Housing market roundup continued

We didn’t cover northwest Indiana in Saturday’s post, but the Post-Tribune ran a story on the local housing market yesterday (Jan. 29^th). The focus is on the strong price appreciation of homes in the “Tri-Town Area” of Dyer, Schererville, and St. John. Nancy Smith, CEO of the Greater Northwest Indiana Association of REALTORS®, reports that demand is fueled by buyers from Illinois seeking easy commutes to Chicago-area employment and relatively lower taxes. You can read the full article here courtesy of the Indiana Economic Digest.

Quick housing market roundup

Local housing markets received some attention from at least three major Indiana newspapers recently (thanks in large part to the efforts of local boards), and here is a quick roundup:

Northeastern Indiana (Jan 12th)

Home construction slowed by 1% in 2005 over 2004 in Allen County. However, sales of existing homes were up by 1% over the same period according to the Fort Wayne Area Association of REALTORS®. (Link to full story in the Journal Gazette)

Southwestern Indiana (Jan. 26th)

John Czoer, President-Elect of the Evansville Area Association of REALTORS®, is optimistic for 2006 following a strong 2005 for southwestern Indiana. In Vanderburgh County, prices were up 5.9% over 2004 and the total number of homes sold was up 3.4%. Read the entire Courier Press article here.

Central Indiana (Jan. 28th)

The Metropolitan Indianapolis Board of REALTORS® reported that volume and prices both increased over 3% in 2005. You can read the full text here, but here’s a snippet from today’s Indianapolis Star article:

Moderate price appreciation and lower mortgage interest rates helped sustain growth, said Jim Litten, president of F.C. Tucker Co.

"The market is very healthy, but how long can we sustain this growth?" he said.

HB 1001 (Property taxes) passes House

The bill that contains a one-time boost in the state-paid Homestead Credit, enhanced taxpayer notification, and reassignment of assessing duties from township trustees to the county level has passed the House by a vote of 97 to 1. And yes, the provision that eliminates property taxes in 2009 is still in the bill. Senator Luke Kenley (Noblesville) will sponsor HB 1001 in the Senate.

Testing a new way to post

We thought we would try to post via email from inside the State House today. We hope that this can be a way to provide instant updates on legislative activity.

Property taxes eliminated?

It is probably too soon to break out the champagne, but an amendment offered by Representative Chet Dobis of Merrillville amended into HB 1001 (Espich) late last night would eliminate property taxes in Indiana by 2009. That’s right— with the exception of debt obligations already entered into, no more property taxes.

The amendment did not suggest replacement revenue for the more than $6 to $7 billion in property taxes that would no longer be collected for schools and local government. However, Rep. Dobis suggested that it was necessary to set a deadline that would prompt major property tax reform.

Lesley Stedman Weidenbener of the Louisville Courier-Journal covered this development here. As her article indicates, even some of those who supported the amendment last night are not optimistic that this approach will work. The conventional wisdom is that this provision will disappear before the end of session. While this is most likely true, a similar deadline for eliminating school operating costs paid by property taxes without replacement actually sailed through Michigan’s legislature a few years ago. Lawmakers then returned later to figure out how to replace the funding from other sources.

Is this going to happen this session? It is doubtful, but stay tuned…

NY Times Real Estate Blog

The New York Times has a great real estate-related blog going now. It is called "The Walk-Through" and you can view it here. It isn't focused on NYC real estate like Curbed.com but about housing, economics, real estate market and business trends, and much more.

For example, one recent post introduced me to Indeed.com, which is a "meta-search engine" that tracks online job listings. But the coolest feature is this interactive map (click here) that graphically displays the job listings per capita for the 50 largest MSAs in the country. It is interesting to see how Louisville, Cincinnati, Chicago, and Indianapolis compare with other markets.

We’re NOT number one

According to a new Inman News article, Indiana is not the number one state when it comes to foreclosures. According to data from RealtyTrac, Indiana was still in the top ten for 2005, but the Hoosier State had a lower foreclosure rate than the top four of Florida, Colorado, Utah, and Texas.

