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L.A. County property value drops for first time in 13 years

About $1 billion in value was lost last fiscal year. But neighboring counties fared worse.

July 10, 2009|Molly Hennessy-Fiske

For the first time in 13 years, the assessed value of all property in Los Angeles County has declined, according to a report released Thursday by the county assessor's office.

County property rolls lost about $1 billion in value last fiscal year -- losses driven largely by downward reassessments of homes as the housing market has slumped.

Property in the county is now valued at $1.1 trillion, a 0.09% decrease compared with the year before, according to the assessor's annual report. Setting aside tax-exempt property such as churches and nonprofit hospitals, the loss of value increases to half a percentage point.

The drop marks a step back for the county, which had seen the value of property increase an average of 7% each year since 1996.

Even so, officials said L.A. County has fared better than other Southern California counties.

"Home values have declined and foreclosures are up," said L.A. County Assessor Rick Auerbach. "But not to the same extent as in neighboring counties. The real estate market is still a vital part of Los Angeles County's economy."

Orange County announced earlier this week that its taxable property value dropped 1.2% last year, the first drop since 1994. Property value decreased 2.3% in Ventura County; 6% in San Bernardino County and 10.5% in Riverside County, according to assessors' reports.

The L.A. County report found that communities with the biggest drops in value were: Lancaster (15.4%), Palmdale (14.9%), La Puente (7.8%), Hawaiian Gardens (7.7%) and Norwalk (7.3%).

The two most-populated cities in the county, Los Angeles and Long Beach, also saw decreases. In Los Angeles, values dropped 0.10% to $413.4 billion total, excluding tax-exempt properties. Property values in Long Beach decreased 2.9% to $43.9 billion.

Cities that saw the greatest increase in property value last year included commercial hubs such as Irwindale (8.7%), Vernon (8.1%) and the City of Industry (7.2%), as well as exclusive Beverly Hills (6.1%) and Malibu (5.9%).

The decrease in overall property values countywide was not a surprise to county officials. Earlier this year, Auerbach undertook a massive reassessment of nearly 334,000 single-family homes and condominiums that lowered property values by about $40 billion.

That loss was offset in part by $15.3 billion in annual Proposition 13 inflation adjustments, $6.9 billion in new construction and $16.3 billion in increases to the assessed value of homes and other property that was sold or transferred.

The total value of property last fell in the county during the recession of the mid-1990s. Property values dropped 1.7% in 1995 and 0.20% in 1996 before rebounding, said Robert Knowles, a spokesman for the assessor's office.

Last year, the median market value of a single-family home in L.A. County was $350,700, about $141,300 less than the year before. In 2007, the median home value also fell, but by far less -- $18,000, and that was after the value had been climbing for years.

Auerbach said he is watching to see if the surge in residential reassessments spreads to commercial real estate, which he expects. Commercial properties make up 31% of this year's property rolls.

A week ago the county began accepting reassessment applications from residential and commercial property owners who believe the assessed value on their 2008-09 tax bill is more than the fair market value as of Jan. 1. Property owners have until Nov. 30 to file. So far, the assessor has received about 1,800 applications from commercial property owners.

Auerbach said he would like to do a large-scale reassessment of commercial properties, but does not have the staff.

"We just don't have the time, and residential properties will have to be handled first," Auerbach said.

County leaders are watching to see how much ongoing reassessments will hurt county tax revenues, said Ed Corser, budget manager with the county's chief executive office.

"Property values have already dropped significantly and that still needs to bleed through to the tax base," Corser said.

Some studies have shown that county property rolls could drop 6% by 2011, Corser said -- the same year the county will face $100 million in added pension costs.

"That's when it will all hit home," Corser said


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