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Home valuations jump
12.6% boost in Milwaukee assessments is both a shock and a good sign
By MICHELE DERUS
[email protected]Posted: May 7, 2005
Milwaukeeans are experiencing a property value boom unlike anything since the post World War II heyday, city assessment records show.
Real Estate
Photo/Dale Guldan
Bob and Doris Greene have seen their home triple in value over the last 10 years with most of the gains coming in the last 2-3 years. Following a reassessment they are now concerned with being taxed out of their Merrill Park Arts and Crafts style home.
Photo/Tom Lynn
Felton Shandes plants flowers in front of his N. 79th St. home Saturday. Shandes and other home owners in this area of Milwaukee have scene large increases in the appreciation of their homes.
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Finally, the city has pulled even with its suburban neighbors in its rate of housing appreciation - maybe even a bit ahead. And Milwaukee is in step, at last, with the national rate.
This spring´s $16.1 billion residential property valuation, 12.6% higher than a year ago, represents a growth streak that took root early this decade and has spread across the city, records show.
After many years of paltry gains, total property values - residential and commercial - have shot up more than 36.4% since 2000, based on equalized values through 2004 and the 2005 assessed values. The city´s rise in equalized values from 2000 to 2004 - 35.3% - outstrips the national trend of a 34.3% rise in the average sale price of existing houses from 2000 to 2004 and also outpaces the 34.4% gain in sold existing-house prices for the five-county metro area in the same period, based on Multiple Listing Service figures.
Equalized values are closer to the actual market value and are calculated as the year progresses.
The growth in new and resale housing values in the collar counties is pulled by a much younger housing stock and ongoing building. But the figures for Milwaukee are based predominantly on older houses, both for sales and assessed values.
Gentrifying neighborhoods such as Brewers Hill and the Third Ward led the way, but now modest, heart-of-the-city areas such as Sherman Park, Merrill Park and Layton Boulevard West are beginning to blossom.
The average assessed residential property value is $118,196 this year, compared with $104,951 for 2004.
"For years, people focused on the negatives about Milwaukee. Now they´re focusing on our amenities - our restaurants, cultural attractions, sports facilities, entertainment options. Our housing stock is affordable, interest rates are low and our crime situation is headed in the right direction," said Milwaukee Mayor Tom Barrett.
"What I really like," the mayor added, "is that no neighborhood is being left behind."
Felton Shandes, who lives and works on the city´s northwest side, sees a city suddenly alive with optimism.
"I´m a mortgage broker, so I see it a lot. Values are going up. It means more equity, and that´s good," Shandes said. "There´s a lot of home improvement and revitalization going on - not just patching, but rebuilding walls, putting in new insulation, plumbing, furnaces. Now you see newlyweds buying, renters turning into buyers, investors rehabbing. I believe we´re catching up, around the city."
Unlike many of his neighbors and those in other modest enclaves, Shandes was not surprised when his property assessment jumped 13.3% this year, from $137,100 to $155,300. But like them, he´s worried about the tax ramifications. If your house appreciates more than average, your property tax bill climbs more, too.
"We got used to taxes being so low for so long, we´ve gotten a shock. It happened fast, almost like when we went to sleep, taxes were low, and when we woke up, they´re high," Shandes said.
Those who stuck out the city´s troubled times - white flight to avoid racial integration in the 1960s and 1970s, increased joblessness, blight and crime in the 1980s to early 1990s, flat or falling home values for years on end - feel gratified at finally seeing some payback.
"We were the urban pioneers," said Merrill Park homeowner and activist Bob Greene, 52, a neighborhood resident since he was a toddler. "We could have took flight, but we stood our ground and fought the crime, the blight - and we were aggressive. We formed a neighborhood association, we got creative, we got help - we stayed diverse. And it worked."
In his near northwest side neighborhood, "our values are outpacing the city´s - and the market does support it," Greene said. "We´ve had a lot of rehab, a lot of new construction - and anything decent that goes on the market - a week to 10 days and it´s gone."
The 2,200-square-foot Arts and Crafts house he and his wife, Doris, bought for $32,000 in 1995 is now assessed at $93,600 - up $10,200 this year alone.
