‘Crazy’ Real Estate Market May Lead to Another Revaluation

STONE HARBOR – More than once, Stone Harbor Tax Assessor Margaret Slavin has referred to the borough’s real estate market as “crazy.” 
Almost four years ago, in January 2018, Slavin reported on the end of a borough-wide revaluation that she hoped would not be needed again for many years. Slavin Nov. 2 told Stone Harbor Brough Council that the state wrote the borough, warning of the need for a new revaluation.
Stone Harbor’s housing market in the last two years has been frenzied, marked by bidding wars, historically high prices, and rapid sales once a property becomes available. 
Slavin said that the inventory of available properties in the borough remains low, with just 25 listings. The borough saw a $50 million increase in its ratables in the past year. In 2020, the taxable value of the 2-square-mile borough’s ratables was just under $4.9 billion.
What’s a Revaluation?
A revaluation involves the review and possible adjustment of all real property values in a municipality. A revaluation is generally needed when the properties in a municipality are not being assessed at the same rate of value, or when they are assessed substantially above or below the constitutionally required uniform value standard.
The frenzied real estate market in the borough has upset the average assessment-to-sales ratio, with homes selling at levels significantly higher than assessed value. An assessment-to-sales ratio of 85% or less is often an indicator of a coming revaluation. Slavin told the council that Stone Harbor’s ratio is 84%.
A municipality can decide to initiate a revaluation, or it can be ordered by the county Board of Taxation, or the state Division of Taxation, or even the courts can order one if circumstances warrant. Slavin said the borough should probably wait until the county indicates one is necessary.
While a revaluation does not necessarily mean higher taxes, it does have an impact on a municipality’s budget. Revaluations are not cheap. Stone Harbor paid $275,000 for its last one, in 2017. Slavin noted that the 2017 effort also involved added tasks that would not be part of a new one. 
Borough Administrator Robert Smith said a revaluation would still be a high enough cost that it would have to be planned a year in advance.
When to Do a Revaluation
One added problem for any revaluation effort is that the market has not yet settled down. Slavin said, “Prices are still crazy.” 
She added that the previous revaluation, in 2017, was led, in large part, by the multifamily and condo properties. The changes in the ratio now are coming largely from single-family homes.
At an earlier council meeting, Slavin said Stone Harbor would probably not be “first in line” in the county for a revaluation. A look at the equalized valuation table for 2021 shows all but four of the county municipalities below the 85% ratio threshold.
The pandemic accelerated the rise in property values in the county, in general, and in high-value towns like Stone Harbor, in specific. In a word, it’s crazy.
To contact Vince Conti, email vconti@cmcherald.com.