Rockingham County is currently in the process of reassessing all real estate in the County. When the new assessed values are sent to property owners, there is bound to be some distress and consternation, as assessed values will increase (in many cases), yet homeowners know that home values have been decreasing over the past few years.
First, have home values decreased over the past few years?- The median sales price in 2007 was $214,250
- The median sales price in 2008 was $204,000
- The median sales price in 2009 (thus far) is $195,975
This shows a 4.8% decline between 2007 and 2008, and a total 8.5% decline between 2007 and 2009.
So, why will many assessed values going up? - The new assessments (effective for 2010 - 2013) will be based on real estate transfers during 2008-2009, when the median sales price was/is $200,000.
- The old assessments (effective for 2006 - 2009) were based on real estate transfers during 2004-2005, when the median sales price was $175,000.
As you can see, many homeowners will likely be confused and concerned.
They'll think it just isn't fair that assessed values are increasing when they know real estate values are decreasing. It will likely be little consolation that real estate values actually have increased in the full time span since the last reassessment.
As a point of interest, property owners should actually be retroactively grateful that they are (only just) now seeing this increase in their assessed values. Here is the tax burden over five years for the median value of homes, given that reassessments only occur every four years:
- 2006 (based on '04/'05 sales) $175,000 = $1,050 tax bill
- 2007 (based on '04/'05 sales) $175,000 = $1,050 tax bill
- 2008 (based on '04/'05 sales) $175,000 = $1,050 tax bill
- 2009 (based on '04/'05 sales) $175,000 = $1,050 tax bill
- 2010 (based on '08/'09 sales) $200,000 = $1,200 tax bill
As you can see, the tax bill stays the same for four years, leading to a total tax liability of $5,400 over five years. In contrast, here's what the tax bill would look like if properties were reassessed each year:
- 2006 (based on '04/'05 sales) $175,000 = $1,050 tax bill
- 2007 (based on '05/'06 sales) $199,975 = $1,200 tax bill
- 2008 (based on '06/'07 sales) $215,000 = $1,290 tax bill
- 2009 (based on '07/'08 sales) $210,000 = $1,260 tax bill
- 2010 (based on '08/'09 sales) $200,000 = $1,200 tax bill
In this scenario, the total tax liability would have been $6,000 over the same five year time period, $600 higher than reality.
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