52% Appreciation in Kirkland This Year???

This is fun.  Just got my new Tax Assessment, and like Robbie, I am clearly puzzled.  Robbie’s Total Assessment went up 10% and he freaked out.  Well Robbie, my total assessment went up 40.6% this year.  NOW let’s talk about the Attack of the Killer Assessments.

Land – Old Value $376,000  – New Value $510,000 – UP 35%

Bldg. – Old Value $167,000 – New Value $254,000 – UP 52%

Nope, no major remodel.  No permits pulled for improvements that I know of except maybe fixing a shower in the basement.

According to Zillow there’s been a drop of about 3.5% in value in 98033 during the same period. 

Clearly a 40% PLUS increase in value is not about appreciation.  Since I am from the Era of Respecting Authority, I think the County has a really, really good reason for what just happened, and i think they are correct.  I want to know what that reason is, of course.  But my guess is that they know what they are doing, and they will give me a valid explanation.

Now…let’s talk about Seller Disclosure for a minute.

If you are buying a property, be sure to ASK the seller if he has his new assessment for 2009.  No, I’ve never seen seller’s disclosing that.  There is no place on the Seller Disclosure Form or MLS Input Sheet to disclose that.  I don’t think a reasonable annual increase needs to be disclosed necessarily.

But if based on opening my mail this morning, I have learned that the taxes are going to increase by 40.6%, don’t you think I SHOULD disclose that?  Most sellers would feel disadvantaged because “no one else is doing that”.  My home has been on market for about 25 days saying the taxes are $4,805.  While what I received in the mail says nothing about a change in the tax amount to be charged, given what it does say it looks like that $4,805 is going to be $6,755 in 2009.

Clearly there’s more to this story than meets the eye.  If anyone knows a reason why the assessment would go up 52% on my house and 35% on my land this year…I’d love to hear it.

72 thoughts on “52% Appreciation in Kirkland This Year???

  1. Ardell wrote: “But if based on opening my mail this morning, I have learned that the taxes are going to increase by 40.6%, don’t you think I SHOULD disclose that? ”

    It does not follow that you taxes will go up 40.6% because your assessment did. But since everyone else didn’t go up that much, you will see an increase.

    Did you buy the home after 2006? That’s about the only thing I could think would result in such a change.

  2. Kary,

    Why would buying it after 2006 make that change? I bought it in September of 2005. What happened for homes bought “after 2006”?

    I would not appeal it, as it is correct. I have a friend with a massive remodel on Goat Hill from sometime in the 90s, who also did not get the assessment jacked from the remodel due to a “moratorium”. Anyone know anything about that? I always suspected that was the case for my house. I’ll have to research said “moratorium” on raised assessments for massive remodels.

    Don’t real estate taxes equal a rate times assessed value? Why wouldn’t the taxes go up the same amount as the assessed value? You lost me there.

  3. Larry,

    I’m sure 2008 taxes based on 1/07 values are online. But I don’t know how long it takes for the 2008 for 2009 taxes to hit the public site.

    Still, I would think if your flyer says “2008 taxes $4,805” and the mls input sheet says the same, that if you know they are going to be unusually increased, a seller should disclose that.

    Clearly it would impact the buyers mortgage payment in short order, and possibly result in the buyer not qualifying at next year’s real estate tax amount, givin PITI is the means to qualify for a loan. With all of the talk about being proactive about buyers and loans, clearly a RE tax increase beyond cost of living should be disclosed for the lender and borrower’s benefit…no?

  4. Wow, that is a huge jump! Is this level of increase for the whole neighborhood or just your house? Our assessment went up this year as well (Totem lake area), but it’s the same for the whole neighborhood. Our assessed house value went up, I always thought it’s the land that goes up in assessment while the house itself goes down. The sad thing is there is no way I can sell my house right now for the current asssess value (08), and I don’t foresee 2009 will be any better than right now.

  5. Maybe what we need is a law requiring the assessor’s office to disclose their analysis that resulted in the increase. I can’t see any legitimate reason why that should be confidential. Would a FOIA request work?

  6. I’m surprised there isn’t a limit to how much it can increase in one year’s time. I haven’t checked with the neighbors yet, but will. In fact if that info IS online, I can check it without asking. Will let you know.

  7. I found some more info online going back to 2005

    2005 land $239,000 Bldg $145,000
    2006 land $262,000 Bldg $166,000
    2007 land $314,000 Bldg $148,000
    2008 land $376,000 Bldg $167,000
    2009 land $514,000 bldg $254,000

    Through 2008 shows on line, not the 2009 numbers that only show on the paper in my hand that came in the mail today.

  8. WOW! Biliruben, that is an amazingly cool load of data! It shows the base land price per neighborhood. Then I add % for each of my view issues. I have a view of “The Mountain”, Lake Washington and Seattle City Skyline including the space needle. More mountain views when I step out front from the other direction. Each of these is an add on.

    You surely could not ask for more of a detailed explanation then THAT! They really break it down to the nth degree and with graphs and color coded maps. Fabulous!

