Prices for single-family homes are dropping at a steady pace, according to a report from the Warren Group. But if you're looking for a silver lining and thinking property taxes are going to drop with them — think again.
As values fall, cities and towns have the option of raising the tax rate in response, leaving your annual bill unchanged. "Property taxes could be cut in half, and the only thing that would happen is the tax rate would double," Marblehead Assessor Michael Tumulty said.
The median home price, year to date, in Massachusetts is down from $350,000 to $315,000. That's a loss of roughly 10 percent, according to Timothy Warren, CEO of the Warren Group, which tracks housing trends and publishes financial journals like Banker & Tradesman.
For September, the median value fell 15.6 percent to $287,500, from $340,750 last year, marking the first time since April 2003 that the median value dipped below $300,000, the Warren Group reported.
On the plus side, the number of sales has risen recently, but that may indicate hard-pressed sellers forced to reduce expectations.
"It's certainly fair to say," Warren said, "the data for the month of September seemed to indicate sellers did compromise on price."
Overall, Warren said, single-family homes are doing far better than condominiums, and the North Shore is in much better shape than Essex County as a whole, which includes troubled markets like Lynn, Lawrence, Haverhill and Lowell.
But sellers might have to brace for more pain: Warren noted that September's sluggish figures reflect deals struck in the summer, before the stock market collapse.
"It will be interesting to see just what the last three months of the year will bring," Tumulty said. In Marblehead, prices have fallen roughly 12 percent since 2005, he said.
As a result, the town has to adjust the tax rate to keep the town's income constant or rising. "It still costs the same to run the community," Tumulty said.
On the other hand, the loss of wealth might have another practical impact on local spending. Barbara Anderson, the prime mover behind the passage of Proposition 21âÑ2 nearly 30 years ago, said it could put the brakes on efforts to raise money through the ballot.
"I don't think people are in any mood to vote for overrides," she said. "The kinds of people in my community who vote for overrides are the ones most impacted (by the market collapse) in their trust funds."
They weren't so concerned previously about the impact of overrides on the elderly, Anderson said.
The passage of Question 1, which would eliminate the state income tax, could likewise end a lot of state aid leaving municipalities struggling financially. But hitting up suddenly poorer taxpayers for cash should be a last resort, Danvers Selectman Dan Bennett said.
"We'd start looking at cutting expenses and services first," he said, "and, heaven forbid, jobs." Danvers was one of the hardest hit by the price drop. Homeowners have lost nearly 9 percent on sale prices since 2007.
Foreclosures might have been a factor in this, said Bennett, who also sells real estate. A few expensive homes might also have lost their value, he suggested. And, he said, "We're not at the bottom yet."
Cities are unlikely to forgo the 21âÑ2 percent annual tax boost provided by law, Beverly Mayor Bill Scanlon said. "It's going to be hard enough to balance the budget even if they do go up the 21âÑ2 allowed."
The number of Beverly home sales increased over last year, from 215 to 219. Prices, however, dropped 5.15 percent. Lower home prices could attract more large families with children, filling the ranks of the Beverly schools, the mayor warned.
Nonetheless, Scanlon remains positive. Yesterday, he said, the stock market soared. "I'm an optimist. I don't think the world is going to come to an end." Prices for homes can rebound just as easily.
"Why should everything be worth half of what it used to be?" he said.
| Median house prices on the North Shore | |||
| City/Town | YTD 2007 | YTD 2008 | Percent change |
| Beverly | $369,000 | $350,000 | -5.15 |
| Boxford | $620,000 | $587,000 | -5.32% |
| Danvers | $395,000 | $360,000 | -8.86 |
| Hamilton | $419,000 | $500,000 | 19.33 |
| Ipswich | $502,430 | $399,500 | -20.49 |
| Manchester | $684,810 | $762,500 | 11.34 |
| Marblehead | $544,500 | $510,000 | -6.34 |
| Middleton | $450,000 | $430,000 | 4.44 |
| Peabody | $349,500 | $329,203 | -5.81 |
| Salem | $316,500 | $300,000 | -5.21 |
| Swampscott | $467,500 | $418,500 | -10.48 |
| Topsfield | $515,000 | $488,000 | -5.24 |
| Wenham | $507,000 | $480,000 | -5.33 |
| Source: The Warren Group | |||
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