2008-07-30 / Front Page

Real estate values are flat, sales continue to decline

By Greg Pearson

Page Dowdy/Chesterfield Observer With the help of the nonprofit group Housing Opportunities Made Equal, Nancy Castellon recently purchased her first home near Chester.
Compared to assessments, the typical resale home in Chesterfield during the first six months of 2008 sold for 2.1 percent above its assessed value. The comparison does not include new homes, land and commercial properties.

"Real estate values in Chesterfield are flat," said Jonathan Davis, director of the Real Estate Assessor's Office. There were 1,737 resales from Jan. 1 to June 30.

While prices have been holding steady compared to assessments, the number of new and resale homes, land and commercial properties sold in the first six months of this year compared to 2007 dropped 45 percent - to 2,836 from 4,120.

Homes are staying on the market much longer these days, providing little comfort to owners looking to sell their homes. The homes that do sell are typically priced at or just slightly above their assessed values.

"The number of closings are continuing to go down, but the rate of decline has slowed," said Tom Tyler, residential analyst for Integra Realty Services.

Page Dowdy/Chesterfield Observer This home on Goswick Ridge in The Grove recently sold for $391,700, 3 percent above its assessed value.
In the 12-month period ending March 31, the average price of a new home sold in the county was $338,792 compared to $367,713 in the eight jurisdictions measured by Integra. Chesterfield's average price is 2 percent higher than the preceding 12-month period, and sales of more multifamily units is reducing Chesterfield's average price compared to other jurisdictions.

"The affordable housing market is $250,000 and below [for new homes], but there isn't a whole lot of sales in that category because of the lack of homes in that range," continued Tyler. "There's a whole lot of built-up inventory in the $300,000-$600,000 range. Approaching $1 million and above is holding up well."

According to the assessor's office, the median assessed value in Chesterfield as of last January was $193,200. Median means half the homes are assessed higher and half are lower.

When real estate sales from the Jan. 1 to Mar. 12 period were 2 percent below assessments, there were concerns in the county government that home values might need to be revalued lower during 2008. Because properties have to be assessed at market value by state law, that would have a negative impact on the county budget.

"If assessed values have to be decreased, it would cause a reduction in our budget, which has to be made up somehow," said County Administrator Jay Stegmaier.

But April resales rebounded to 3.4 percent above assessed value followed by 3.8 percent in May. The trend seemed more positive until last month when it dropped to 1.7 percent.

Other sources of county revenue are stagnant. Property tax revenue represents 43.5 percent of this year's general fund monies - how the county pays for most of its services. Assessments increased 11 percent in 2007.

The administration has already predicted - based on a projected 3 percent increase in residential assessments this year - the FY10 budget starting next July will be tight.

The bright spot in the county's revenue stream is a spike in commercial building. Davis pointed to all the new construction going on at the Watkins Centre, Hancock Village, the Village of Midlothian and another strip center at Commonwealth Centre. The county's Economic Development Department is also reporting a banner year ending last month with $75 million in new investment and 534 new jobs - more than double from FY07.

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