. At the same time, I did lose equity.”
Stone continues that he hopes the county can better inform property owners by releasing this information early. The heat map he sent out is based on actual market transactions, Stone says, and doesn’t necessarily indicate increases in assessed values.
The assessor’s office records all property sales every month. It calculates the average median price within each of the 25 designated areas. The office then uses those changes in average median prices to make appraisal adjustments, Stone explains.
“I want to stress that this information is only one indicator, albeit an important one, used by the assessor’s office to determine changes in the marketplace,” he adds. “Many other factors such as location, school district, quality, age, number of bedrooms, etc., impact property values.”
Next month, the county will be able to share appraisal based on comparable sales in a given neighborhood to underscore the assessor’s enrolled value, Stone explains.
By the end of the fiscal year, June 30, Stone’s staff will mail out about 460,000 assessment notices to homeowners in the county. The mailing will include a password that lets a homeowner log into the assessor’s online opt-in tool at http://www.sccassessor.org/prop8 to dig up more information about their address. You can also look up directions at that URL to ask for a lower assessment.
Some 136,000 county properties received a temporary reduction in 2012, Stone says, saving them a total of $27 billion. Earlier in May, Stone counted the number of properties eligible for the same reduction at 90,000, 75 percent of which are eligible for a partial restoration of assessed value to match the recovering market.