As Alabama continues to deal with the lingering recession, declining home values are now showing up in property tax home valuations across the state.
Property tax data compiled by the Birmingham News provides a more detailed analysis of the falling values.
Shelby County Alabama which includes parts of Birmingham showed a dip in property values for the first time in years with the average resident experiencing a 1.4% drop in tax valuations.
However, some of the neighborhoods which have been traditionally among the fastest growing in Alabama experienced drops in home valuations of almost 20%.
County records confirm that 2009 is the first tax year that home values have fallen since the state began requiring annual property revaluations in 2004.
The drop in valuations is likely to cause several issues as Alabama local governments look to maintain their tax base in order to provide services.
First, many homeowners have experienced a much larger drop in real estate values than 1.4% (based on recent sales) than the tax data reflects. Many areas in Alabama have seen average price reductions of 6% or more. This difference is bound to lead to more Alabama residents challenging their property tax assessments.
In addition, as real estate values fall, this could result in tighter budgets for local governments and schools. Every school district in Alabama is currently dealing with a 7.5% funding cut from the state. That’s bound to put more pressure on local governments to raise property tax rates in order to support the schools.
If this recent trend towards lower property tax values in Alabama isn’t enough cause for concern, there are other significant issues on the horizon.
For starters, home sales show little signs of improving and there are still plenty of foreclosures and short sales on the market. In addition, residents along Alabama’s Gulf Coast are still bracing for possible devastating drops in property values arising from the BP Oil spill in the Gulf. Some areas of the Gulf Coast experienced a 60% drop in sales in May after the severity of the spill was realized.
If you are an Alabama resident, it is important for you to know that even if your property tax valuation is falling, it might not be falling fast enough to keep up with the market value declines in your area.
The good news for you is that if Alabama’s annual property tax re-appraisal system doesn’t lower your value fast enough, you have the right to appeal that value.