  9. Ardell wrote: “Why would buying it after 2006 make that change? I bought it in September of 2005. What happened for homes bought “after 2006″? . . .Don’t real estate taxes equal a rate times assessed value? Why wouldn’t the taxes go up the same amount as the assessed value? You lost me there.”

    As to the first part, when you buy it they might reassess based on the sales price. If it was 2005, that wouldn’t be the reason for your change.

    As to the second part, you need to spend more time at P-I land. The tax rate is only determined after the value of all the properties is determined. If everyone goes up 10% in value, and tax revenues are to go up 1%, then taxes go up 1%. Your taxes would only go up more than 1% if the average increase was 10% and yours went up more than 10%

    That said, different levies being added/dropped, especially school levies, can change that result.

  10. Two other things (also discussed at P-I land):

    1. Because tax rates are not determined until the total value of the taxing district is determined, the government doesn’t make money off of appreciating tax values. But they do make more money off the Excise tax! One of the best things WR (formerly WAR) does is lobby against increases in that tax.

    2. Due to a change in the burden of proof in contesting tax matters, commercial property owners are more likely to contest, due to the larger amounts at stake. This means the tax burden will shift to SFR (including condo) properties, because those properties will make up a larger percentage of the total.

  11. Title companies (or the county) may be able to help w/figuring out how much the 09 taxes will be by factoring the millage rate.

    When I’m figuring estimated payments for buyers, I always let them know they can count on their payments adjusting from property taxes.

  12. All in all its just another brick in the wall. I told a friend years ago we are going to be taxed into oblivion. Getting close… it would appear.

  13. I’m reading this morning’s Seattle Times and on the front cover of the RE page (lower left corner) they have an upcoming feature:

    “Get answers to property tax questions. Confused about your latest King County property valuation? Check in with Barbara Alsheikh, King County tax adviser, who will answer your questions starting noon Tuesday. Submit your questions now at seattletimes.com/realestate”

    This should be good!

  14. This statement of Kary’s has been bugging me all weekend.

    “when you buy it they might reassess based on the sales price.”

    First of all, “might reassess” is just lame. They do or they don’t…and they don’t unless…

    This is mega important to home buyers. In CA, the assessment DOES change when someone buys a house. In WA…NOT!!!

    In CA you can have two neighbors with the same house with one assessed at half the value as the one next door, simply because it has changed owners more times. A very unfair system and WA does not do that.

    Easy to prove out. Just go to Rivertrail in Redmond and you will see that two 1,544 models will both be assessed at $369,000 regardless of whether the owner is an original owner or the townhome sold 4 times at increasing prices over the same 10 year period.

    The exception is New Construction and Major Remodel. When it comes to new construction it is often anyone’s guess what market value will end up being. We’ve all seen a new construction start out asking $1.6M and end up selling for $1.3M. So assessed value of new construction is highly influenced by purchase price.

    Same is true for a mega remodel, which is why my property increased so much. The previous owner bought it as a small tear down. Instead of tearing it down, he expanded it and lived in it for 11 years. The assessment increased, but without a market sale to prove out the market value of the remodel, it remained artificially low. One of the reasons has to do with view considerations. As a small bungalow, the assessor’s office didn’t show any views, which was always incorrect even when it was a bungalow.

    The market sale not only substantiated a value increase, it also highlighted the fact that there is Lake Washington, Mt.Rainier and Seattle City Skyline views. In fact I’d like to see the breakdown of the new assessment to make sure sure they noted the view considerations. I’m more concerned that it continues to be too low than I am that it is too high, even though it went up 40%.

    The average buyer who is buying a resale house that has not had siginificant changes as to remodel should not be led to believe that his purchase price is going to increase his taxes above that of his neighbor. This ain’t CA and it just isn’t so.

    So Kary…no…I don’t read the PI Blog. I’d rather read Seattle Bubble. Get black and white. Does every house’s assessment automatically go up based on purchase price after a sale. NO!!! For God’s Sake NO!!! Unless WA just adopted CA methods and I haven’t heard about it.

    Sorry, I’ve been holding that in for two days.

  15. When I bought my house on North Lake in West Hill Auburn, the very next day I had a note taped to my front door from someone w/the assessors office wanting to confirm my sales price…which I thought was odd because they could just check out the excise tax affidavit.

  16. Rhonda,

    All Tax Assessors use sales data to determine value changes for a neighborhood for sure. But they don’t automatically jack the assessement to the most recent sale price on a house by house basis the way CA does. Most States do it the way WA does as far as I know. Otherwise there would be huge variances between taxpayers who live next to each other and receive the same services. Not an equitable system to treat three neighbors quite differently, simply because they bought their homes at different times.

  17. Ardell, when I said they “may” reassess, that merely meant that I don’t know whether or not they do that. Not that they might or might not do it.

    But assuming they do, that doesn’t mean we have a California type system, which I agree is a stupid system. It would be something more like what Zillow does, where their Zesitmate eventually gets closer to the actual sales price. So they have their own methods of determining value year to year, but when they get an actual sale they adjust.

    We bought our house in late 2007, and our assessed value is very close to the sale price. It’s up 17% from the prior year’s assessment, but still slightly below the sales price. I’d assume that’s a result of the sale.

