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.
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.
In the past four months of 2020, the number of homes sold exceeded the number of homes listed, demonstrating the continuing residential real estate boom, and showing that the residential market continues to be very seller-friendly.
With the presidential election behind us and the COVID-19 vaccine on the horizon, renters feel a bit more certain about the market. But is this boom point to a recovering leasing market? Leasing trends were already on a downturn when the pandemic hit in March. Manhattanites were leaving for suburban living. Rental rates spiraled downward to 17.3% lower than those of the previous year. The upward trend is encouraging, but there’s still a lot of inventory and record concessions and vacancies. Whether the lease boom is a mirage remains to be seen.
Based on an analysis by a Detroit residential broker, there is a one-year supply of condos for sale in the Downtown Detroit market. According to the broker, 4-6 months is considered a “balanced” market, so the existing one-year supply is a clear buyer’s market. It appears the rush to develop new condos in Detroit to meet rising demand happened too quickly, with a glut now on the market. There are successes, to be sure, but the pricing of some condos appears to be aggressive for the market.
Thousands face eviction in St. Louis, Missouri. The backlog of eviction suits threatens to leave many homeless, especially low-income tenants. An eviction defense program and hotline that was set up in August 2020 has received 60% more calls than normal, and many of those calls concern illegal lockouts. The backlog of eviction suits is concerning, with the fear being that all of these tenants may be put out all at once when the eviction moratorium ends.
The pandemic brought Detroit area projects to a screeching halt. By summer, many of them had resumed. The outcome of these projects, ranging from apartment developments to a small-format Meijer, hinges on how many office workers return to Detroit, how soon sports fans will feel safe at sporting events, if restaurants and hotels will fill up again, and if Detroit-area lofts will remain as desirable as they were pre-pandemic.
The disparity between the average national home value and that of Detroit’s black homeowners has tripled in recent years and has far-reaching consequences for future generational wealth. While some attribute the gap to ongoing systemic racial issues and the foreclosure crisis, one professor of architecture and urban planning feels the study that produced the data is flawed. In the current year, there are no signs of the gap widening further, but also no signs the gap is shrinking. For a great discussion of the role of redlining in impeding African-American wealth, view the PBS documentary The House We Live In.
I want to highlight a few topics that I believe will dominate the Michigan real estate landscape at a macro level in 2021.
First, mortgage foreclosures will begin to impact the residential market later this year. Although there is the potential for further federal or state moratoria, eventually we will be unable to kick the can further down the road. These foreclosures will begin to place downward pressure on sales prices at the end of 2021 or early 2022, as the foreclosed properties will begin to be marketed for resale.
Second, the impact of COVID-19 on commercial properties will begin to be felt in 2021 as well.
Although it appears the industrial class is weathering the storm quite well, the same cannot be said for retail and office properties.
For retail properties, in addition to the impact of “stay home” orders, you have the continuing trend of online shopping, which only accelerated due to COVID-19. Paradoxically, the decline of the retail sector has contributed to the stability of the industrial sector, as logistics and warehouse uses that support online retailers have thrived during the pandemic.
Major retailers often file for bankruptcy protection in January, after the cold realities of a failed holiday season hit home. This year, I would expect that major retailers, as well as “mom and pop” stores will have to fact reality in early 2021. The “sit-down” restaurant sector will likely also be impacted.
For the office sector, it remains to be seen is whether the impact will be long-lasting. If companies permanently shift work to a remote, or work-from-home, setting, the impact on the office sector could be significant. However, if employers move back to a traditional work setting, 2020 may be a blip on the office sector radar.
Finally, the lifting of eviction moratoria will impact the residential market. Evictions could have a net positive impact on the investor-owned market, as non-paying tenants are shown the literal, and proverbial, door. Or it could merely signal that rental rates will be forced down, impacting investors and overall residential market pricing.
If you would like to track articles on foreclosure and evictions, those articles are specifically tracked on this page of the Michigan Real Estate News website.
Grand Rapids median home prices are predicted to grow 6.5% in 2021, mirroring the 6.8% growth between 2019 and 2020. Younger adults are a driving force behind the trend with the median household income also increasing from $68,703 (2019) to $80,000 (2020).
