How Much Pain?

In response to Tim’s post and the new property tax valuations hit, lots of folks might wonder just what kinda ankle-grabbing they’re in for.

If you care to get a preview, check out the newly-launched website The brainchild of Expedia entrepreneur Rich Barton, Zillow seeks to cash in on the home-buying craze by providing free real-time valuation for every house in the US. While Zillow is not the first to merge maps and prices, it takes a serious jump ahead by modeling current prices for all homes based on a vast sales and valuation database. The site is supported by an ad-based revenue model (people still use those?), and claims to provide anonymous access for searching price history and structural details.

If Zillow is to be believed (and automated valuations have a less-than stellar reputation), my house skyrocketed 35% in the first four months of 2005, slowly retracting about 10% since then. Whether this is accurate or not, this is likely based on similar information to what TCAD will be using for their price hikes, and the results will be frightening.

Adding insult to injury, I have little or no confidence that this inflation is based in reality. Or, more specifically, that it reflects real value gains. The thinking here is that sales valuations, by definition, only reflect those houses that are sold. Those that view their houses as homes rather than investments are less likely to put houses on the market. If the properties that sell are inherently different from those that stay off the market, then “home-owners” are being unduly punished by the sellers, especially if many of those sellers are flipping property to the next over-excited tool.

If TCAD jacks the rates as promised in the article, Austin might just find itself with a tax revolt on its hands. At a minimum we’ll see a record number of protests filed, but the higher the valuation the more insistent the resistence. Then it won’t just be McMansion ordinances getting bandied around, but all sorts of property tax reforms as well. And if enough commercial interests and real mansions get hammered, maybe something will actually come of it.

1 Comment so far

  1. M1EK (unregistered) on February 11th, 2006 @ 1:03 pm

    Try looking at what they think are the ‘comps’ for your house. If anything like mine, they’re ludicrous – five houses that happened to be sold recently that aren’t remotely comparable, especially in location.

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