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Painful reality of home prices

In print: Saturday, November 15, 2008

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Homeowners in neighborhoods beset by foreclosures know the value of their homes is falling faster than in more stable neighborhoods. Banks are selling distressed properties in the region at about 60 percent of market value, and those sales constitute more than a third of all deals.

This is the new housing market.

That is why it is incumbent upon the state's property appraisers to adjust to these realities and begin considering foreclosure sales as they value homes for the tax rolls next year. Fairness and common sense dictate this approach, and it appears appraisers in the Tampa Bay area agree.

Already, Pasco County Property Appraiser Mike Wells has begun using foreclosure sales to gauge the taxable value of nearby homes. And it appears that Hillsborough and Pinellas counties will soon do the same. All 67 of Florida's property appraisers should follow suit.

Standard practice, as promoted by state revenue department guidelines, has been to ignore distressed sales. But in October, more than a third of home sales in local counties were either after a foreclosure or as a "short sale," where the homeowner sells the house for less than is owed to the mortgage holder. As such, a policy that made sense when foreclosures were relatively rare doesn't now.

Of course there will be painful consequences for local governments as property tax revenues sink further because of the change in calculating property values. But the duty of property appraisers is to accurately assess the value of property. The only fair way to do that in these times is to better reflect the devastation that the foreclosure crisis has wrought.