The new Madison property tax assessments are out (view article here). It's hard to believe, but the average assessed value is only 1% lower than the average assessed value from last year.
Many people - quite often sellers - are tempted to use a property's assessed value as a proxy for market value. More often than not this ends up being an unreliable way to value a home.
One reason is the 2009 assessed values are based on activity that took place in 2008. The market is fluid and changing fast. In real estate terms, what happened in 2008 is ancient history now.
Another reason is the criteria used by buyers to value a home are much different than the criteria used by property assessors. Buyers evaluate everything about a home - including all of the things that are difficult to quantify in a spreadsheet. Things like the style and the quality of updates, the curb appeal and the landscaping, the maintenance and the upkeep that have gone into a home.
Not so long ago 9 out of every 10 Madison homes sold for above the assessed value. In 2008, that number was just over 5 in 10. Given that the average assessed value has only dropped by 1%, we can expect that number to dip below 5 in 10 this year.
For more on this topic, check out the following DaneCountyMarket.com articles:
Dan Miller, Keller Williams Realty and DaneCountyMarket.com
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