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Property values down for ’09 taxes

This Proctor Landing estate was originally listed for sale at $39.5 million dollars. The 1.4-acre compound was recently sold, during the housing market slump, for a reported $15 million. The state assessor’s office recently sent out the 2009 tax assessment cards, with many on the Island discovering that their property taxes have gone down, along with their property values. - Chad Coleman/Mercer Island Reporter
This Proctor Landing estate was originally listed for sale at $39.5 million dollars. The 1.4-acre compound was recently sold, during the housing market slump, for a reported $15 million. The state assessor’s office recently sent out the 2009 tax assessment cards, with many on the Island discovering that their property taxes have gone down, along with their property values.
— image credit: Chad Coleman/Mercer Island Reporter

Many Islanders received their tax assessment cards in the mail last week. Most, if not all, found that the value of their land and structures have fallen. For those who still own their homes, having the value of their home fall presents a mixed blessing — lower tax bills, yet also a loss in potential future income.

According to the assessor’s report on the data and methodology used specifically to determine the values of Island homes and properties, the computed home values were adjusted downward by 15 percent nearly across the board. Slightly smaller adjustments were made for waterfront homes. The analysis included 399 sales of Island properties between January 2007 and December 2008. The assessor’s office made a physical inspection of Island properties last year.

A press release posted on the King County Assessor’s Web site, when the new assessments were mailed countywide in late May, states flatly, “Homeowners will see a reduction in assessed value.” The reasons for the reductions, while intuitive, indicate that the office recognized that the speculative value of properties had begun to shape assessments in past years and no longer represented the market correctly.

The remarks continue:

“The real estate market in King County has shifted dramatically in the past year. Historically, the Department of Assessments has taken a conservative approach when assigning values. In rising markets, this was accomplished by using two or three prior years of sales in the analysis and not trending the prices upward to the latest market levels. This approach removed speculative value and market spikes, resulting in a conservative valuation level.

In the recent declining market, this approach was not an option. Instead, sales occurring prior to January 2009 were adjusted downward for use in the analysis process. An additional downward adjustment was warranted to account for lack of sales and the influence of distressed sales on the housing market. Most homeowners will see a significant reduction in the assessed value of their home.”

The report also notes that data on “distressed” home sales and other transactions left out in past analyses were included this year to better reflect changes in the housing market.

The Northwest Multiple listing services statistics for the past month support these trends. For Mercer Island, August 2009 sales and closed sale prices were both down compared to the same month a year ago. The number of homes and condos on the market was down by 3.5 percent, hovering around 225. The number of homes that sold were down by nearly 30 percent, and closed sale prices decreased almost 25 percent over August of a year ago.

However, the number of pending sales for the month was up to 34 units, up from 21 last year — an increase of nearly two-thirds — perhaps signifying that the slump in sales might be reversing somewhat. Yet the relatively small number of homes sold each month even in a good year, can skew the statistics to reflect greater changes than may really exist.

The notices report the assessor’s appraised value of property, as of Jan. 1, 2009, for the purpose of 2010 property tax distribution. The office points out that property tax obligations are determined by 160 taxing districts in King County, as they create their respective budgets for 2010 and are not determined or set by the assessor. Simply put, the “amount” of tax obligation is determined by the taxing districts and the “distribution” of the obligation is determined by property values.

For more information, go to www.kingcounty.gov/Assessor.

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