Special Board of Aldermen 11-15-2021 Page 6
Many types of properties commercial wise really were devastated during it and a lot of restaurants haven't recovered and
even now, we're slowly starting to see progress but it's really in specialized areas. Areas that have done very well
actually more than industrial type properties with the new demand for warehouse space and manufacturing space. That
area is going stronger than the commercial properties are. So there are still types of commercial properties that are
doing well. The apartments are still doing really well. So it's a mixed bag with the commercials. It's not that all of them
were, you know, affected negatively from it. Some were affected positively but when you value the commercials, it really
is more of a specialized process of looking at their income stream for leasing, their expenses, and what the capitalization
of the cost of money is in determining the values of these properties and they're really class base like office, retail,
restaurant, with manufacturing, warehouse and each one of those classes will be going in order of value. Some higher,
some level, some maybe even declining from five years ago. So it's a little bit different than what the residential is where
you can see most of the classes or townhomes were up or down or up a lot. But the difference was 5 to 7%. We've
analyzed the commercials. You're going to see that each category might have quite a difference in the evaluations.
Alderman Klee
Thank you. Having heard what was said about COVID having an effect and we know that it's affected everything and
you say that it's even affected residential because of supply and demand. You know, there's whispers, there's yelling,
there's all kinds of things that’s saying it will be a market correction, or things are going to kind of turnaround in a year,
hopefully, so just COVID but the bottom line is we're doing this evaluation where residential is high. Do we foresee
anything happening? And | know that we had a big huge market correction back in the ‘70s, and the ‘80s, and the ‘90s
we seem to kind of see these trends. Do you foresee - and | Know you don't have a crystal ball so please I'm not holding
your feet to the fire on this - but do you foresee a correction happening not long after we do this reval?
Mike Tarello, Vice President
Both the pattern so far is still increasing. So in the New Hampshire area and in the Massachusetts area where | do a lot
of evaluation, one thing I've noticed is four or five years ago the greater Boston area really increasing at a high rate.
Now they're increasing a little bit lesser rate but maybe 5 - 6% a year instead of the 10 or 12. | think because prices
have gotten so high in this market area but what's happened is the areas to the west and north of Boston and to the
south have started to get those increases from a few years ago because their values were lower. They were more
desirable for someone that could get more home even though they had to go further away from maybe where the jobs
were and so forth. What's happened is when | did the reval. in Manchester five years ago, they were only going up
maybe 5, 8% over a five year period. Then over the last five years, they've gone up 45% or 40%.
| think that it's difficult for that increase to occur because it's not as if people are making that kind of salary increases on a
yearly basis. | think what's helped a lot is that the capital for getting loans and so forth, interest rates have been
extremely low. If those stay low, they will continue to help your increases because money is cheap to borrow. But if
those types of go up and the cap rates and interest rates start to go up, that could definitely slow the trend of people
purchasing properties because most people borrow a large amount of it when they buy the property and don’t put a lot
down or cash. So | would first say that | still think things are going to probably increase over the next year or so but it
appears that it could be at a slower rate. Declining wise, | would say that that still may be a couple of years behind. But
again, | do not have a crystal ball. But in Massachusetts, we're valuing now for the 2020 values, January 1, 2021 and
we're looking at sales in 21 for next year for them and they're still going up 5 to 10 to 12% depending on the locations. |
see that now with continued sales on the reval. that we just finished in Salem and Manchester that they're still going up 1
to 1.5% a month.
Alderman Klee
Thank you
Alderwoman Lu
Thank you. Just a couple of questions. Just for clarity, Alderman Klee asked about the likelihood of a change after this
reval. — measure and list but am | right in thinking that every year the equalization step addresses fluctuations in value so
that equalization that gives us a chance to modify - okay. Is that correct? So that is one tempering - that is one way to
protect us against, you know, a decrease.
Richard Vincent, Chief Assessor
The annual equalization study tells us what our assessment ratio is to market values. So we watch that every year and
that tells us where we are. If we get too far out of range from market values, then we need to do another revaluation. In
