NEW ORLEANS, La. (WVUE) - Some local real estate and home valuation experts say property owners may not like it, but home values in the city have risen.
In recent weeks, thousands of property owners complained to city officials after receiving significantly higher property assessments. And droves of residents showed up at the assessor’s office to appeal their assessments.
Professor Casius Pealer, Director and Master of Sustainable Real Estate Development at Tulane University’s School of Architecture discussed factors which impact property assessments.
"The value of residential property is largely any improvements you might have made to it, obviously is a factor the number of bedrooms and the quality of the building. But most of the impact that folks would see on an assessor's kind of change in valuation would have to do with changes in home values and other home sales in that area, and whatever that neighborhood was over the past few years,” said Pealer.
When for sale signs go up in neighborhoods, residents can monitor what the properties eventually sell for in their area. Pealer said that can be an important indicator for property owners.
"If houses are selling for more generally then that probably means that your home is valued more. Now the actual taxes you pay are based on a valuation plus a millage rate, so the assessor only sets the valuation, but the millage rate can go up or down. Louisiana has very low millage rates, nationally,” Pealer stated.
Robert Penick, PhD., is director of UNO’s Institute for Economic Development and Real Estate Research.
"It's normal, okay, it's happened before. We've been through this years ago,” he said of shifts in property tax values.
Penick says for starters, the cost of construction materials is higher.
"You can't build a house for a hundred dollars a foot anymore,” said Penick. “People are saying that the assessments are too high, but that's due to increased costs, it's due to inflation, you know, we're 14 years out of Katrina and values went down, they're saying 75 percent during that time, but now they're back up."
Because of Hurricane Katrina, in some neighborhoods, a number of older homes have been razed and new ones have gone up in their place. Penick says that too has an impact on property assessments.
"Home values did rise because people came in and took over those houses and rebuilt them and built them out and now, they're worth more than they were 14 years ago,” he said.
But many property owners complained to city officials that they may not be able to afford the higher property tax bills that could be a result of the higher assessments.
Pealer said income levels are part of the equation.
"The changes are neighborhood by neighborhood. I think people talk about gentrification and dramatically increased home values, I think there are also neighborhoods in New Orleans where home values have not been increasing and that has an impact on folks' wealth as well,” Pealer stated.
City Council President Helena Moreno said the body is looking at ways to reduce the financial burden on property owners.
"The council has several options. One just simply deals with the millages, rolling them forward, rolling them back. If we roll them back 15 to 18 percent that'll provide some relief just on the city side, but remember if your taxes went up 200 percent, a 15 or 18 percent rollback is not going to make a huge difference to you,” said Moreno.
Assessor Erroll Williams stands by his office’s handling of the reassessment of properties.
"It's going to be what the fair market value is estimated today and if you provide evidence showing that it's damaged or condition issues to your property then the assessor's office will make the adjustments,” Williams said.
LaTanya LaBranch, President of the New Orleans Metropolitan Association of Realtors released a statement on the issue:
“In New Orleans, there’s been a ton of new construction, as well as renovations. Most homebuyers are loving being close to major points of attraction and are willing to pay to live in areas that put them close to work and play. Having a new construction or newly renovated home adds to that desire. When there’s a demand and low supply, prices go up. Interest rates are low which allows buyers to purchase more with their money. Home prices have increased significantly post-Katrina which has displaced some New Orleans residents. Sellers are understanding that their homes are worth more and are willing to sell to gain on that equity. For buyers that can’t afford the increased home values, they’re forced to live further away in areas that are affordable for them thus pushing them further from their workplace. I don’t foresee pre-Katrina pricing coming back in New Orleans, but I do see pricing leveling off due to cost of living and wages not being equal.”