How annual property assessments work: Sales drive them

written by Newspack Team | February 14, 2020

The city of Charlottesville and Albemarle County recently completed their 2020 reassessments. While the assessor’s offices for both localities calculate the value of properties, it’s the real estate sales that take place during the year that play a large role in determining the final numbers. 

Charlottesville

Of the city’s 15,138 taxable properties, home properties increased by about 3.8% while commercial properties — which include apartments, retail, office, industrial space and vacant land — increased by about 10.5%. 

  • 73% of residential assessments increased in value, 3.4% declined and 23.6% did not change. 
  • 81% of commercial assessments increased in value, 7.9% declined and 10.2% did not change. 

“We look at sales that take place within the year based on neighborhoods and, from that, we use those sales to update our assessment figures,” said Jeffrey Davis, the assessor for the city. As for the main causes of local increase or decrease in property values, Davis said it is buyers and sellers. “When market conditions are good and inventory is low (which it is in the city), then prices tend to go up,” Davis said.  “It’s a matter of supply and demand. That’s what we’ve been facing the last couple of years. There’s been a really low inventory and demand has been high, so it’s caused prices to increase.”“Especially on land, too,” residential appraiser supervisor Elizabeth Craft added. “There’s so little land left in the city that when a piece of land sells, it goes up.”Charlottesville’s total size is a bit over 10 miles in circumference, with much of the space already developed upon — another contributing factor to increased assessments are what remains is sold.  

Albemarle County

Like Charlottesville, the county’s assessment changes are the result of appreciation in the real estate market. Different neighborhoods and sections of the county change at different rates with details reflected in a release from the county. County assessor Peter Lynch said that his office uses a model to determine the value of a home and it is updated every year “based on what we believe is going on with the sales during that year.”“As we are working through the year, we determine that residential properties are going up so we adjust the rates that we have,” he said. “Then we calibrate those indicated values that are created by the model with the updated rates back to the sales, where we compare the values we are creating to the sales that have happened.”He said that while the sales market influences property values, the market itself is in flux, with various examples for why houses sell for what they sell for at any given time.  “It can change by the type of home, where maybe properties that have outdated styles might not sell as well,” he said. “The open concept is kind of more common and more sought after now, so properties that don’t have that might not sell for as much and the ones that do might sell for more.”He noted that an overall trend in the last several years has seen an increase in the sale price. Overall taxable property type: 

  • Urban Residential (County Water & Sewer): +2.8% 
  • Residential up to 20 acres: +4.1% 
  • Rural (20 to acres): +5.4% 
  • Rural (100 acres and over): +5.6% 
  • Commercial Properties: +2% 
  • Multi-Family: +5.5% 

Average reassessment changes by magisterial district: 

  • Rio: +2.6% 
  • Jack Jouett: +2.6% 
  • Rivanna: +4.5% 
  • Samuel Miller: +3.5% 
  • Scottsville: +4.1% 
  • Town of Scottsville: +6.1% 
  • White Hall: +3.3% 

Looking forward

At a recent Charlottesville City Council meeting filmmaker and activist Tanesha Hudson spoke about concern for recent city property assessments, citing the tech industries entering or expanding in the area. We need to pay attention to the tech crunch coming into Charlottesville,” Hudson said. “These high salaries are going to bring people and they’re going to continue to push people out of the city. This is the reason for a lot of assessments increasing.”Hudson cited the price to live in the Washington, D.C; Maryland; and Northern Virginia as an example she cautions for Charlottesville. “We’re going to be like D.C. soon. It’s $2,200 to rent in D.C. in an average neighborhood. Jobs are paying $15 an hour and we wonder why there’s a homeless issue in places like D.C. and Baltimore when the cost of living is just so expensive,” Hudson said. “Charlottesville is like a hub for what’s happening in D.C. We’re really close to it and Fredericksburg already got a little of the heat from it, but we’re not paying attention to that stuff that’s trickling down to us.”While Hudson noted the expanding populations and job growth in certain sectors in the area, a recent fourth quarter housing market report by the Charlottesville Area Association of Realtors echoes some of that. “Say if you moved to the area to start a new job, you have to make do with what is available,” said Tom Woolfork, president of CAAR. “ But now it’s not as much as you might have, say, a year ago.”He noted that properties for sale aren’t staying on the market as long as they used to, which the report also highlighted.Key takeaways from the report: Economic Conditions

  • Steady job growth in the first half of 2019
  • Low unemployment in the region making it “challenging for local businesses to find workers to fill vacant positions.”
  • That permits for new construction leveled off at the end of last year, but that the pace of new construction was “still lagging behind what is needed to meet pent-up demand.”
  • Interest rates have changed little recently and are expected to remain low into 2020

Housing Market Conditions

  • Median sales price climbed by $18,000 and the sold volume surged nearly $58 million compared to last year
  • Homes sold about 5 days faster in the region, “a reflection of the shrinking inventory of active listings”
  • Active listings declined 3% in the fourth quarter compared with a year ago

Woolfork said that with unemployment currently down and more employers looking to move to Charlottesville and Albemarle in the next few years, there could be anywhere from 2,000 to 7,000 more jobs in the next half a decade — and many of those employers and employees will be seeking to buy a house. “Wages are starting to go up again,” Woolfork said.  “They have been flat for a while, but now there’s lots of desirability in this area. That speaks to the issue of affordability then.”

Credit: Credit: Charlottesville Area Association of Realtors

Addressing affordability concerns, Woolfork said the market and permits for new builds have seen a rise in attached dwellings. “What we’re seeing with residential new building permits for new builds, there are about 60% detached and 40% attached townhouses, villas and duplexes,” Woolfork said. “That tends to speak to affordability, as townhouses can sell for less than a single family home.”He noted some things in the way of houses that are affordable.“Working against that [affordable housing] is a whole regulatory process and lack of land to build on,” he said.While he doesn’t see the affordable housing issue “going away right away,” he said that among people working to address it, there “are a lot of good ideas out there,” noting that other possibilities could see older homes or abandoned places being redeveloped.“Five years out … I wish I had a crystal ball,” he said.  “Nothing rises forever, but it’s going to be a robust market, and as prices go up, fewer people qualify.” 

 

To contact the assessment offices, visit their sites. Charlottesville | Albemarle County