In a year when the average American homeowner saw his or her home value decline by 12 percent, Roanoke County’s number-one revenue generating machine – the real estate tax – was already cranking into high gear, presenting homeowners with a tax increase in disguise.
Even as county officials wrung their hands and wailed about impending budget deficits while simultaneously celebrating the ribbon cutting for the $32 million Green Ridge Recreation Center now standing in an isolated tract of Valley Pointe in north county, more than 7 in 10 property owners were receiving the “good news” from the County – somehow, despite all indications to the contrary, your homes and land had beaten the odds and increased in value!
Yes, despite Roanoke Valley MLS reports showing the average selling price of homes in the valley declining from a high of $213,459 in 2007 to $188,855 in 2009 (a decrease of more than 11 percent), according to Billy Driver, county director of real estate valuation, only about 13 out of every 100 property owners actually saw a decrease in their most recent property assessments.
Here’s a look at the official numbers provided by Driver.
For the 2010 Roanoke County reassessment, taking into consideration single family homes (including homes in rural areas), manufactured homes, patio homes, as well as residential suburban and urban vacant land and rural vacant land:
- 4,867 parcels (13.2%) decreased in value
- 5,947 parcels (16.1%) had no change
- 26,043 parcels (70.7%) had some kind of positive change
How much did the parcels that increased actually go up you might ask?
A December report from The Roanoke Times in which Driver was quoted states that overall residential properties went up an average of 0.52 percent in 2009. Commercial properties were reassessed even more aggressively, with combined residential and commercial reassessments averaging an increase of 1.02 percent for the year. These increases bring the combined total value of all county real estate to more than $8 billion and will result in more than $1 million in new tax revenues for the county in 2010.
And yet, while the county is quick to report these increases as, “the smallest in more than 25 years,” one still cannot help but wonder why prices in Roanoke County would be so remarkably resilient while national and local sales all appear to be sliding faster than the 2010 gold-medal-winning American Olympic bobsled team.
According to Driver, a number of sales at higher prices in a given neighborhood can drive up assessments, but there’s a lag time, as the 2010 assessments going out now to county residents are based on sales during 2008 and the first three months of 2009. Additionally, while comparable sale prices are the dominant factor in determining assessments, he says there are also several “secondary factors” that are not directly accounted for in the assessment process which can still influence assessed values through their impact on property transactions and the marketplace at large.
A few examples of such factors:
- The unemployment rate. “Roanoke County is three percent less than the national rate and almost one percent less than the state rate,” Driver says.
- Interest rates on mortgage loans which, “remain at or near historic lows.”
- Government stimulus programs. The tax credits such programs make available to some buyers create, “good deals in several price ranges.”
- A “healthy” sales market. The state department of taxation does a sales ratio study and for 2008, “Roanoke County turned in the seventh highest number of sales in all Virginia counties,” an indicator some would say supports the belief that the real estate market in Roanoke County does not always participate in national trends.
“These are things that go on in the marketplace, but that doesn’t mean that our appraisers actually look at those things,” Driver says. “These are factors that probably influence the number of sales. For example, the first-time homebuyer tax credit may have influenced the sales that we did have in The Roanoke Valley [last year].
“If we have a neighborhood that has maybe 60 homes, and there are five sales within that neighborhood that are all showing sales that are higher than our assessments, then that is a pretty good indicator that the values need to be increased within that neighborhood. But, if we only have one sale in that same neighborhood, and again it sold for a little bit more than what we had it assessed at, then an appraiser might look at it and say ‘I’m not so sure this neighborhood needs to be increased.’ The same would apply if there is only one sale and it was less than our assessment, just because that one home sold for less doesn’t mean all the others were going down. So it would be nice to have several sales to confirm our suspicions that the values might be going down or might be going up.”
This process may sound good on paper, but another look at MLS reports shows the volume of sales in the valley is also on the downward slope, dropping annually from a high of 5,831 transactions in 2005 to 3,707 in 2009. This information begs the question, “what’s an appraiser to do when sales are slow and comparable sales data is in shorter supply?”
Unfortunately, combined with the trends already outlined above, we’re forced to conclude the answer can only be, “when in doubt, raise values anyway.”
Who says you can’t raise taxes in a recession? Just be optimistic about property values! (Well, it seems to work for Roanoke County anyway.)
