AMESBURY — Declining property values have been a bugaboo for Amesbury since the national housing market collapsed five years ago, but recent trends suggest Amesbury may finally be on the verge of turning the corner.
Job growth, housing sales and new auto sales have all seen growth over the past few months, and Mayor Thatcher Kezer said he believes those trends are indicative of an overall recovery that could result in Amesbury’s property values leveling off this year before rising next year.
A total of 46,887 single-family homes were sold statewide last year, which marked an 18.4 percent increase over 2011 and the highest number of annual sales since 2006, according to the Warren Group, a private company that tracks real estate sales in New England.
More good news came last Tuesday, when reports surfaced that overall auto sales in March had increased by 3.4 percent to 1.45 million compared to a year ago, marking one of the strongest months the auto industry has seen since before the recession.
Amesbury’s real estate trends have been mixed. According to the real estate tracking website Trulia, the median sale price of properties from December 2012 through February 2013 — the latest period available — dropped about 7.3 percent from the previous year period. There have been significant fluctuations in sales prices over the past few years, with the current figures trending upward slightly.
“What’s happening is we’re probably going to see in [this coming] fiscal year the last of the economic downturn’s impact,” Kezer said. “Jobs are up, home sales are up, and car sales are going up, so values are probably going to stabilize for this year and grow next year.”
Kezer’s optimistic outlook comes on the eve of budget season, when members of the City Council are sure to raise questions about the city’s economic outlook and the impact that further changes in property values could have on the tax rate.
Last year, the City Council approved a $54.6 million budget that included $1.3 million in increases over the previous year. The councilors approved the budget expecting that the tax rate would increase by about 40 cents from $19.13 to $19.53, but when news broke in December that Amesbury’ total property values had declined by $67 million, that increase ballooned to $20.24, raising the ire of both residents and the councilors alike.
Since the tax rate is determined by a mathematical formula where you take the total dollars taxed and divide it by the city’s total property values, the ebb and flow of the city’s values are a primary driver of the tax rate.
Historically the housing market and Amesbury’s tax rate have largely gone hand in hand.
Between 2000 and 2007, Amesbury gained nearly $700 million in property value by riding the national housing boom, and the average property more than doubled in value during that time, according to the Department of Revenue.
Over that same period of time, the tax rate in Amesbury went up from $17.88 in 2000 to $18.28 in 2001 before decreasing every year afterward to a low of $13.16 in 2007, according to the assessor’s office.
Since the housing bubble burst in 2008, both of those trends have gone the other way. Amesbury has seen a steady decline in property values that have outpaced other communities in the region, and the tax rate has steadily increased since then too.
Amesbury’s value decline of $67 million was a continuation of that downward trend, but if Kezer is correct and the city’s property values do level off this year, that could also signal a decline in the city’s tax rate as well.
“The rate is driven by property values going up and down, so what’s probably going to happen is one more year of flat change of values, and then growth,” Kezer said. “So the rate is going to track that, and if you look at the history of the tax rate in Amesbury and Massachusetts in general, it cycles with the economy.”