Are homeowners overextended, or are Rockingham County assessments too low!?
In reviewing foreclosure notices in the Daily News Record from this past Wednesday (August 13, 2008), I was surprised to see such a consistent scenario of loan amounts exceeding the assessed values of homes. These included:
- A home in Grottoes assessed at $124,700 with a loan in jeopardy of foreclosure with an original amount of $143,200.
- A home in Hinton assessed at $127,600 with a loan in jeopardy of foreclosure with an original amount of $165,000.
- A home in Dayton assessed at $93,200 with a loan in jeopardy of foreclosure with an original amount of $144,784.
Given this consistent relationship between assessed values and loan amounts, I assume one (or more) of the following must be true:
- Rockingham County assessments are too low, and these homes are really worth more — at or equal to the amount that has been financed.
- The homeowners purchased or refinanced at a price well above the actual value of the home at the time of the transaction.
- The homeowners purchased or refinanced at the actual value of the home at the time of the transaction and those values have now fallen dramatically.
Recent sales trends indicate that prices aren’t really going down — so the third possibility doesn’t seem likely. Perhaps it is a combination of the first two factors?