Real estate roller coaster throws Jackson, Macon property revals off track
This isn’t the easiest time to be a real estate agent in Jackson and Macon counties, not with the crippled housing market and a customer base that is, in most cases, hard pressed to find the dollars to buy new homes.
Nowhere is it tougher than the upscale communities of Cashiers and Highlands, a market catering to second- and third-home owners. Here, where houses just a few years ago routinely sold in the millions, the bottom has fallen out.
Terry Potts isn’t complaining. But, as the owner of four separate real estate offices in Highlands alone, Potts perhaps is experiencing even greater pain than most agents.
“In most cases, property has been selling for about half the tax value,” Potts said of the market in Highlands, adding that what has sold are, generally, bank foreclosures.
“I think that’s why they put it off,” Potts said. “And I do think the values are going to drop a good bit — if they truly use values of (properties) that have sold.”
“It” would be the property revaluations, now scheduled to take place in both Jackson and Macon counties in 2013. Countywide appraisals were last conducted in Jackson in 2008 and Macon in 2007, at practically the peak of the housing boom in Western North Carolina.
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Macon County commissioners decided to postpone its revaluation from 2011 to 2013; and Jackson County recently opted to push its back one-year from 2012 to 2013. State law mandates revaluation takes place at least every eight years; both counties had been on four-year cycles.
The issue?
‘True’ market value
In both counties, the tax assessors predicted difficulties with calculating true market value when little property has sold. Bobby McMahan, Jackson County’s tax assessor, recently told commissioners one township with 4,000 parcels had just three property sales in three years — hardly enough to establish a baseline.
McMahan wanted commissioners to delay Jackson County’s revaluation until 2015. This would have meant, however, that taxpayers would continue paying taxes for several additional years on what are now hyper-assessed properties. Some residents, particularly those living in southern Jackson County, cried foul — and not just over the possibility of shouldering an unfairly large tax burden, but about the overall level of services the Cashiers area receives back.
“The emotional irritation is that there is a miniscule percentage coming back to southern Jackson County and these townships,” said Phillip Rogers, who lives near Cashiers in the Hamburg Township.
“I’m personally contributing property taxes on two houses … I don’t mind paying the taxes as much as I mind not getting a return on services,” Rogers said.
But even if property values are lowered, it’s unlikely to provide residents such as Rogers tax relief, as he knows. In light of falling property values, Jackson and Macon counties would have to raise the tax rate if they want to bring in the same amount of money.
“That’s true,” agreed interim Jackson County Manager Chuck Wooten of the options facing local leaders. “In order to be revenue neutral there would have to be an increase.”
Wooten estimated that staying revenue neutral in Jackson County would require a tax-rate increase of the current 28 cents per $100 valuation to the mid-30s.
The largest drop in property values, not surprisingly, is expected in the Glenville and Cashiers area — the same areas where they had risen so rapidly over the first part of the decade.
Norman West, a longtime real-estate agent, primarily works in Cullowhee, the fastest growing part of the county population-wise, according to the 2010 Census.
Even so, things aren’t good, West said, “but we tend to be a little more insulated than some other communities” because of Western Carolina University.
West said what Jackson County has yet to truly contend with is the crash of high-end developments — granted, many lots in such developments already have been through foreclosure, but he believes there are many more to come. The fallout from the Great Recession isn’t over.
“These are uncharted waters,” West said.
Things that roll downhill
Jack Debnam, a real-estate agent who serves as chairman of the Jackson County Board of Commissioners, acknowledged local leaders have been placed in an unenviable position.
To offset the lower property values when revaluation starts in 2013, they will either have to raise taxes or cut county services.
Commissioners might face that dilemma sooner than 2013, however. The county already faces a budget shortfall. Wooten has asked each department to cut 5 percent from their budgets in the coming fiscal year.
There is every likelihood state leaders will shift portions of the $2.4 billion budget deficit they are facing downhill to local governments. After that, there’s nowhere downhill to go — again, local leaders are left to slash services or raise taxes.
“We just don’t know where the state’s going to put us,” Debnam said.
In Macon County, Bob Holt, a Franklin resident and real-estate instructor for Southwestern Community College, said during the first quarter of this year, sale prices were running at 63 percent of the assessed value. He expects to see values drop after this evaluation.
Richard Lightner, Macon County’s tax assessor, said his office could ask commissioners to delay the revaluation again, up to 2015, but that he doesn’t plan to do that.
“I think we need to adjust to where reality is right now,” Lightner said. “The whole premise of doing a revaluation is to equalize the market values.”
Lightner said the lower- and median-priced homes are generally stable — it’s the high end, speculative markets that are down.
While some counties bring in a specialized appraisal firm to conduct the revaluation, others do it in-house with their own staff. Macon County has done theirs in-house in the past, but Jackson is contemplating bringing the reval in-house for the first time.
Lightner said Jackson is likely to “have a difficult time” if it does. Macon is well along in the revaluation process — some 30 percent of property values are done. Jackson is just starting.
Additionally, Macon has experience doing revaluations in-house; Jackson County does not.
“They’re starting from scratch right now,” Lightner said. “I wouldn’t want to do one like that.”
If Jackson commissioners insist on sticking to its target of 2013, Lightner said he expects Jackson County tax-office staff will be unable to make as many on-site evaluations as Macon County, and instead will be forced to rely more on computer-generated assessments.
