Reality-Checking the Reassessments: Part 2

This article is part of a series examining how Mt. Lebanon is likely to be affected by the recent county-wide reassessment. For other articles in the series, see Blog-Lebo’s Reassessment Series. —Tom

In our previous article, Reality-Checking the Reassessments, we compared the new assessments to recent residential property sales in Mt. Lebanon to see if we could learn whether they fairly represented actual market prices. Taken as a whole, they seemed reasonable (“not horrible” was the technical term I used), but for many individual properties, they seemed far from reality. Also, it seemed that less-expensive properties tended to be overassessed and more-expensive properties underassessed. So there seems to be some cause for grumbling.

Now we perform a second reality-check: Do the new assessments do better than the old assessments? (Recall that the motivation for the new assessments was to remedy the inequities of the old assessments.) To help answer this question, we return to our data set of recent Mt. Lebanon residential property sales (courtesy UCSUR) and compare recent sales to the new assessments. But this time, we also compare them to the old assessments, to see whether new or old are closer to the actual market.

The easiest way to see how new compares to old is, well, to see how they compare. So here’s another statistical plot, much like the plot from our previous article, but this time with two dots for each home sold in Mt. Lebanon in 2010 or 2011. Take a look and then I’ll explain more below.

(Click image for a printable high-resolution version in PDF format.)

Here’s what’s going on. For every home sold in Mt. Lebanon, there are two dots, one red and one blue, connected by a horizontal gray line. The vertical position of that line gives the home’s actual sales price. The horizontal positions of the dots give the old and new assessed values of the same home. The red dot represents the old assessment; the blue, the new assessment. You can think of a house’s assessed value as having “traveled” along the horizontal line from the red dot (old) to the blue dot (new). The question, then, is whether they traveled toward (or away from) fair-market prices.

To help answer that question, we have added a 45-degree reference line to show where the assessed values would line up if they perfectly reflected market prices, as estimated by our recent sales data. To the extent that a home is underassessed, it will appear to the left of this line; to the extent it is overassessed, to the right. The actual market is a bit of a moving target, so we won’t worry too much about assessments near the reference line, just those far from it.

So what can we see? First, the blue dots are almost always to the right of the red dots. That means that most of the homes had their assessments increase. And that’s what we would expect, given that property values have generally increased since the old assessments took place. So far, so good.

Second, the blue dots are closer to the 45-degree reference line than the red dots. That means the new assessments are closer to actual market prices than the old. In other words, the new assessments seem to be closer to reality than the old assessments. That’s a clear improvement.

Okay. So the new assessments are truer.

But are they fairer? We’ll look into that question next time.

Until then, comments are open. Let us know your thoughts.