Overvalued Housing Markets: A New Nationwide Epidemic
In a new report, Fitch Ratings estimates that home prices are 5.5% overvalued nationally. However, Michigan is one of the few states where housing is undervalued.
The demand for housing far exceeds the available inventory nationwide. This trend is due, in part, to homeowners’ reluctance to list homes during the pandemic. Metro areas around the United States are overvalued by more than 10%. Las Vegas (28%) and Dallas-Fort Worth (20.24%) are prime examples. Idaho (30-34%) is the highest overvalued state on the list, with Nevada coming in a close second.
Ann Arbor and Developer Work to Save the Trees
Ann Arbor City Council and developers have debated over a 51-home subdivision for years. The original proposal called for the removal of 200 old growth oak trees, but was unanimously rejected by City Council in 2017. But now, a new alternative called “The Canopy” would preserve most of the old forest fragment at 2857 Packard Road, while erecting a 2-story apartment or condo building loaded with green features.
Weekly Brief – February 1, 2021
This week I want to highlight the upcoming tax appeal season.
Generally in the first weeks of February (sometimes later in Macomb County), property owners will receive a Notice of Assessment in the mail. If you have not received a Notice of Assessment when you expect it, you should immediately contact the assessor’s office in the municipality in which the property is located. Not receiving your Notice of Assessment does not extend any deadlines. It is the property owner’s responsibility to receive the Notice of Assessment.
Once the Notice of Assessment is received, it should be reviewed to confirm it is: (a) accurate; and (b) appropriate. I have an easy guide to reviewing your Notice of Assessment on my tax appeal blog, which can be accessed here.
Most property owners do not understand that, although the Taxable Value is what is used to calculate the tax bill, the Assessed Value/State Equalized Value is what is actually appealed in a tax appeal. In order to reduce an owner’s tax bill, the owner must demonstrate that the Assessed Value should be reduced to an amount less than the Taxable Value. Only then will the tax bill be reduced. The easy “back of the napkin” method for analyzing a tax appeal is to determine whether the property’s market value is less than twice the Taxable Value. In other words, if the Taxable Value is $100,000, the tax bill will only be reduced if an owner can demonstrate the market value is less than $200,000.
Notably, the date of value for a tax appeal is December 31, 2020. This may impact an appeal’s validity, as the impact of the COVID-19 pandemic may not be fully felt until later in 2021. Last year, I wrote a blog post about the impact of COVID-19 on tax appeals, which can be found here.
There are also deadlines that apply to tax appeals. First, for property classified as residential or agricultural, the owner must first appear before the March Board of Review. This is a mandatory requirement to pursue a tax appeal. After receiving the determination of the Board of Review, the owner must then file a Petition before the Michigan Tax Tribunal by July 31.
For property classified as commercial or industrial, the owner is not required to appear before the March Board of Review, although the owner is permitted to appear. The deadline for filing a Petition before the Michigan Tax Tribunal for these properties is May 31.
My law firm is happy to review properties to determine whether a tax appeal is appropriate. If you are interested in such a review, please email me at dnykanen@fnrplc.com.
Former Real Estate Executive Charged with Wire Fraud
/in SE Michigan /by Tracy WillisViktor Gjonaj, former head of the Troy-based Imperium Group, LLC, has been charged with bilking at least two dozen investors of $26.4 million to fuel his Michigan lottery habit. Gjonaj promised investors that he would buy, develop, and resell real estate for a profit, but did not promise a specific rate of return. Of the 66 real estate deals presented, none came to fruition. Instead, he used the funds to support his $1 million a week Daily 3 and Daily 4 gambling habit. The state’s $5,000 daily limit on lottery terminals, installed in 2018 in response to Gjonaj’s lottery activities, did not slow his habit. Gjonaj’s current location is unknown.
Weekly Brief – January 25, 2021
/in Weekly Brief /by Dave NykanenAs we observe the impact of COVID-19 on the residential, office, and retail sectors, there is a much longer-term factor that I am also observing. The impact of electric and/or autonomous vehicles on real estate.
First, electric vehicles. As the percentage of electric vehicles increases, there will inevitably be an impact on petroleum retailers. These gas stations are generally found in “prime” corner locations. If there is an economic impact on gas stations that causes a contraction of the number of locations, this will open up these locations to alternative developments. However, given the simultaneous decline of bricks and mortar retail, the users of these prime locations remain to be seen.
Second, autonomous vehicles. There are two potential impacts of autonomous vehicles that I want to highlight. As an initial matter, if one is able to “call” a car to pick you up when you are shopping or working, the need for close parking locations may decrease. This could have an impact on the requirement of zoning ordinances to provide on-site parking. If zoning ordinance requirements change, the impact on land use could be substantial. Second, if the shift to autonomous vehicles leads consumers away from vehicle ownership, and towards “on-demand” vehicles, this could have significant impacts both in our infrastructure needs and, in Detroit specifically, in the economy. If vehicles are rented on demand rather than owned by individuals, the sales volume could substantially decrease, as consumers could make more efficient use of available vehicles. Imagine if your car, parked in your office parking lot, was instead able to be used throughout the day by others. If sales volumes decrease, the economy in Michigan could be detrimentally impacted.
Again, these are all long term issues. But a smart investor, owner, or consumer, will monitor the trends.
Air Cargo Is Booming During COVID-19
/in National /by Tracy WillisThe Cincinnati/Northern Kentucky International Airport, also known as CVG, has 15,000 fewer arrivals and departures since the start of the pandemic. That doesn’t mean their runways are clear. Their air cargo business is booming. Amazon Air is completing a 798,000 square-foot sorting center, a seven-level parking structure, and acres of concrete to accommodate 20 aircraft. The new facility is scheduled to open in the fall. This boom in logistics is impacting industrial development around the country.