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Local homes lose 40 percent of assessed value

Posted: June 1, 2009 10:45 p.m.
Updated: June 2, 2009 4:55 a.m.
 
More than 330,000 homes in Los Angeles County, and more than 150,000 homes in the Santa Clarita Valley, declined in value in the most recent county assessment, striking another blow to the county's tax coffers, according to a county official.

"The actual amount in tax revenue reductions is not ready, but the estimate is around a 1 percent reduction in taxes," said Rick Auerbach, Los Angeles County Assessor.

The County Assessor reviewed the value of 473,000 homes county-wide, most of them purchased between 2003 and 2008. Homes in the Antelope Valley sold as far back as 2000 also were assessed, Auerbach said.

The reduced prices on 333,000 of the 473,000 homes will result in a reduction of $440 million in tax revenue from those homes with reduced assessments, Auerbach said. However, that loss will be balanced against homes that, according to the assessor's formula, didn't lose value and will pay an increased assessment on this year's tax bills, he said.

The formula established under 1978's Proposition 13 uses the most recent sale price of the home, and adds 2 percent per year, in each year which inflation is above 2 percent, as the assessed value, Auerbach said.

The Assessor's office decided in 2008 to begin reassessing home values to see where there were declines in the market, Auerbach said. "In a normal market we never have to reassess homes, we use the Proposition 13 assessment value," he said.

But the market is far from normal and areas with new developments were among those hardest hit by the new assessments.

"Of the 190,000 homes in Antelope and Santa Clarita valleys reviewed by the assessor's office in this last round, 80 percent received reduced values from the assessor's office," Auerbach said.

That's approximately 152,000 homes in the Antelope and Santa Clarita valleys.

In comparison, homes on the west side of Los Angeles County, including West Hollywood, the west side of Los Angeles and Santa Monica didn't fare as badly, Auerbach said. Of the 64,000 homes reviewed, only 31 percent received reduced value assessments, he said.

The news of reassessed values is not necessarily bad news for Santa Clarita homeowners.

"We've seen a 43-percent decline in real-estate values in the last year," said Michael Regilio, associate broker at Reality Executives in Valencia. "For a person in what was a $400,000 house that's now valued at $240,000, or a 40 percent reduction, that's a saving of $2,000 on their property-tax bill."

The average savings, county-wide, is $1,400 for homeowners and $1,100 for condominium owners, Auerbach said. "That's not a rebate or refund; that's real money in people's pockets," he said.

Regilio said the savings translates into money spent on gasoline or groceries, two areas where prices are increasing.

The reduced property taxes might have another positive effect for consumers. The lower tax burden might stimulate the housing market, Regilio said.

With more expensive homes with much higher tax burdens coming down in value and in tax burden, new homeowners may come off the sidelines and enter the market, he said.

He noted a home in Saugus that sold in December 2007 for $695,000 with an annual tax bill of more than $12,000. The home is back on the market for $349,000 and a tax bill of $6,000. "That creates affordability for new homeowners," he said.

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