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Wednesday, August 16, 2006

Shocking: Tax Assessments Continue Climb

I hope you're sitting down, because you're in for a shock. Get this... when "hot, hot, hot" home prices "soar" "sizzle" and make "huge gains," tax assessments that do the same aren't far behind! I know—who would have thought!

Linda Peterson's 1,200-square-foot rambler in Monroe has the same avocado-colored sinks it had when she bought it in 1975. She and her husband, David, finally replaced the shag carpet a few years ago, but few other improvements have been made.

Imagine their surprise when they received a notice from the county assessor that their property's 2006 assessed value had jumped more than $86,000 from the previous year.

"And I'm thinking, 'For what?' I can't imagine why," Linda Peterson said.
...
Snohomish County properties had an average increase of 20 percent in assessed value this year from 2005, according to a report from the county assessor.

That's almost double the 11.3 percent increase in property values statewide, according to the state Department of Revenue. It's also a leap for Snohomish County, which saw increases of about 11 percent in 2004 and again in 2005.

A blazing real-estate market in Snohomish County is to blame, County Assessor Cindy Portmann said.

"As long as people keep buying at these prices, market values will continue to climb," she said.

But former King County Assessor Harley Hoppe, who now helps homeowners with appraisals, property taxes and appeals through his firm on Mercer Island, thinks that assessed values are sailing so much higher not because of the market, but because of county officials.

"This is a criticism of Pierce, King and Snohomish counties. They've gone to the max height of the market and it's scaring residents," said Hoppe. "It's absolutely ridiculous. Values do not increase like this."
I agree. It is absolutely ridiculous. But unfortunately for homeowners, soaring tax assessments is a reflection of the absolutely ridiculous housing market. You know, the double-digit year-over-year gains that have been persistently trumpeted in the news outlets for years now? I'm sorry, but this story just gives me the impression that as a group, homeowners just want to have their cake and eat it too. Sorry darlin', the real world just don't work that way.

(Kathy F. Mahdoubi, Seattle Times, 08.16.2006)
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21 comments:

Peter Taylor said...

What a shocker! And here I thought that there were absolutely no drawbacks to being a homeowner!

redmondjp said...

I was just in for a dental cleaning and talking with my hygenist about (what else) but housing/real estate. She has friends who inherited an empty lot adacent to Lake Wash. High School in Kikland (Rose Hill area, just north of Bridal Trails). They built a house on the property which cost them somewhere in the $300-350K range. They were shocked when they got their assessment close to "waaahhhhn meeeeeeeeeleon daaaahlers". Just the property taxes alone are going to be $800-900 PER MONTH (roughly--I don't have the exact tax rates handy). That's the entire P&I portion of my mortgage payment, before taxes and insurance (thank God I bought in '98, while I could still afford to, and I live in a dump relative to everything around me).

But SOMEBODY has to pay the salary of those 16,000 King County employees, right? Like those Metro drivers I see driving empty busses around the Eastside at 11 at night.

SourMash said...

\Shrug\

My assessment went down 8% for the 2007 tax year.

Marinite said...

Sorry darlin', the real world just don't work that way.

It does in California thanks to Prop 13. I hope WA doesn't decide that something akin to Prop 13 is a good idea. At least I hope if it does WA does it right. Use CA as a model of how not to do it.

Orion said...

As the property taxes are lagging the "sizzling" RE market (or maybe "zizzling" if you believe zillow.com's comps) starting now and for the next few months the new appraisals will be rolling in for last year, the peak of the market in most areas of the U.S. But then when the market does cool off and most likely decline, homeowners may find themselves with property assessed higher than it's worth. I know you can dispute the assessment. But from what I understand it's from last year's comps. I bet it won't matter to the tax appraiser if a house sold last week that lowers the neighborhood comps. But I'm not an expert so we'll see. Expect lots of whining no matter what.

Homeowners felt so rich with the runup in prices, but they were only rich if they sold their home and stepped out of the market. Getting a HELOC doesn't count (debt is not wealth), which seemed difficult to grasp by some. At least if you owned pets.com stock when it was flying high you didn't have to pay taxes on its inflated value if you didn't sell it, imagine then paying those taxes a year after it tanked.

biliruben said...

Sourmash - I think, from a previous post, that I live around the corner from you, but my assessment shot up around 40% on my land and 10% on my property. It's still 15% behind Zillow, but I am having a hard time understanding why the descrepency between our assessments.

Any ideas? Anyone?

Anonymous said...

It's the sourmash moonshine still. Lowers the property value every time....

SourMash said...

heh. if only.

I think you actually live in a nicer area than me, biliruben. I'm down near the Seattle border.

You can dispute the assessment if you have some sales comps or other data to support the argument.

richard said...

Anyone catch the July employment article in the PI yesterday? it had this quote:

The largest job growth occurred in government (up 4,200 jobs),

Could this have anything to do with taxes?

Jobs and jobless both up in state

mercer_island_guy said...

