All of the property in Fair Haven was reassessed for 2014. The purpose of a property tax reassessment is to ensure that the tax burden is spread fairly within a municipality. When properties are reassessed (or revalued), it’s an attempt to set the assessed value as close as possible to the property’s fair market value on October 1st of the previous year.
“Fair market value” is the price that an informed and willing buyer is willing to pay an informed and willing seller. The prices of homes that are sold under duress or given as gifts to family members are not considered fair market value sales.
When a municipality conducts a property tax reassessment, many home owners are concerned that they’ll have to pay higher property taxes. Although some home owners do end up paying higher taxes, others end up paying lower taxes. The intent of a reassessment is that all property owners are paying fair taxes.
I keep an extensive database to monitor the sales of every home in Fair Haven. In an ideal world, each home’s selling price would be very close to that home’s assessed value. I thought it would be interesting to look at all of the 2014 year-to-date sales and compare the actual selling prices to both the 2013 and the 2014 assessed values. When I did this I had to exclude new construction, because the information available to me for almost all of those homes included only the assessed value of the land, and not for the improvements.
61 Fair Haven homes (that were not new construction) sold between January 1st and now. When I looked at the ratio of Selling Price to Assessed Value for each home, I excluded one sale as an outlier because the percentage was so different from all the others. For the other 60 sales, this is what I found:
Average Selling Price vs. 2013 Assessed Value: 140%
Average Selling Price vs. 2014 Assessed Value: 110%
We can draw two conclusions from these results. First, Fair Haven’s average 2013 assessed value was much too low, and didn’t come close to matching current fair market value. Second, Fair Haven’s average 2014 assessed values was very close to fair market value. Now before you tell me that a 10% difference isn’t close enough, let me remind you that the 2014 assessments were based on fair market value as of October 1, 2013. Let me also remind you that as of the end of July, the median price of a Fair Haven home had increased 12%.
It looks like our tax assessors did a great job when they did the 2014 reassessment!
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