Tulips & the Assessor
May 21, 2010 1:42 PM
When I was stuck in Amsterdam recently I spent some time in the Dutch history museum and I learned a thing or two about tulips. It turns out that tulips aren't native to the Netherlands. They were imported from Turkey in the sixteenth century. But the Dutch really took to them, and over several decades, tulip bulbs became so in demand that a market developed for them like any other commodity. In fact, the price for rare bulbs grew astronomically until 1637, when a tulip bulb auction hit a snag. Nobody bid. The price of the bulbs plummeted and fortunes built on the idea that tulip bulbs were valuable were wiped out overnight. The Dutch economy plunged into a deep recession all because people changed their minds about the value of a plant.
I'm reminded of that story as I think about the drop in overall property values in the City of Madison. On the one hand, the news is painful and historic. We don't have records going back far enough to show the last time we had a 3% drop in overall values or a 1.8% drop in residential values. But on the other hand, the fact that our properties have retained so much of their value in this market is remarkable. The national average was a 6.5% drop in the value of homes. Some notable cities had drops of 6.9% in Minneapolis, 7.4% in Detroit or 4.5% in Chicago. In fact, we can't find another city that held its values as well as Madison did last year.
What that tells us is that there is bed rock value in our city based on real quality, not the amorphous values of a real estate market built on the shifting sands of speculation. What retains our home values isn't just the quality of the housing stock itself. Rather, it's the quality of our city and its neighborhoods, it's the quality of our school system, the quality of our basic services, the extent and breadth of our amenities and the underlying strength of our economy.
The tulips that are blooming all over our city right now certainly add to the quality of life and bolster those property values. But when they give way to the stronger sun in the next week or two our community will still be strong. In Madison the value of our community isn't speculative like tulips in seventeenth century Netherlands. It's the real thing.