On the city´s north central side, Riverwest resident Lorraine Jacobs said her assessment rocketed $36,000, to $187,500 in just the last year. "You wonder if it´s like a balloon and will go away," she said. "But every once in a while I consult with a Realtor, and the value has always been on target with the assessment."
Twenty years ago, Jacobs said, she bought into the once-rocky neighborhood against outsiders´ advice.
"I never felt afraid, and it´s worked out well. I love my house and neighborhood," she said. "But these gains make it difficult to ensure the neighborhood remains multicultural and multiethnic. It does raise the question: How do you keep good housing values in a lively market and yet continue to be a place people can afford?"
Housing, which represents 68% of the city´s $23.7 billion total valuation, is at the heart of this upturn. The residential sector´s average 12.6% gain from 2004 to 2005 outpaced the commercial sector´s 10.2% jump.
Together, they´ve made history. City values last took a one-year leap this size, in equalized values, in 1952.
Some residents find this year´s jump in values hard to believe, but the numbers square with resale figures from the Metro Multiple Listing Service, a private databank used by real estate brokers. The MLS shows last year´s average city resale price as $127,685, compared with $116,814 in 2003.
Nationally, last year´s average house resale price was $236,600. That´s a 10% increase from the year before, compared with a 9.3% gain in the city´s average resale price, MLS figures show.
Assessed figures calculate value as of Jan. 1, while MLS figures calculate market conditions at the moment of sale.
"Everybody´s trying to figure out what happened here. Did values go up or are they finding another way to get the deficit taken care of?" said Donald Ivey, a near-north side renter. If his landlady has to pay more in taxes for the place, he figures, the rent will go up.
"Folks are cranked," said Steve O´Connell, executive director of the Sherman Park Community Association. "It was a pretty dramatic jump in assessments for some this year, and a lot of our residents are on fixed incomes. What I´m hearing from them is, ´Could I actually sell my house for that money?´ "
On his block, "we all went up about $12,000, which I think is fair," O´Connell said. "I´m now at $126,000 - about double what I paid 19 years ago."
One reason Milwaukee´s housing stock is rising so dramatically now is that it sank so low in bad times, said former city housing chief Leo J. Ries, now director of the Milwaukee office of the Local Initiatives Support Corp.
"There was a time when we wondered if it could possibly go any lower. We had white flight, huge manufacturing losses and there was no real support for the housing stock. In the early ´90s, when we were starting City Homes (redevelopment housing in the central city), the houses around there were valued at $10,000 to $15,000," Ries recalled. "Now you have new homes being built there for over $200,000."
Milwaukee´s resurgence is part of a national rediscover-the-cities trend - "good for the cities and good for the urban communities," Ries said. "But in other cities with renaissances, poor people were displaced or ended up doubling up to make ends meet. That needs to be a growing concern here."
Meanwhile, a new wave of buyers browses properties here with fresh eyes.
"I see a whole generation coming up that isn´t intimidated by diversity, like previous generations were," said Ries.
As young people and immigrants buy into older neighborhoods, they are reinvigorating them, say those who live there.
In the Layton Boulevard West neighborhood on the city´s near-southwest side, "there was a lot of disinvestment for many years," said resident Helen Hermus, whose assessment jumped almost 17% this year, from $66,000 to $77,000.
"Now we have a lot of immigrants. Hispanic homeowners are coming into our neighborhood - the Hmong population too - and they´re investing a lot in their houses."
That has reinforced efforts under way where she works at Layton Boulevard West Neighbors Inc. "We got designated a Main Street City, a Milwaukee program for historic preservation," she said.
Mike Ruzicka, president of the Greater Milwaukee Association of Realtors, thinks first-time home buyers are pouncing on Milwaukee´s housing stock in part because they´re priced out of suburban markets.
"There´s not enough under-$200,000 houses out there in greater Milwaukee, but there is a huge supply in the city of Milwaukee. So people are saying, ´OK, let´s buy in Milwaukee.´ They might not be planning to stay 30 years, but if they stay five to seven years, they can build equity and use it to buy outside the city," Ruzicka said.
They may stay if the city can achieve good results in "the four pillars of the location mantra: crime (rate), schools, jobs and taxes," Ruzicka said. The city has made headway on these, but needs to do more - "especially schools, the number one issue for families," he said.
