The large number of low-priced foreclosed properties in Santa Clara, California has cut down the growth of property values in the county as of January 1, 2009, based on a report released by the county this week.
Total assessed property values in Santa Clara grew by only 0.18 percent compared to last year, the smallest growth rate since 1978.
The total assessment was $303.9 billion, marking an increase of only $542 million compared to last year.
County officials said the low prices and high volumes of foreclosed properties contributed to the drop in the total assessed value. They pointed out that when foreclosed properties are sold, the selling prices are often much lower than the previously assessed values.
Countywide, foreclosed properties soared four times to 6,200 units in 2009, compared to the total in 2008.
David Ginsborg, county deputy assessor, said that about 90,000 houses out of the total 400,000 houses in the county lost value this year largely because of the large volumes of foreclosed properties. He said the average value loss for each house was about $170,000, pushing the total net value loss to $17.4 billion.
Larry Stone, the county assessor of Santa Clara, explained that assessed values in the county incorporate market conditions.
Additionally, Ginsborg said that the county is responding appropriately to the declining market values of real estate properties. He said that the county also suffered a drop in assessed value growth in 2007. That year, total assessed value fell by 8.25 percent, a drop from the 9-percent growth rate in 2006. Last year, value growth was 7 percent.
Ginsborg expects assessed value growth to further decline next year because of the continued increase in foreclosures. The expected drop in commercial real estate values will also cut down assessed values further.
When a consumer buys a home in Santa Clara, the buying price is the assessed value, according to Ginsborg. Every year after the purchase, the county assessor adds only 2 percent or less to the home’s assessed value.
The cities which bucked the countywide declining trend are Mountain View, where assessed values rose by 6.2 percent; Los Altos, by 4.3 percent; Los Altos Hill, by 2.9 percent and Palo Alto, by 3.8 percent.
The deputy assessor explained that the four cities had more established communities and had lesser number of entry-level houses and foreclosed properties.
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