Currently, property owners in the City of Harrisonburg are taxed at a rate of $0.59 per $100 of assessed value. In other words, a $225,000 home is a tax liability of $1,328 per year.

Thus, since real estate values almost always increase in Virginia, unless the City lowers its tax rate, taxes will also almost always increase!

And so, this year (2008), the City of Harrisonburg finds itself going through the process of notifying Harrisonburg property owners that they are proposing a real property tax increase. No, they aren't increasing the tax rate ($0.59), but the effective taxes will increase because of increased property values.

Here are the details of the changes in the City:

• Property Assessments increased by 6.45% between 2007 and 2008.
• To keep the sum of the tax liability for all property owners the same as last year, the City would have to lower the tax rate from $0.59 per $100 of assessed value to $0.5543 per $100 of assessed value.
  
• Thus, the effective rate increase is the difference of these two tax rates, an increase of $0.0357 per $100 of assessed value, which is a 6.4% tax increase.
  

Certainly, some property owners will see more (or less) of an increase in their tax liability -- but as a whole, by keeping the tax rate at $0.59, the City is increasing taxes by 6.4%.

Do you have questions or opinions about this tax increase? You are welcome to voice them here on my blog, in the comment section. Additionally, a public hearing will take place on May 13, 2008 at 7:00 PM in the Harrisonburg Council Chambers located at 409 South Main Street, Harrisonburg, Virginia.

I was recently asked about the rate at which commercial properties are appreciating (growing in value) in downtown Harrisonburg. 



Getting to an answer took quite a bit of data collection and analysis, but here's what I have compiled . . .

Methodology
Properties meeting the criteria below were considered in this study, which resulted in a data set of 145 properties:

• B-1 zoning (downtown central business district)
• Current commercial use categorization
• Property improvements of $50,000 or greater

Point-to-point Sales Analysis
A point-to-point sales analysis was completed of all properties for which two historical sales prices and dates were available, where the sale dates were at least two years apart.  This resulted in a data set of 8 properties:

• Appreciation per year ranged from 7% to 26%.
• Average appreciation per year was 16%.

Five-Year Comparison of Assessed Values
The 2003 assessed value and 2008 assessed value were compared for each of the 145 properties.

• Appreciation per year ranged from 1% to 56%.
• Average appreciation per year was 12%.

NOTE: The 12% per year increase in assessed values includes a number of properties purchased and rehabbed by investors (which, in some cases, caused major increases in assessed values).  So, added value by investors is part of the 12% (not just perceived market appreciation by the assessor).

The assessed value of a property is the value assigned to the property by the local assessor's office, for the purpose of determining how much you will pay in taxes.  Harrisonburg has a great "Understanding Assessments" guide on the Commissioner of the Revenue section of their web site.

How to determine the assessed value of a property:

For Harrisonburg, visit the new Real Estate Information System to view assessed values for properties, and lots of other property information.

For Rockingham County, visit their GIS web site, where you can search for a property, and obtain its assessed value.

Additionally, if you have trouble with either of these systems, feel free to e-mail me (scott@cbfunkhouser.com) --- I look up assessed values quite frequently, through both of the systems above, and through the MLS.  I'd be happy to look up a property for you and e-mail you back with the assessed value. 

Real World Assessments

Let's take a look at a few real world assessments compared to recent sale prices to see how they compare, starting with the three real estate closings from the past few weeks in our MLS for Harrisonburg . . .

1064 Meadowlark Drive (closed 1/2/2008) Sale Price = $155,000 Assessed Value = $149,500 (96.5%) 1159 Westmoreland Drive (closed 12/27/2007) Sale Price = $265,000 Assessed Value = $204,300 (77.1%) 80 Maplehurst Avenue (closed 12/27/2007) Sale Price = $312,500 Assessed Value = $229,600 (73.5%)

1090 Oakdale Court (closed 1/3/2008) Sale Price = $167,000 Assessed Value = $144,000 (86.2%) 4765 Lawyer Road (closed 12/28/2007) Sale Price = $270,000 Assessed Value = $180,900 (67.0%) 126 Wilson Way, Massanutten (closed 12/28/2007) Sales Price = $325,000 Assessed Value = $299,000 (92.0%)

It becomes clear that there is not a magical percentage that can be used to determine the market value of your home based on assessed values. 

Finally, here's one example of a house (that I am marketing) that is for sale at a price below the appraised value:

6210 Dotts Lane, Penn Laird (click here for details)
Asking Price = $319,000
Assessed Value = $333,200
With amazing views, a large lot, a private neighborhood, schools in close proximity, superior construction quality, and a price below appraised value, it is a great opportunity!

A reader posed the question of how or why might you appeal the assessed value assigned to your property by the City of Harrisonburg.  Below is an overview of that subject, based mostly on information I gleaned from a conversation with Nancy Lawson at the City of Harrisonburg's Commissioner of the Revenue office. 

When determining new assessed values, the City of Harrisonburg always tries to get pretty close to the market value of the property --- but they are almost always under market value with their assessments.  ("Market value" being defined as the amount you could obtain if you sold it.)  They are often under market value because they use sales data from July 1 to June 30 --- and they release the new assessed values in November.  So they are basing the new values on data that is 4 to 16 months old.  However, regardless of the data being used, it is possible that the city could have assessed your property at too high of a value --- and there is an opportunity for recourse.

The first step of the appeal process involves meeting with someone at the Commissioner of the Revenue's office about how they came to your assessed value --- this is called the informal review.  There is a "worksheet" on file for your property showing the calculations they used to come to your assessed value.  They can also share the information on comparable properties in your neighborhood, which they use to determine assessed value. 

If, after the informal review, you think they have assessed your property at too high of a value, you can file a formal appeal using this form.

Click here for more assessment information from the City of Harrisonburg

This all applies to the City of Harrisonburg.  The process and details for properties in Rockingham County (or in any other city, town or county) are a bit different.  If you live outside of the City of Harrisonburg and you're having trouble finding parallel information for another locality, let me know --- I'd be glad to help you research it.

"The city's annual reassessment shows a preliminary average increase in property values of 6 percent, according to Commissioner of the Revenue June Hosaflook."  Source: Daily News Record, November 27, 2007

Interestingly, one of my clients e-mailed me earlier this week indicating that his assessed value had gone down approximately $2,000 from 2006 to 2007.  Great news relative to his tax burden --- questionable news relative to the one-year change in the value of his house.

Also this week, on WSVA's Home Show, we had a call from another city resident whose assessment decreased.

According to the City, some neighborhoods went up dramatically in assessed value, and some went down year to year.  The common thread in almost all of the neighborhoods was that the land assessment stayed constant or went up --- land almost always appreciates or holds its value.