With the I-747 1% cap on property tax levies, does it really matter if assessments go up? I know I-747 is being hotly disputed right now (http://seattlepi.nwsource.com/local/273869_initiative14.html?source=mypi) but I would think everyone's 2007 taxes would not increase much.

billruben, I don't know your specifics, but the 1% cap is done on an assessment-district basis. They generate a levy % in your district based on (last yr's budget * 1.01)/(sum of all district home assessments). So levy % has been decreasing at roughly the same rate as the assessment values have been rising. However, within a particular area, some houses appreciate faster than others, so some people are paying more than a 1% increase and some are paying less. I would imagine view and waterfront assessments have skyrocketed, for example, and those homeowners are paying a greater share of their district's levy. Look at the district levy %'s from last year and you'll see places like Yarrow Point, Medina, Mercer Island, and Madison Park have a much smaller % than areas w/o waterfront and view homes.

biliruben said...

Ah. Okay, Sourmash.

I'd thought you'd said your were in zone 3 or whatever, which was my zone.

I feel better now. It actually isn't an unreasonable assessment. I just couldn't understand why a neighbor wouldn't have gotten a similar one.

As for nicer a nieghborhood, I would doubt that. Does your nieghborhood regularly have paramilitary groups cordoning off your street to take down old lady dope-fiends? ;)

Now I wonder if they'll drop the assessment when my house value drops 30% down to what I paid for it in 3 years.

Actually, I don't wonder.

matt said...

I'd file this article in the "Everybody's in on the take" folder, from the shady developers, Real-Estate used car-dealers and predatory lenders right down to the state and county government... Who's looking out for consumer's right when it comes to Real Estate? Guess what? nobody!!!

Everybody's cashin' in on the (Ka-)Boom!

plymster said...

Blindly limiting Tax Assessments is absurd. I would suggest that tax limits should be based on the core CPI, as these costs should directly correlate with the expense of providing services to taxpayers (if the core CPI weren't being blatantly manipulated, that is).

In fact a tax limit of this sort on the federal level would reduce the sort of Social Security and TIPS manipulation that the feds are engaged in. It might also keep Congress in check. Of course, since that pack of corrupt slimeballs cannot even maintain a balanced budget with the power to raise/lower taxes at their whim, they can hardly be expected to maintain a government based on inflationary limits.

A negative side effect of this would be that banking, agricultural, and defense industries would all post significantly decreased profits, since these industries would no longer be getting the de facto subsidies they are currently receiving.

Anonymous said...

So now they are assessing property values at once a year instead of once every 4 years like they use to do. I think they made that change right before values went gangbusters. If and when prices start to loose ground, who's betting they'll find a reason to go back to the once every 4 years schedule?

ks_kitsap said...

Just the property taxes alone are going to be $800-900 PER MONTH

Yikes...you can rent a house for that aorund Kitsap. Let the landlord pay the taxes, LOL.

marin_explorer said...

I recall coming across an internal King County gov. document early last year that gave some upbeat predictions for future residential assessments. Reading this, I was a bit bothered by their eagerness to re-assess every property.

You know, a lot of homeowners had no stake in this bubble, and they're still going to feel the pain--acutely for those with fixed incomes. It works OK when appreciation is "normal", but not recently.

matt said...

You know, a lot of homeowners had no stake in this bubble, and they're still going to feel the pain--

Yeah, this is the Realtor/City-Gov. Seattle campaign to throw the grandmother's out on the street in order to turn a quick buck. Again, the way the local press cheer the Seattle Bubble as if its some mana from heaven, is completely disgraceful. There's always casualties when it comes to running up an asset to silly levels of unrealistic appreciation.

Do these money-grubbers care they're throwing people out on the street when it comes to a condo-conversion? Do they care when someone on a fixed income cannot afford their over-inflated bubble-sponsored property tax? You kiddin' me?

My favorite was when the local gov. and the Realtors(tm) go together and agreed their should be affordable housing..."Okay, let's agree, good enough! next order of business!!" friggin' vampires...

Personally, these are the true victims of this monster, not the F'd borrowers who ignorantly got themselves over their head on a neg-am/i.o., those nitwits could've read the fine print, but folks who have no other option and did nothing wrong in the midst of this mania and are now suffering from this silliness, they have my sympathies...

Mikhail said...

Does anyone know of examples of what happened to property tax rates in real-estate downturns? Are there examples where property taxes have fallen? I am just wondering if governments always manage to find a way from decreasing taxes no matter what.

What happens if you buy a house during a downturn? Would your tax assessment be the same as the previous owner even if you paid far less than the assessed price of the property?

richard said...

Would your tax assessment be the same as the previous owner even if you paid far less than the assessed price of the property?


Back in 93, a friend of the family did just that. Nice house, 130' of no-bank waterfront on Lake Washington. Paid $1,050,000 for a place assesed at $1,340,000. (asking price at the time was $1.25M)

They had to sign a notarized declaration that this was the true purchase price. Assesed value was reduced.

Marinite said...

I just got a hit on my blog from "State of Washington Department of Revenue" and the search words they used were "california's prop 13". You all better watch out. Seriously, this is for real.

desert transplant said...

marinite, how does California do Prop 13 wrong, and what alterations would it need to make it right?

plymster, if the CPI is used as a basis for tax limitations it would be even more subject to manipulation. I would go so far as to say that if you selected an index that has the slightest degree of subjectivity (e.g. in selection of the data to be compiled), it is inevitable that it would be manipulated. Only a very basic measure with no subjectivity at all could be used.