Foreclosures top 1,800 in '09

COVINGTON -- Foreclosures in Newton County totaled 1,852 in 2009, up from 1,500 in 2008, according to the Newton County Tax Assessors Office.

Of those 1,852 foreclosures, 637 involved vacant land and 1,215 were on improved properties. Not all of those improved properties were owner occupied; some were still under ownership by developers.

The vast majority of the foreclosed properties -- 1,527 -- was located in unincorporated Newton County, with 325 located in the county's five municipalities.

"The upside to this is last year we only had between 250 and 300 come out of foreclosure and into the market place," said Chief Appraiser Tommy Knight. But in 2009, a total of 1,354 homes went back out on the market, Knight said. Many were snapped up by investors and are now rental properties, he said.

"I think it's the very, very beginning of the market getting back on the right path," he said.

The ever-increasing number of foreclosures has posed problems in valuing property for the assessors office, but the law requires foreclosures be considered during that process.

"It's harder to value property than it's ever been," Knight said.

One difficulty is the growing disparity between sale prices of similar properties in the same neighborhood. For example, two homes on Lakeside Circle in Fairview Estates, both 1,300 square feet and with similar floor plans and in the same condition, sold in February and April of 2009 -- one for $18,000 and one for $50,000.

Typically, price ranges in a neighborhood will vary as much as $10,000, Knight said, but lately, that range has grown by up to $40,000 or more.

The sale price is not necessarily the value of the property, Knight said. But homeowners often believe that's the case and are asking that their property values be lowered to equal those properties that are under foreclosure. This year, more than 1,300 property owners have filed returns claiming a different value for their property than what has been appraised. In a normal year, that number ranges from 200 to 250.

"If you've got one property that sold for $13,000 and the one next to it sold at $30,000 and then another one sold at $50,000, it's not fair to value one property at $13,000 and one at $30,000 and one at $50,000. We have three different values on three similar properties. To me that's not a fair way to value property," Knight said.

Instead, the homes are grouped from the lowest to highest price range and the median value is taken. Most often, the majority of sales are within 10 to 15 percent of the median, Knight said.

"I think that's being fair to the homeowner and to the county," he said.

Another difficulty caused by the downturn in the economy and resulting increase in foreclosures is that properties are being snapped up by investors at tax sales for as low as $2,000 or $3,000. They then charge rent, say $800 a month, and pay off their debt in less than a year. Meanwhile, the property owners next door paid $75,000 for their house and are working on paying off a 30-year mortgage.

"A property that rents for $800 a month is worth more than $15,000. That's not fair to those other homeowners," Knight said.

With investment properties like that, the income approach to valuing property -- which involves estimating how much rent each unit could generate in the current market place -- is considered along with sale price.

"I'll assure you that we're not pulling numbers out of a hat. There is a methodology to what we're doing," Knight said.