Those that know me will surely tell you that I am no doomsayer. Actaully, many people would call me an optimist almost to a fault (if that is possible). Sometimes, however, I cannot help but think that things have the possibility of becoming very, very, bad indeed.
In the latest issue of the Fluvanna Review, I came across their regular review of the most recent meeting of the Flvuanna County Board of Supervisors. Most of the stuff was pretty mundane, as usual. There was one little section, however, that certainly caught my attention. It read:
Supervisors were briefed on the progress of the latest countywide real estate reassessment.
According to Blue Ridge Assessments, the work is approximately half done–Lake Monticello has been completed. All fieldwork is scheduled to be finished by December 1, although a request to the court for a deadline extension will be needed to complete the documentation.
If the entire reassessment process is completed by February 1, then real estate property owners should see the reassessment reflected in their July 1 tax bills. While the company did not make a firm projection as to the probable size of the reassessment increase, a spokesperson said that it was likely to be in the 30 to 50 percent range.
Let’s keep in mind that the latest reassessment in Fluvanna County was sent to property owners in the beginning of 2004. I would imagine that even those who do not follow the real estate market are able to reason that a 30%-50% value appreciation over that time seems unlikely.
After reading the article, and putting my eyes back in my head, I decided to crunch some numbers. I went to the MLS and looked up all the sales that have closed in October so far. I then compared the sales price to the current tax assessment for those properties. I then increased the current assessment by 30% (the low end of the stated increase range) to see if the new assessment would be in line with market value. I only took the properties that have sold in Lake Monticello because the article stated that the work at Lake Monticello had already been completed, so they must be getting the 30%-50% figure from those assessments.
I found that there have been seven closed sales thus far in the month of October in Lake Monticello. Below is a list of the sale prices for those properties, and then the assessed value of those properties AFTER the 30% increase.
1)$188,000—–>$203,580
2)$205,000—–>$214,890
3)$219,900—–>$235,560
4)$225,900—–>$258,830
5)$244,900—–>$239,850
6)$265,000—–>$287,430
7)$299,500—–>$332,280
I want you to take notice of the fact that ONLY ONE of those properties sold at or above its adjusted assessment. The rest of the properties did not sell for the adjusted assessment value, and in some cases, the difference between the two was 10% or more. What this basically means is that 6 of the 7 homes that have sold thus far in October will be overtaxed when the assessments go out next year, unless they can acheive remarkable appreciation in the iterim. Given the current market conditions, that isn’t likely. Of course, in the event that the county adjusts the assessments of those 7 properties to reflect he most recent sales price, they will be right on target. That fact, however, is of no help to their neighbors.
For the sake of argument, I went back and checked the September sales as well. That search yielded similar results. I had to go back to February before the results started to make any sense at all. I wonder, however, will their be new assessments for the people who purchased their homes in February? Some of the current assessments for those homes reflected the sales price. To increase that assessment now by 30% would be horrific for those homeowners.
After examining the data, it would appear that Fluvanna has simply chosen a very bad time do conduct the reassessment. The rapid appreciation of 2004 and 2005 is what triggered the assessment, but the fact that it has been conducted in 2006 is very bad timing, indeed. The market has changed tremendously since only the beginning of the year, and many of the assessments that were done in February and March probably wouldn’t be considered accurate in November and December.
I sincerely hope that someone will be paying attention to the issue, and lower the proposed assessment increase. If that doesn’t happen, my fear is that the homeowners of Fluvanna will have to spend a considerable amount of time and effort challenging their individual assessments, or face the risk of being severely over-taxed on their property.
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