Declining property values are beginning to sink in at tax assessors’ offices around the sound.
From the Everett Herald: Slump hits tax value of your home
“I don’t think I can remember a year where we’ve decreased residential values countywide since I started working here in 1987,” county assessor Cindy Portmann said. Her chief residential appraiser, Steve Lightle, said it hasn’t happened in his 35 years with the county.
And from the Tacoma News Tribune: County property values decline
…when the assessor mails notices to the owners of 243,000 residential properties this week, 85 percent will see a decrease.
“It verifies that the market has changed,” said Assessor-Treasurer Ken Madsen.
But don’t get too excited, thinking that this means your actual tax obligation is headed down. Both writers point out:
A drop in assessed value won’t necessarily translate into a smaller property tax bill, warned chief deputy assessor Linda Hjelle.
and
But lower property values won’t necessarily translate to lower tax bills next year.
(Jeff Switzer, Everett Herald, 06.05.2008)
(David Wickert, Tacoma News Tribune, 06.08.2008)
Cindy whacked me 5% for the ’09 tax year
Thank you ma’am, may I have another?
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Don’t they assess the property taxes on a 3 year average? AKA, even if the prices dropped this year, they will still be figuring in 06 and 07.
Gill
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A silver lining to the delay in declining tax bills is that it softens the drop in revenue for government services. Budgets will be whacked anyway, but maybe with a little less panic and shortsightedness than if taxes dropped off immediately.
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Hey- this is SEATTLE!! Just because assessed values are falling doesn’t mean market prices will drop. Everybody calm down. Please.
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Even if assessed values decline significantly, you don’t actually think that they are going to lower tax bills, do you?
http://www.metrokc.gov/Assessor/PropertyTaxes.htm
“The state constitution, statutory levy limits set by the legislature and excess levies approved by the voters are used to calculate the total property tax levy. The tax rate on your property is the figure resulting from dividing the dollar amount required for the taxing district by the total value of property within the district and then adding up the rates of the various districts in which your property is located. The assessed value of your property, multiplied by the combined rate, produces a tax amount which is your fair share of the total property tax levy in your area.”
That dollar amount required is the key, and it isn’t determined by assessed values, it’s determined by revenue needed. So unless your assessed value falls significantly compared to other areas, you won’t be paying less, they’ll just tax you at a higher rate to make up for the decline in assessed value.
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this sounds like a plus for owners of low end houses.
if values in the low end fall faster than in the high end (as has been seen elsewhere and expected here), the low end homes with be worth a smaller fraction of the total property value, so their property taxes should decline.
or increase less.
so, good news for anyone who owns a cheap place and doesn’t care what it is worth. your plummeting property value should save you some money in taxes.
property insurance could decrease somewhat, as well. not a big deal for most people, but if you’re old, on a fixed income, and don’t want to move, maybe this small reduction of costs will help.
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Using Redfin as a guide, I typically see asking and sales prices significantly higher than the tax assessment value. Like $50 to $100k differences.
Can someone who has been here longer than I have explain if that is normal here or does it indicate that market prices grew much faster than tax assessments recently?
Most places say that the tax assessment is below the market price but Im curious how close they normally are in the Seattle area.
thanks
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Silver9,
I am not expert on the subject but for watching it a long time myself and I would say that not only is your guess about market prices growing much faster than tax assessments, the tax assessments themselves are based on 2007 values (at least according the the Redfin postings). The 2007 year was inflated. I have been watching properties that are priced at or about the tax assessment and these are tending not to sell. My hunch: prices will have to drop below the 2007 tax assessments (King County, of which I speak).
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if values in the low end fall faster than in the high end (as has been seen elsewhere and expected here), the low end homes with be worth a smaller fraction of the total property value, so their property taxes should decline.
That only works if the high end and low end are in the same city so they are paying the same tax rates.
Doesn’t work if the high end is Seattle and the low end is Kent, because each city finances its spending from its own tax base.
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I’ll inject some real-world information into this thread. My taxes were assessed down about $100k for this past tax year. This resulted in my property tax being a little over $1k less (which I won’t be upset about). However, in my opinion this big drop makes my assessed value much more in line with the true value. I felt the city/county was caught up in the ramp up of house prices as well and sent the assessed tax values upward as well. Just my two cents….
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For your property tax to decrease in King County, I believe one of two things needs to happen. Either your tax district (one of 160) decides they need to collect less money this year (probably not likely), or your house needs to decline in value relative to your neighbors.
Read more here:
http://www.metrokc.gov/Assessor/
-Rick
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mine as well as my neighbors values all increased go figure.
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Not sure what combination lead to my decrease. My house had always ‘Zillowed’ for way more than my neighbors, whatever that is worth. That in spite of our houses being of a similar vintage (1920s) and features. Either way, it was $1k more in my pocket this year, or, $1k less *out* of my pocket.
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Frankly I’m a little surprised to see Seattle area tax assessments falling so soon after the market peak.
Where I’m at in Fairfax County, the budget is facing some serious strain due to decreased RE tax collections. The county came up with an interesting adjustment to the assesments: slash the assessed value of the structure, and assess the land at it’s lot value to an infill developer.
Net outcome is that assesments haven’t fallen much, though market values of existing homes have come down significantly.
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[...] Assessments & Government Revenue First up, while tax assessments may be falling in Pierce and Snohomish, it looks like they’re still on the rise in King County. Aubrey Cohen reports for the P-I: [...]
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[...] Furthermore, around the Sound, those in Snohomish and Pierce counties have already seen their property tax valuations decline as a result of the dismal housing market, though these homeowners aren’t likely to see any decreases in their actual property tax bill either, as summed up earlier by Seattle Bubble. [...]
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King County homeowners can find out if they’re overassessed on not using ValueAppeal’s service. For homeowners who are eligible for an appeal, ValueAppeal provides the comps required to prove the reduced assessment is warranted.
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