Getting assessments right is a challenge, but new modeling methods and updated technology are helping to paint a more accurate picture of what homes and commercial buildings are worth, according to Cook County Assessor Fritz Kaegi.
Kaegi and senior Cook County assessors discussed the issue of “Racial Justice in Property Taxation” at the Southside Builders Association’s October meeting.
Kaegi referred to research by Christopher Berry, a professor in the Center for Municipal Finance at the Harris School of Public Policy at the University of Chicago, which showed that across the country the real estate tax burden falls more heavily on lower-income homeowners. According to Kaegi, this is a problem that goes beyond statistical modeling.
“So you need a modeling assessment technique that is more sensitive to the location and unique circumstances of our very diverse human and urban landscape, so we can do that with the modeling,” he said.
Kaegi added, however, that there are many unknowns that are beyond the scope of statistical models used to evaluate the value of a home. A lack of information about the condition of the apartment can lead to a regressive valuation.
“Higher houses with Martha Stewart’s tricky kitchens and the basketball court in the basement and all those other things that add value are hard for us to see,” Kaegi said. “That can lead to an undervaluation, but the fuser face, which has not been treated in 100 years, has issues with mold or deteriorating conditions or other things that we don’t measure and that can lead to overvaluation.”
Samantha Simpson, chief data officer in the Assessor’s Office, said that once the new hires took office, they began updating the technology used to determine the assessments. “We found a lot of things to be very out of date,” she said, noting that most of the work was done in simple spreadsheets.
“You have clients and customers using Google and Zillow and everything is at hand. So it was really important to us to be able to reflect market value not just in terms of the value of houses, but also technically so that we could do this. “See what was going on,” Simpson said. “That meant switching from spreadsheets and what the office originally used, which was a linear model and didn’t really provide dynamic information about what was happening to the home values.”
Kaegi said the new processes have successfully cut this so-called regressivity in half, but there is still a lot to be done. He told association members that the federal government can play an important role in further improving these assessments by releasing data from the Uniform Appraisal Database, which is used by Fannie Mae and Freddie Mac to determine which loans to support .
“The federal government has a really important role to play in several respects,” said Kaegi.
He also urged federal regulators to enforce mortgage lending rules for non-banks that issue home loans. “How good is our federal mortgage infrastructure to ensure these assessments are conducted in an unbiased manner?” He asked.