Victims of the downturn in the housing market, unfinished subdivisions litter the Charlotte region. Some have streets and sidewalks but no homes. Others might have a completed home or two sitting next to empty lots.
The Mecklenburg Times talked with Mecklenburg County’s revaluation manager, Chuck Hicks, about what impact partially built subdivisions had in the 2011 revaluation.
Did you include incomplete subdivisions in your 2011 revaluations?
The sites have value placed on them. If there is no further development going on there, then obviously we are not listing any improvements. For example, suppose you have a subdivision and maybe they poured some slabs. There is no value captured for that.
Do you know how many incomplete subdivisions were in the 2011 revaluation?
No, I don’t. What we see in our office is recorded plats. To do an inventory of ones that have gone under, that would take field analysis to go over that.
What impact do incomplete subdivisions have on the county’s property tax base?
It’s really hard to measure. The only way that we can see any kind of impact is to look at what the improved sales are going for. And if there’s excess inventory, which those incomplete subdivisions represent, it’s going to have a downward pressure on prices. Also, some of those lots can be discounted and sold at a lower price. We try to capture that as best as we can.
In the 2011 revaluation, did incomplete subdivisions drag down surrounding properties’ values?
We would assume they would. Of course, we would have to actually look at improved sales in the neighborhood.
When vacant lots are sold, they are usually sold in bulk to builders. And builders will typically buy them at a discount. The real contribution of lot value is typically higher per parcel than what the builder paid for the lot. So, that builder sale is typically not going to give us a representation of what the parcels actually were.
But when a subdivision goes under and there is no further development and those lots sit there, that means that the real market price for those lots is going to fall. And that will be captured in other sales that take place.
Where do the most incomplete subdivisions seem to be clustered in the county?
I don’t know. I would imagine, if I were to guess, we would find some of that activity in the northwest part of the county, from center city Charlotte to Mountain Island Lake area. I imagine we would see some of that around to the east, as well. I know that would follow the foreclosure pattern. Those two seem to follow close to one another. The general bust and real estate boom affected all property types in all areas of the county in varying degrees. A well-known unfinished condo building that’s standing skeletal in uptown is indicative of the same economic forces that caused some of these subdivisions to go out.
What do these incomplete subdivisions do to property values if you are a home in the middle of an empty subdivision?
That’s tough to answer. I know that it creates a perception issue. If you are out there, and there’s not anything else happening, the potential is there for there to be some type of stigma. We’d have to verify that by looking at comparable sales.
Anything else you would like to add about incomplete subdivisions?
From a personal standpoint, it really does not surprise me at all. The Austrian business cycle theory says in a period of submarket interest rates, speculative building because of those low rates sends a false signal to developers. It’s no surprise at all that some of those projects imploded.
Interview by Tara Ramsey, [email protected].