Major Moves takes a big step forward

IAR was one of the groups standing with Governor Daniels this morning as he announced the winning bid for the Indiana Toll Road operating lease. As WIBC is reporting, the selected offer appears to be $3.8 billion. This will certainly give the Governor’s Major Moves plan additional momentum, and we expect committee action on HB 1008 very soon.

Assessment reform is not personal

Not surprisingly, Governor Daniels’ recent call for moving assessment responsibility from the township to the county level is being met with some resistance. Today’s Howey Political Report Daily Wire noted several newspapers articles about opposition to the plan. We were especially struck by the ending of Michele McNeil’s piece in today’s Indianapolis Star (click here for the full article):

"It's hard not to take this personally," [Warren Township (Marion Co.) Assessor William] Birkle said. "We all want nothing more than fair and equitable assessments. And that's what we're trying to do."

Unfortunately, debate over whether or not assessment should be done at the county level has sometimes devolved into attacks on the competency of assessors. IAR feels that such a debate misses the point—all Hoosiers, including assessors and taxpayers, suffer from a system with too many units of administration and accountability. Assessors should not take the cry for reform (which is not new) personally, as it is primarily about structural issues.

We applaud the “nearly 200 township and county assessors” that are gathering this week for more training (although we must note that this is still less than one-fifth of Indiana’s 1,008 township-level assessors and 92 county assessors). However, training cannot change the fact that 1,008 different interpretations and applications of such training is more likely to lead to variations in assessments than county-level assessment.

Our position is best explained by the quote in the Star article from IAR staff:

"To me, this is not a question of efficiency. The real goal is not to squeeze every last dollar out of assessors, though there may be money saved. The real money at stake is taxpayer money," said Karl Berron, a lobbyist with the Indiana Association of Realtors.

The Realtors, along with associations representing counties, and cities and towns, support this idea, which is contained in House Bill 1400. The bill hasn't been scheduled yet for a committee hearing.

"If I'm not paying enough property taxes, then someone else is paying too much," Berron said. "This is about taxpayer fairness."

The state’s own equalization study showed that significant disparities exist from county to county and across townships within the same county. More training may help at the margins, but there is a reason why only one other state in the US uses townships as the basic assessment unit throughout the state.

Many good assessors are trapped in a bad system. Neither Governor Daniels nor IAR wants to see anyone’s job eliminated. But let’s fix what we all must admit is an antiquated system and give taxpayers more accountability by putting one person in charge per county.

Reforming Indiana's assessment system

The following is a statement issued by IAR after the Governor's remarks in his State of the State address regarding moving responsibility for assessment to the county level. This is a high priority for IAR this session, but it will certainly generate significant resistance from some township offcials. Later today we will examine news coverage of the emerging debate over this much-needed reform.

The Indiana Association of REALTORS® applauds Governor Daniels for his call to consolidate property tax assessment at the county level. REALTORS®, perhaps more than any other group, see the inequities caused by our antiquated system on a daily basis.

The reason this reform is needed now is simple. In far too many cases, Indiana property owners pay more than their fair share of taxes under the current system.

For too long this issue has been swept under the rug as policy makers have debated other aspects of our antiquated property tax system. Meanwhile, assessment experts have been recommending this reform for nearly 100 years. National studies recommending county level assessment began appearing in 1907. State studies recommending consolidation began in the early 1950’s.

Even a 2005 study by the Indiana Township Association supports the position that county level assessments would be both more accurate and cost significantly less. The study states:

“It is likely that countywide assessment would create greater consistency of property assessments within the county because the larger scale of operations could permit hiring of personnel with greater skill and would permit administrative controls across the entire county.” (Page 7)

It further states:

“While we do not presume to calculate a savings estimate for the state as a whole, the evidence available here do indicate that substantial cost savings could result if the primary assessment function were transferred from the township to the county level.” (Page 21)

In case we needed more evidence of the discriminatory nature of the current system, it was delivered in the recent Tax Equalization Study conducted by the Indiana Fiscal Policy Institute. A key finding of their extensive analysis is that the current assessment structure systematically results in taxpayers paying more than their fair share of property taxes in far too many instances. The study also produced yet another call to transfer assessing responsibilities from the 1008 townships to the county level.

