A
mixed tale of Galesburg property sales
by
Mike Kroll
The
Zephyr, Galesburg
The news for Galesburg city property tax payers is
mixed. Most residents will almost certainly see their property tax bill rise
next summer by four percent but the prevailing fear that the local property
market had collapsed in the shadow of gloomy local economic conditions has not
been substantiated. This is bad news when you must come up with the twin
property tax payments next summer but good news for many property tax supported
entities who will welcome the availability of additional revenue.
This is also good news for those trying to sell their
homes as the average selling price of existing Galesburg homes in 2006 was
$5,500 higher than that just one year earlier. As one local Realtor said to me,
ÒGalesburg is currently a seller's market. Nice homes sell very quickly and for
a better than fair price.Ó
Illinois statute mandates that local township
assessors conduct a ÒquadrennialÓ reassessment of all residential, commercial
and industrial properties within their jurisdiction as a means of maintaining
fairness and accuracy of assessed property values. Unlike appraisers who typically evaluate a property to assure its worth
to a lending institution, assessors
do what City of Galesburg Township assessor Darrell Lovell calls a Òstreet
appraisal. Such an appraisal depends upon official records and an exterior
visual inspection most commonly conducted from the street or sidewalk.
ÒEven if we were permitted to visually inspect the
interior of a home as done by appraisers that approach simply wouldn't be
practical due to time constraints,Ó explained Lovell. ÒThere are nearly 13,000
property parcels in this township, 10,399 of which are houses, and I have less
and a year in which to reevaluate each and every one during a quad year. Even
with additional help this is a huge task.Ó
Lovell maintains a computerized database of every
parcel in the City of Galesburg township, which includes most but not all of
the corporate limits of the city of Galesburg. Some northernmost parts of the
city that have been annexed in are in a different township outside of Lovell's
jurisdiction. In this database is contained basic information about each home,
such as year and type of construction, number of stories, number of bedrooms, square
feet dimensions, garage, basement, etc. And most importantly there is an
assessed fair market value placed on the home by Lovell and a color photograph
of the home's exterior from the street. All of this information is accessible
on the Internet from Lovell's website, www.ci.galesburg.il.us/assessor/
and searchable by address or parcel number.
The job of an assessor like Lovell is to use this
information to categorize homes into ÒcomparablesÓ so that his record of
property sales can be used to determine the fair market value of each home.
Whenever you sell your home in an arms length transaction that sale price
becomes the home's fair market value but for homes that haven't sold recently
sales of similar homes are used by Lovell to assign a fair market value. In
Illinois non-farm property tax values are calculated based on one-third of the
fair market value of a parcel with a variety of adjustments applied.
Property owners are not solely at Lovell's mercy. They
can appeal his assessment of their property's value with the County Board of
Review that hold hearing annually. Most of the time such appeals are made by
large commercial or industrial property owners or third-parties looking to take
advantage of the system. But every year a group of regular home owners will
take the time and expense to build a case that their property is over assessed
and request an adjustment. To Lovell's credit he appears to make very few
errors and seldom large ones. People may not like paying property taxes but
most in Galesburg accept their property's assessment as fain.
As future sales take place in between quadrennial
years Lovell compares the actual sale price to what he had determined the fair
market value of the home to determine the accuracy of his assessed values each
year. These comparisons yield what is called a multiplier that is then applied
to all properties in the township prior to calculating the next year's property
tax bill. If the calculated multiple is under 1.0 then the assessor has
generally overvalued properties while multipliers greater than 1.0 mean that
actual sale prices are outpacing assessed values. From an assessor's point of
view the ideal is to remain as close to a 1.0 multiplier as possible as that
suggests the highest degree of accuracy in assessed values and therefore a
fairer system.
ÒWe have just completed the 2006 quadrennial and there
is reason for some optimism about the local economy,Ó stated Lovell. ÒThe
average sale price of an existing home in 2006 was $73,500 compared to an
average price of $68,000 in 2005. New home construction is even more telling.
In 2005 the average price of a newly constructed home in Galesburg was 125,920
but in 2006 that jumped to $210,500, of course only six new homes were built in
2005 and 15 in 2006. Of the new homes built in 2005 half were Habitat for
Humanity houses and the lower price of those three homes accounts for much of
the difference. Only one Habitat home was constructed in 2006.Ó
Lovell's numbers show that there were 231 property
transactions in 2006 in Galesburg and 124 of those sold for more than the fair
market value he had them assessed at while 107 sold for less. Based on these
results Lovell believes that the multiplier for next year's property tax bills
will be 1.04 in Galesburg. This year's multiplier was 1.0 and one year ago it
was 0.98 and the year before 0.985. ÒGalesburg has already turned the corner in
real estate values and I am happy to say that the bottom never did fall out of
the area real estate market as many of us feared it would in the aftermath of
the Maytag and Butler closings,Ó commented Lovell.
Lovell's records show that the market value for new
home construction hit a peak in 2000 when 35 new homes were built totally $5.31
million in value. Sales of existing homes in that year averaged $70,000 each
but jumped to $74,900 in 2001. During the past seven years (2000-2006) 109 new
homes were constructed in Galesburg, that is considerably less than many
comparably-sized communities in Illinois according to Lovell. What is more
disheartening is that during that same timeframe 144 homes were demolished
leaving a net loss of 35 homes in the last seven years.
ÒGalesburg has some of the lowest housing prices in
Illinois as compared to similar size cities. We seem to trade off the
distinction of lowest cost homes from year-to-year with Danville. Part of this
can be attributed to our population decline but part of it also has to be due
to the inability of many residents to properly maintain their homes under the
current economic conditions in Galesburg. I have conducted five quadrennial
assessments since first being elected assessor and I must say that this last
one was the first time I recall describing the condition of so many homes as either
'poor' or 'unsound.' This quad saw the condition rating of many Galesburg homes
drop a notch or so and I found that to be very discouraging. Even worse is that
while a condition rating of unsound implies a home that is virtually
uninhabitable many such homes nevertheless had people living in them.Ó
Lovell also noted that even some comparably new homes
are showing signs of neglected maintenance. The deterioration of Galesburg's
housing stock is not solely the result of our large number of older homes. In
general the homes in the worse condition are those that are not owner occupied.
There are many rental properties that simply receive little or no maintenance
and deteriorate as a direct result. It must be hard to witness this gradual
decline over 20 years as Lovell has but it has provided him with a unique
insight and perspective.
ÒYou can't come away from what we have been seeing
with Galesburg's homes without recognizing that the character of this city is
changing drastically. The middle class is evaporating in Galesburg. While
projects like the new shopping center on Seminary Street will generate both
sales taxes and substantial additional property taxes, particularly for the
schools, home ownership is the role of a community's middle class. Middle class
families have left Galesburg and won't return until we can provide them a good
reason. They will live here to work at good local jobs or they will commute to
work and live here for a better quality of life. Right now Galesburg isn't yet
a compelling draw either way.Ó
7/26/07