Value of California’s properties falls 1.8% to $4.4 trillion
The Golden State’s real estate market lost a bit more of its luster as the total value of California’s properties fell for the second year in a row — and for the second time since records were first kept in 1933 at the depths of the Great Depression.
The value of all types of properties fell 1.8% this year to $4.4 trillion, the California Board of Equalization reported Thursday. The total value fell 2.4% last year.
Forty-eight of California’s 58 counties saw totals fall — nine by more than 5%. Only two counties, oil-rich Kern and tourist-destination San Francisco, posted expansions of their property tax rolls of 2% or more.
The negative numbers make for more bad news for county governments. They’ve had to curtail spending on basic municipal services because falling values have resulted in lower property tax revenues.
“It’s a decline that’s outside of their control” and unlikely to reverse itself until California starts creating tens of thousands of new jobs, said Board of Equalization Vice Chairman Jerome Horton.
The contraction of the last two years contrasts with California’s historic growth in its real estate value, Horton said, with “constant increases of 5% to 15% per year” for the last 77 years.
“Those numbers tell us we have a ways to go, and we have some work to do to bring balance back in our economy,” he said.
Some experts suggest that things could get even worse before they get better.
Many homeowners purchased or refinanced residences in 2005 or 2006 and could face interest rate hikes from the variable-rate mortgages, said Tracey Seslen, a real estate professor at USC’s Marshall School of Business. Tight financial markets and underwriting standards could make it hard for them to refinance at lower rates, she said.
“With the stricter lending measures in place, removal of the home-buyer’s tax credit and with uncertainty in the economy and the jobs picture, we have a large confluence of factors that are all going to be putting downward pressure on the housing market,” she said.
Other housing specialists, though, think that the board’s data, based on Jan. 1 figures, already may be out of date.
“In many areas of California, prices have found a floor and have even recorded three or four months of guarded recovery,” said Stuart A. Gabriel, director of the Ziman Center for Real Estate at UCLA’s Anderson School of Management.
“Hopefully, we have found or are close to a bottom” of the market,” Gabriel said, “and, we’ll be able to see some recovery of prices.”
The board’s data found that Los Angeles County, which accounted for about a quarter of the value of all property statewide, lost 1.8% of its property value. The steepest drops were in the high-desert cities of Lancaster and Palmdale, local officials said.
Plummeting commercial property values also are contributing to the reduction in the size of tax rolls, Los Angeles County Assessor Robert Quon said.
The county got hit with a one-two punch of “fewer changes of ownership and less new construction,” he said.
The weak market spurred Los Angeles assessors to review about 600,000 homes and condominiums. They lowered annual property tax bills on 400,000 properties purchased between July 1, 2003, and June 30, 2009, Quon said.
By getting their properties reassessed to reduce taxes, homeowners were able to save an average of $1,800 on a single-family home and $1,500 on a condominium, according to the county.
Across Southern California, property values fell 4.4% in Riverside County, 4.3% in San Bernardino County, 1.5% in San Diego County, 0.5% in Orange County and 0.3% in Ventura County.
Inland areas lost about twice as much of their property value as coastal areas did. The state’s hardest-hit counties were in the Sacramento and Northern San Joaquin valleys and the Inland Empire, the board said.