In calling for this reform, Governor Daniels has placed the taxpayers of Indiana first. He has correctly pointed out that this is an issue of fairness. While consolidating assessment would likely result in cost savings, the real money at stake here is that of taxpayers. Hoosiers pay nearly $6 billion in property taxes annually. They deserve to pay their fair share, and no more.

HB 1008 (Major Moves) being heard this morning

HB 1008 is the vehicle for the Governor's Major Moves transportation plan. Authored by Representative Randy Borror (R-Fort Wayne), HB 1008 would allow public-private partnerships to bring capital into Indiana for infrastructure investment. IAR stood with Governor Daniels last Friday and endorsed this proposal.

Discussion of this legislation is sure to be very interesting, and I encourage you to take advantage of a new opportunity to watch committee hearings. Click here to launch live video of the House Ways & Means Committee hearing.

NOTE: Committee video is not yet being archived, so if you are unable to see the video the hearing may have ended for the day.

Weekend coverage of Friday's press conference

More on IAR's endorsement of the Major Moves transportation plan from Saturday's Northwest Indiana Times:

"Our members are literally on the front lines of selling Indiana every day," said Karl Berron, the top lobbyist for the Indiana Association of Realtors.

"When we looked at the breadth of projects, the pace with which they're accelerated, this was a no-brainer for us. We're thrilled to stand here today to endorse the plan."

The Realtors also support Daniels' plan to abolish township assessors and shift their duties to the county level. That plan need legislative approval, as does any Toll Road lease.

Click here to read the full article.

IAR endorses Major Moves program

Several REALTORS® from all over Indiana joined Governor Mitch Daniels in his State House office this morning to announce IAR’s endorsement of the “Major Moves” transportation plan.

Click here to see a photo provided by WISH-TV (Channel 8) and read a brief article on this announcement.

To hear an audio replay of this event, click here.

2006 State of the State address

Governor Daniels just delivered his second bold State of the State address, and he again surprised most observers of Indiana government. As IAR’s own Karl Berron was quoted in today’s Indianapolis Star, the Governor "continues to be willing to do things that insiders like me believe are the third rail of Indiana politics." (To read Mary Beth Schneider’s full article, click here.)

His proclivity for tackling controversial issues was certainly on display this evening. But while the headlines in tomorrow’s papers may focus on the proposed cigarette tax increase, other items deserve as much or more attention. We were especially excited by the Governor’s focus on reforming Indiana’s antiquated system of property tax assessment.

The Governor tonight called for the consolidation of assessment at the county level. Here is the relevant portion from a transcript of the address:

“Redundant and antiquated government makes property taxes too high and decision making too slow. Scattered authority produces bizarre tax assessments in which identical houses just blocks apart are taxed at widely different levels….I ask the local officials of our state to endorse and help effect the end of the archaic township assessment system and the transfer of this failed process to the level of our 92 counties.”

IAR has long supported this change, and we plan to be very vocal in our support. A press conference has been scheduled for tomorrow to explain the details of the specific proposal, and we will report here soon after.

Daniels to give State of the State address tonight

The State of the State address will be given at 7 pm tonight. If you miss the live broadcast on radio or television, it looks like it will be available online here. IAR will be watching and posting our thoughts shortly after the speech.

House Republicans offer property tax proposals

The Republicans in the Indiana House of Representatives announced their 2006 caucus agenda this morning, and you can view a full list of the various proposals here.

It is worth pointing out a few highlights related to property taxes that will greatly interest REALTORS®. Please note that the following is IAR’s interpretation of these proposals as presented this morning—the actual legislation has not yet been reviewed:

• Consolidate assessment at the county level

• Cap the amount of property tax dollars used for child welfare services with the state assuming responsibility for growth

• For property taxes due this year, provide a one-time special 12% credit for Homestead Credit-eligible properties that should more than offset expected impacts of rising child welfare levies

• Give taxpayers more information regarding changes in local spending and property tax rates

IAR hopes that this means adopting a program like Florida’s where the “TRIM” notice tells a property owner how his/her tax bill will be impacted by proposed spending changes before tax rates are finalized. Click here to view a sample of the notice that Florida taxpayers receive.

