© The Stoneham Independent
STONEHAM, MA - Residential property values skyrocketed so high over the past 12 months that town officials can no longer contain citizen's tax liabilities by shifting a greater proportion of the burden onto commercial landowners.
According to an analysis of financial records produced by Town Assessing Director Brian Macdonald, the median single-family home value surpassed the half-million dollar threshold for the first time in Stoneham's history earlier this year.
Meanwhile, as commercial land values appreciate at a much slower pace, that same business base has been significantly eroded as commercial land is being converted into new apartment and housing developments.
Those rezoning initiatives have especially hamstrung the town's ability to absorb the impact of soaring home values, because future economic investment is already severely restricted by Stoneham's lack of commercial land masses.
As a result, Macdonald explained to the Board of Selectmen late last month, local officials have lost the ability to prevent major tax hikes by increasing the spread of Stoneham's dual tax-rate.
Ultimately, town officials conceded during the recent tax classification hearing, Stoneham's homeowners will pay the price, with the average tax bill expected to climb by $188 this year alone. And unless something major happens to the market, that trend is unlikely to change.
"In recent years, as we've gone through the rapid appreciation of residential home values, the Board of Assessor's has recommended an increased shift to maintain [consistency]," the chief assessor remarked. "Unfortunately, we're at the point where a maximum shift will no longer hold."
"That will continue to accelerate so long as the residential side continues to outpace the commercial side [in terms of new development and rising values]," Macdonald further warned.
Several Selectmen like Caroline Colarusso and Board Chair Shelly MacNeill were particularly frustrated by those market dynamics, because the local officials already have next to no tools at their disposal to control the larger real-estate market.
As evidenced by the sheer volume of multi-level apartment buildings popping up in communities all around the Boston area — not to mention a noticeable uptick in subdivision permits in the immediate area — the almost frantic demand for new housing inventory is hardly unique to Stoneham.
Earlier this week, Woburn's City Council referenced the same kinds of issues while setting the city's tax rate for FY'19. In the neighboring community, the median single-family home is now assessed at nearly $476,000, and the average citizen's property taxes there are expected to jump by $200 this year.
However, unlike Stoneham, Woburn has a substantially larger commercial tax base to absorb that potential financial hit for area residents. Next year, new business growth is expected to bring in as much as $3 million in new real-estate and personal property taxes.
According to Selectman Anthony Wilson, if Stoneham is to find a way to break away from its reliance on residential ratepayers to fund the annual tax levy, townspeople might have to rethink their traditional stance against large-scale commercial developments.
"The only control we have to change this would be to increase the value of our commercial [properties]. We're actually losing commercial, which makes that harder," said Wilson. "Someone would have to improve their property or bring in a commercial development…And that's something that becomes controversial, because that development has to go somewhere."
Overtaking the Great Recession
Under normal market conditions, the assessed worth of a home actually lags behind the actual market value, as the town largely bases its calculations off of sales records and other economic data from two years prior.
Over the past 12 months, when Macdonalds staff compiled valuations for all real-estate in Stoneham based on sales data and other indicators, the average single-family residence in town soared by $38,506 to an assessment of $537,286.
That increase marks the first time the median assessed value of homes surpassed $500,000. Just a year prior, Stoneham's average single-family household value was estimated at $498,780,
The resurgence of residential real-estate prices stands in sharp contrast to home prices between 2008 and 2012, when all classes of properties in the community sharply plummeted during what economists dubbed the "Great Recession."
The recession not only impacted the residential real-estate market, but also hurt many commercial landowners, who struggled to find tenants for their buildings.
The previous housing bubble reached its pinnacle in Stoneham in 2007, when the average value of a single-family home was assessed by Macdonald's office at $440,882. Over the next four years, as the subprime lending crisis decimated the economy, many homeowner's discovered their outstanding mortgages exceeded the actual value of their properties.
The sharp decline in Stoneham's real-estate prices ended in 2012, when the average assessed value of single-family homes plummeted to a low-point of $393,849.
However, because Stoneham's tax levy continued to increase, citizens never got a break in their tax bills, which still climbed on average by $672 during that same period of depreciation.
The housing market finally began rebounding in the community in 2013, when median home values climbed by a modest $8,000. By 2015, the recovery had restored home values just within reach of pre-recession levels, as according to town records, the average home was valued at $434,125.
By the time Macdonald addressed the Board of Selectmen last month, Stoneham's residential real-estate market had shattered 2007's pricing ceiling. That watermark was breached in 2017, when the average home in Stoneham was assessed at $498,780.
In fact, over the past four fiscal years, single-family home valuations have climbed by 23.4 percent — or a staggering $102,161.
Since 2007, the average residential tax bill in Stoneham has jumped by $1,572, which amounts to a 35 percent increase in a decade.