The Reval Deval
When the Forsyth County Tax Administration office issued its findings for the 2013 property revaluation, the numbers were shocking — some of them anyway.
Even those girded for the worst kind of news after the five-year housing crisis and attendant tumultuous cycles in the market weren’t prepared for the steep losses in tax value that hit some of the city’s neighborhoods.
Homes in Morningside Manor, according to the new revaluation, lost about 65 percent of their value, which was last calculated four years ago, just as the crisis of foreclosures and difficult lending conditions was starting to pick up steam. City View homes lost about 55 percent in tax value. The Whitfield Development dropped by about half.
More troubling was that these steep reductions seemed isolated to Winston-Salem’s African-American neighborhoods. And with the department standing pat by their numbers, an investigation was in order.
The result is this week’s cover story, which begins on page 17 and will continue next week with more material by our media partner, the Camel City Dispatch, which helped us gather information and crunch the data on the 14,000 or so homes used for the reval.
We found a dozen property sales that probably have been disqualified from the formula: foreclosures, flips, sales between fam- ily members and sales between churches, financial institutions, government entities and other contaminated transactions that further dragged down the already beleaguered tax values of these neighborhoods — millions of dollars single largest assets.
Monticello Park, a neighborhood of African-American affluence when it was built during segregation, took a 70 percent hit based on three sales.
The problem was one of poor workmanship more than racist conspiracy — though it should be noticed that the white areas did not meet similar treatment by the department.
And there are systemic issues as well. The revaluation procedure was not designed to cover a disaster the magnitude of the unprecedented housing crisis. When the money for mortgages tightened up, sales stagnated so much so that some of these revaluations were based on miniscule sample sizes. As far as we can tell, Carver Glen homes dropped about 40 percent based on a single sale. Tollgate seems to have lost almost 60 percent based on two sales, as did Eastwood Estates. And homeowners in Monticello Park, a neighborhood of African- American affluence when it was built during segregation, took a 70 percent hit based on three sales.
Sample size is a major factor in any statistical survey, affecting margin of error and overall accuracy. We suggest for future revals a legal sample-size minimum that must be met before a change can be enacted, because a single, uncontaminated sale — or even three or four — does not give enough information to make a determination that will affect people’s net worth, their credit ratings and ability to borrow.
It will also mitigate these huge swings in value, which raise ire in the neighborhoods and wreak havoc on tax revenues.
Stability is a key aspect of prosperity, and with the housing market anything but stable these last few years, it’s time to make a change in the way we assess real property. This was an avoidable error; we can do better.