Homeowners slammed by 16 percent drop in property values
July 3, 2009
By J.B. Wogan
King County appraisers combed Newcastle neighborhoods earlier this year, checking up on improvements to houses and real estate transactions to determine home values.Homeowners in Newcastle and throughout King County saw their homes increase in value over the years — but the trend halted this summer, and homeowners are grappling with properties that have dipped in value.
Countywide, properties have dropped in value by about 16 percent. Blame the dive on a cooling real estate market.
County appraisers conduct a physical inspection of a designated area once every six years. Newcastle was up for inspection this year.
Debra Prins specializes in residential property appraisals for the King County Department of Assessments.
Prins said this year’s assessments were more accurate to the housing market of today, in part because the assessor’s office changed the way it calculates home values. In addition to its typical statistical analysis and limited physical inspections, the assessor’s office dropped property values down another 15 percent from its January 2009 value, she said.
“We wanted to make certain that we were taking in consideration all vagaries of this market,” she said. “We believe there were things our (past) evaluation models did not take into consideration.”
The assessments were more than a half-year behind in reflecting the dramatic slowdown in home sales or the dropping in prices, Prins explained.
Interim King County Assessor Rich Medved said the average sales price of a home in the county had dropped from a high of $710,000 to $615,000.
Medved said his office began sending out assessments June 11. The assessments released this summer would affect property taxes for 2010, although the relationship between assessments and property taxes is different in Washington than in most other states, he said.
“Most states in the United States are what we call rate-based systems,” he said.
In rate-based systems, there is a direct correlation between the value of a home and how much a taxing district, like a city, will charge in property taxes.
But Washington has a budget-based system, Medved said. King County has 160 taxing districts, including cities, school boards, the Port of Seattle and King County, and those taxing districts determine how much they will require through taxes. In other words, the taxing district set how much money it would need and then the tax rate is adjusted to collect that amount.
The property assessments affect property taxes in the context of relative worth; if someone’s property value drops more than their neighbor’s, then they could see a drop in property taxes. If a taxing district opted to collect a smaller annual amount, that, too, would lessen someone’s property taxes. The reverse is true, too, according to Medved.
“It’s still very possible that you could see an increase in your tax bill next year,” he said, adding that taxes are directly impacted by voter-approved tax increases. “Voters have the right to impose additional taxes on themselves.”
Medved said people should know that they have 60 days to file an appeal if they believe an assessment isn’t accurate.
King County Councilwoman Kathy Lambert said she’s worried about how people might interpret the news that their property values are down. She said she has heard from residents who think lower property values will mean lower property taxes.
“I’m very, very nervous. When I try to explain how property taxes work, people get very upset,” she said. “A lot of people don’t understand that when they vote for a levy of any sort, that is above what the county does.”
On the Web
- Learn more about property taxes online at http://www.kingcounty.gov/Assessor/PropertyTax.aspx.
- Learn more about the Department of Assessments at http://www.kingcounty.gov/Assessor.aspx.