Northern Virginians Greet Assessments With Disbelief

Washington Post, March 6, 2006
By Amy Gardner

When Linda T. Nevitte opened her 2006 property assessment notice a few days ago, she knew enough about the Northern Virginia real estate market to expect a higher assessment on her 22-year-old colonial in Sterling.

But nothing could have prepared her for what she saw -- that her 2,800-square-foot home, valued at $431,300 in January 2005, was worth $603,200. That's a 40 percent increase from one year to the next, and it is likely to lead to a whopping new tax bill for Nevitte this spring.

"The whole neighborhood got a 40 percent increase," Nevitte said. "We have a neighborhood e-mail system, and it's on fire. I'm expecting them to storm the courthouse with pitchforks and knives."

Thousands of property owners across the region know how Nevitte feels. It's sticker shock season -- the time of year when property assessments jolt homeowners with the good news (more equity) and bad (higher tax bills) of rising property values.

This year, the shock is particularly deep in the outlying counties of Northern Virginia, where property owners thought they were insulated from the skyrocketing appreciation the inner suburbs have experienced most of this decade.

With an average home value increase of 28 percent, Loudoun County led the region this year. Prince William County, at 25.5 percent, was not far behind. And Loudoun appears on track to handle a record number of complaints and requests for review. It is too soon to say the same for Prince William, where notices have not hit the streets, officials there said.

"We've had a couple thousand calls," said Loudoun County Assessor Todd Kaufman. Most callers don't dispute that their new assessment represents market value, as required by Virginia law, he said. They're just shocked that the value has gone up so much.

"For the most part, people aren't upset about their assessments once we explain it to them, show them comparable sales and so on," he said.

There are exceptions. Laurie F. Neff, 34, owns a home in the Sumner Lake neighborhood of Manassas. Her 3,500 square-foot home's value rose from $535,500 to $749,600 -- a 40 percent increase. Neff said she believes that the assessment is wrong because her house has been on the market for two months -- for $689,000. All Neff said she could think when she read her notice was: "Are they on crack?"

Assessments rose briskly in the inner suburbs, too -- 20.6 percent in Fairfax County, 19.5 percent in Alexandria, to name two. But in those closer-in communities, the rate of growth has slowed a bit from last year. In Fairfax, average home values actually ticked down in the fourth quarter of 2005, although they are still about 20 percent higher than in the previous year.

What no one can say is whether that trend will continue and whether property owners can expect a more profound stabilization next year.

"As long as people moving into Arlington have the income to support mortgages of several thousand dollars a month, and as long as interest rates remain relatively low, then we'll probably continue to see appreciation in the value of real estate," said Thomas L. Rice, director of the county's Department of Real Estate Assessments.

"But if you take a historical perspective and look at how increases in values have occurred, this is without question the most protracted increase in real estate values that anyone can document."

In the outer communities, one possible explanation for the higher rates of increase is the fact that historically, such locations have remained affordable, officials there said. As prices have soared closer to the District, home buyers with limited money have flocked to Loudoun and Prince William in search of cheaper homes.

Unfortunately, that very sales activity is driving prices up in those enclaves, said Allison Lindner, Prince William's real estate assessments division chief.

"I don't know for sure," Lindner said. "It seems to be the areas where there is some affordable housing in comparison to D.C."

Rising assessments don't automatically translate into higher tax bills. It is ultimately up to county boards of supervisors and city councils to set property tax rates.

Still, most residents will see their property tax bills rise this year. Although local governments are considering reductions in the tax rate -- seven cents in Loudoun and Fairfax counties, for example -- those reductions do not counter assessment increases in those communities.

Officials say they cannot afford to keep tax bills even because of the cost of services that their growing populations demand.

And that points to the quandary that governments will face next year, if home values do level off more dramatically. They will no longer be able to absorb spending increases with rising assessments. Unless they slow spending growth, they will have to increase tax rates

"Every year at the budget hearings, there are people arguing about the cost of taxes," said Kevin C. Greenlief, director of the Fairfax County Department of Tax Administration. "But there is also a large contingent arguing for services."