So, how much did your home appreciate in value over the last three years when a variety of factors --from low interest rates, the pandemic, changing work environments, the comparatively low cost of …
So, how much did your home appreciate in value over the last three years when a variety of factors --from low interest rates, the pandemic, changing work environments, the comparatively low cost of Rhode Island housing and then a shortage of properties for sale -- sent home prices skyrocketing?
Unless legislators feel differently than the mayor and city council, we won’t know until around this time next year. That’s because the revaluation that was to be implemented this year by state law will have been postponed. But that doesn’t mean that today’s values will be implemented next year explains City Tax Assessor Neal Dupuis. Rather, what it means is that values as of Dec. 31, 2022, will be used to establish the tax rate for the 2023-24 tax rates as based on that year’s fiscal budget.
Might the property values between now and then flocculate; might rising housing mortgage rates which haven’t been as high since 2018 according to the Wall Street Journal and the burden of higher costs pushed by inflation burst the housing bubble?
When Mayor Frank Picozzi advocated postponing the revaluation, he said he was doing so to bring relief to homeowners hit by higher costs. He didn’t want the gains in property values to adversely impact taxes although not until the City Council and mayor approve a budget there’s no way of knowing whether one’s taxes will go up, stay the same or go down. As some properties appreciate at a greater percentage – based on market demand – than others, they would be the ones to see higher tax bills.
Dupuis, who has been in the business of assessing properties for more than three decades, hasn’t seen such a volatile market with prospective buyers scrabbling for homes and paying excessively more than the asking price.
“I have never seen the supply (of houses) so low and the demand so high,” he said. Dupuis believes people are buying above their means and when that happens, “they don’t have the money to stay in their house.” The result on a large scale is a crash.
Dupuis uses the cost of gasoline as his telltale of the housing market. He said when gasoline prices exceed $4 a gallon, homeowners have trouble paying the bills -- including their mortgages -- and they look for cheaper housing. That leads to more houses for sale and with the increase in houses lower prices. This could lead, as it did in the Great Recession, to defaults on mortgage payments, foreclosures and a glut of housing.
Dupuis isn’t prepared to speculate when the bubble will burst, or in fact, whether it will. So, will housing values tend to level off by the time a revaluation is implemented next year? And what would that mean to taxes?
“Who cares about the value?” he asks. “What they (people) care about are the taxes.”
Dupuis acknowledges that in a year from now, values could be in the same place. That would be a stabilization of the market but not necessarily a readjustment in the proportional valuations. Some properties will have greater percentage than others meaning their taxes would go up if budget expenditures remain consistent. That appears to be improbable. As inflation has hit the homeowner, it has also impacted the city. While federal funds and the city’s rainy day fund could offset dependence on property taxes, Picozzi is reluctant of setting up a structure deficit going into the next fiscal year.
Dupuis said his office is moving ahead on the premise that the revaluation will be postponed. That would not call for the rebidding of the contract now held by Vision Government Solutions, but an extension. The current contract is $289,000 of which 60 percent is paid by the state. Extending the project into next year he projected to cost an additional $93,000. Of that amount, 60 percent would also be reimbursable by the state.
Delaying this statistical revaluation puts it on the cusp for a full revaluation when appraisers visit properties in 2024. The last full revaluation was done in 2015 and cost $1 million.
Thanks to the development of technology such as using tablets for field work in place of paper, Dupuis thinks the tab could be cut in half.
Dupuis also noted that his department has been capable of reducing abatements due to misinformation about properties. Before being hired in 2018, the city averaged $3.6 million annually in abatements between 2010 and 2017. In his first year on the job abatements dropped to $975,000 and since they have averaged under $400,000.
Seeing that the city has a contract with Vision Government Solutions and is prepared to move ahead with the revaluation if it is implement this year or next, former City Councilman and Chair of the School Committee Robert Cushman reasoned the company should have a work product with values as of now. He filed a request for information from the city and was told that information don’t exist at this point. Dupuis said the city and the company hadn’t reached the stage of applying values to all the properties. Since Cushman filed his initiate request for information he has also asked for all emails between Vision and the city as well as invoices. Dupuis said there are 7,600 emails that the city is prepared to make available to Cushman at a charge. He said the invoices could be more easily made available.
“We are still looking at our options,” Dupuis wrote in an email. “But we will be able to maintain most of the work that was done to date. The scope of work to be completed in 2022 will be much less, with the cost of that likely to be no more than 1/3 of the cost of the 2021 statistical update. I am still looking at options to get the cost below that if the City does some of the additional work, or we contract with outside appraisers. “
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