You think when market declines, your real estate assessments (what the county thinks your house is worth) also going down to reflect what's happening in the marketplace. However, that's not the case. The housing market might be declining, but officials think that real estate assessments should be up.
Each jurisdiction uses formula to come up with the numbers. For example, in Virginia, assessments are reviewed annually. Across the river, in Maryland, it is done once every three years. Technically in MD, you won't feel the pinch until three years later. For 2008, Marylanders would see their property assessment go up the roof! A sticker shock of 33% increase, phased in three years - or 11% annual increase.
In Arlington, post-2005, they're seeking to have a 50/50 balance in the property tax base between commercial and residential. That means, if commercial properties are up, even though residential assessments is down, you can expect that your property assessment will be up. That's exactly what happens in Arlington.
Homeowners who question whether their assessment is accurate should ask: “Would my home sell for the assessed value if I put it on the market?” If the answer is “yes,” the assessment is probably accurate. If the answer is “no,” contact the Department of Real Estate Assessments.
You live in Arlington? If you think you can't sell for more than the assessment, you can go and 'make your case' to the Dept. of Real Estate Assessments. I'm pretty sure, after January 16 (that's when they intend to mail out the notices), their phones are going to be jammed up with calls from home owners.
You can appeal your case to other jurisdictions as well.
Here's the line up for this year. Arlington is up 5.3%. Over at Fairfax, they're maintaining FY 2008 real estate tax rate of $0.89 per $100 assessed value. The forecast includes a projected drop of 4% in property values in FY 2009. Prince William, because they got hard hit with foreclosure, assessment expected to decline 14-16%. Marylanders, despite the 33% increase, depending on where you live there's a max cap put in place, i.e. Montgomery not to exceed 10%, etc.
If foreclosures linger on, you will see more area residents feeling the pinch. Maybe they'll consider lowering the assessments at that time.