“Marco, I just received my tax rate notice in the mail and it looks like my taxes for my condo in South Lake Union rose by around 12% over the rate of last year. Does that mean my condo value should also have increased by 12% if I want to sell?
Dear Mr. My Taxes Are Increasing:
This is a great question and a common one. The short answer is no, not necessarily. But that’s over simplifying it. In a similar post last year I received a little bit of feedback that my answer was a bit too simplistic so I want to try to expand a bit since this is a common question we get about condo values here in Seattle.
For background, King County uses the tax assessed value of real estate as a means to fairly collect property taxes. It’s one way they generate revenue as a county. This is only a tax revenue value and does not directly correlate with what a condo, or a house or even a commercial building’s “market value” might be. When determining market value, most appraisers, real estate brokers, and lenders do not reference tax assessed value. However, the overall trend should be the same in my opinion. Meaning that if real estate market values are low or decreasing, than tax assessed value will likely follow that trend. And on the other end, if real estate market values are increasing, then it makes sense that tax assessed values will also start to increase. But they will not always increase or decrease at the same rate.
I’d love for someone to chime in that might work for the county assessor’s office on this, by the way. It is confusing for a lot of people, even me in the industry as to exactly how the county assesses condos and houses because it seems there is a big lag in adjustments by the county assessor’s office.
Many of you will recall that back in 2008-2010 when our condo values were decreasing, we had a lot of people asking how to get their property taxes lowered. The county responded and starting making adjustments based on the market but not across the board. So now guess what, the county is of course going to start the pendulum moving the other direction I would assume, thus why ‘Mr. My Taxes Are Increasing’ is seeing that increase. Our condo at 2200 Westlake also saw our tax rate increase by quite a bit.
But to answer the question of ‘does the tax rate increase of 12% mean that a person can assume the market value of their condo has increased by the same 12%”, the answer is no, but the trend is indeed in line with the Seattle neighborhoods such as Downtown, Belltown, South Lake Union, Ballard, and Capitol Hill where median condo prices are of course up over last year. We saw sharper median price increases during the 1st quarter of this year, with them tapering off a bit in the 2nd quarter, but still a general trend over all of condo market values increasing over 2012. But it’s not a flat 12% increase to simply answer this question.
As always, thanks for the questions, and for your comment and feedback.
By Marco Kronen with Seattle Condo Review: A guide to Seattle downtown condos.
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