• Limit the growth in the property tax rates on residential property to 3% each year

• Institute a statewide tax cap for residential property that limits the yearly amount due to 2% of assessed value

If this is similar to legislation passed in last year’s budget bill, a 2% cap means that the annual taxes on a $200,000 home cannot exceed $4,000, for example. In some counties, primarily Lake and St. Joseph Counties, such levels of property tax burdens are not uncommon.

State House update: Eminent domain bills passes committee

HB 1010, authored by Rep. Dave Wolkins (R - Winona Lake), just passed out of the House Judiciary Committee by a vote of 10-0 (one amendment was adopted). IAR supports legislation that can further protect private property rights without stifling economic development, and HB 1010 appears to strike such a balance.

Gov. Daniels to suggest eliminating township-level assessing?

A brief Q&A with Governor Daniels was posted by The Northwest Times on its website (www.nwitimes.com) today, and it contains a very exciting hint about the contents of next week’s State of the State address:

Question: The Indiana Fiscal Policy Institute study suggests the state should get rid of township assessors and trustee assessors. Are you going to call for that in your State of the State speech next week?

Daniels: "I’m not going to give the speech away today, but I’ll just say that they were right. It’s intolerable that essentially identical properties, often not far apart, are taxed at very different rates. This problem was supposed to be fixed some time ago. It hasn’t been, and so we’ll put it on the list of things that need to be addressed. We need equity and we also, I think, waste a lot of money in the way that we have historically assessed property.

As you know, IAR has written about this topic many times and is thrilled that this may become part of the Governor’s agenda for the 2006 session of the General Assembly. More to come on this topic soon…

Housing outlook article in the FW Journal Gazette

The Fort Wayne Journal Gazette ran a story yesterday entitled “Housing boom cooling: Region’s growth slowing; could nation’s follow?” (read the full article here). Despite the headline, the article contains some fairly optimistic views on the local economy and housing market in northeast Indiana. Here is an excerpt:

Sales of existing homes in Allen County inched less than 1 percent higher in 2005, according to preliminary statistics from the Fort Wayne Association of Realtors. Realtors had sold 5,393 homes as of Dec. 30, according to the association’s Multiple Listing Service. In 2004, Realtors sold 5,388 houses.

New home construction has dipped from record levels reached in 2003. As of Dec. 27, the county had issued 1,731 home construction permits – about 2 percent less than in 2004, according to the Allen County Building Department. Builders received 1,768 permits in 2004.

The strong sales figures reflect buyers’ confidence in the local economy, said Daniel Quintero, owner of real estate firm Quintero and Associates Inc. Verizon created about 200 full-time jobs to build and operate its fiber-optic network, and the medical industry also is expanding. Buyers decided to invest in new homes because of the upswing in the local job market in the last two years, Quintero said.

“They’re more confident in their jobs and the economy,” he said.

Economic (and housing) outlook for 2006 from IU

The Indiana Business Research Center (part of the Kelley School of Business) has just published its 2006 economic outlook. In this issue of the Indiana Business Review, Jeffrey Fisher of IU’s Center for Real Estate Studies examines the housing market. Unfortunately, there are no forecasts specifically for Indiana, just national projections for 2006-07 by the National Association of Home Builders.

This same issue of the Indiana Business Review does have a series of local outlooks for individual economic regions with some focus on real estate. The South Bend-area report notes that strong commercial development is expected in 2006 as occupancy rates rose in 2005. The Richmond-area outlook contains this news on the East-Central Indiana housing market:

The housing sector is doing reasonably well after a slowdown in the first half of the year. There is an uptick in home prices partly due to the influx of professional and management people in [the Richmond-Connersville-New Castle area economy].

However, the author of the Richmond-area section also predicts that home prices will slow if the Federal Reserve continues a tightening policy.

You can view a PDF of the entire publication here.