    So what I was trying to convey was simply that if you had a large increase, and a sale shortly prior to that increase, the increase could be due to the sale. But your sale was too long ago for that to be the likely cause.

  18. Not likely, Kary. Some of the highest assessments, and much higher than yours in your neighborhood, are homes that haven’t changed hands since the late eighties. Plus your neighborhood is so large and has sufficient turnover that there are always plenty of general comps and no need to track the individual sale of any particular one home.

    It’s important, as a real estate agent, for you to know that assessements are not based on sale price or subject to change after closing due to sale price. If it were, it would be very important for you to discuss that with your buyer clients. And when it IS, as it is in the case of new construction and homes with a major remodel that are under-assessed at time of purchase, it is a disclosure by the agent and not the owner. So I suggest you get a better handle on what “is” vs. what it “may” be.

  19. As to your first point, properties that haven’t changed hands in a long time are the ones that they would be more likely to be off on. That’s also the case with Zillow.

    But you’re right. We both need to get a better handle on this, because it is important. Now you have a better handle on the topic because you know that an increase in assessment doesn’t necessarily result in an increase in tax (although your extreme situation almost certainly will, but not necessarily 52%), and you can also explain to clients who note that their 2008 went up that it’s based on January 2008, and January 2008 was higher in many places than January 2007.

    I’ll try to look into the sale issue further, but in my case I’m hardly in a position to contest a reassessment that is below what I paid.

  20. I looked at six other closings in the second have of 2007, and only one other one went up like mine did–actually as a percentage it went up more. At the other extreme, one ended up being assessed at only about 70% of sale value, and at a price where the place would have had to have been falling down to be able to buy it at that price in January, 2008.

    A couple of other points, picked up from the King County website:

    1. Even though not required, they now reassess every year. Given the way tax rates are determined, that’s actually better because you don’t get hit with an increase every X years that only 1/X of your neighbors get hit with.

    2. The state constitution apparently requires assessment at 100% of value. That means a couple of things, including the fact that changing to a California type system would require a constitutional amendment. That said, it seemingly would also require them to take recent sales of property into account. I wonder how the assessor’s office justifies assessing property at 70% of a recent sale price?

  21. So your house is worth $950,000 and you’re upset about an assessment of $764,000? I think you should send Mr. Noble a thank you note for the years of under-assessment! 🙂

    Maybe it’s just the methodology and size of the increase that you’re upset about.

    I find it ironic when a homeowner says “my taxes are crazy! The assessment is up to $500,000!”
    “Really, what’s your house worth?”
    “Well, at least $800,000!”

  22. Gordon,

    I think you missed something in the post:

    ” I think the County has a really, really good reason for what just happened, and i think they are correct.”

    I am not complaining at all. In fact they may have missed some of the view factors and it may continue to be under-assessed.

    I know exactly what my house is worth, Gordon. It’s my job to know that. It’s not $764,000 or $$950,000 🙂

    There was no question in my mind when I bought it for $850,000 that it was under-assessed. I was not surprised. The day I am surprised by anything in real estate after 18 plus years is the day I should think about hanging it up…LOL!

  23. The primary difference is they tend to be on the golf course! 😉

    That’s really a hard question to answer because of the differences in the houses–primarily whether or not they’ve been remodeled, and if so, how well. If you just look at the raw numbers it could be up to $100,000, but that is clearly excessive. I believe the highest price house sold in the past year was on the course, but it was also a much larger house than the average in the neighborhood.

    Personally I view the golf course more as a feature that is more akin to larger lot size. It makes it somewhat more valuable, not not as much as what you’d think. But I’d also suspect that the answer may be different for different courses.

    For us being on the course made us interested in the house because we were looking for some separation from neighbors and/or a view of woods. The golf course does that for us, but being a golf course itself had no real value to us, except . . .

    Having a golf cart garage is great for real estate agents. Good place to put staging, signs, etc. 😀

  24. Okay, you’ve got me. You know “exactly” what it’s worth?

    You should email me that price offline so we can track back after the sale and see how close to zero your standard deviation is….

  25. Kary,

    I considered a house on the golf course when I lived in Florida, until 5 guys showed up a few feet from my lanai. I used to go out on the lanai in the morning in a bathrobe and green face mask to have my coffee and do some work. No way I wanted to be waving good morning boys in that getup.

  26. I wear my robe a lot, so I have somewhat of a similar problem in the evening. If I come home in the afternoon wearing anything other then denim, I’ll change out of it, and that might be straight into a robe depending on the time and what else I’m doing.

    So in the evening I might be drinking wine or grilling on the deck in my robe, which seems strange. In the morning, walking to pick up the P-I I can pretend I’m impersonating Tony Soprano, but there’s no excuse for it in the evening.

    My brother used to live on a course in CA, and he warned me about the maintenance equipment in the early morning hours. So far in just under a year that’s only been a problem once, but I typically wake up early.

    Finally, thanks for the question–it’s caused me to think about a few other things and will probably work into a piece on valuation in general over in P-I land.

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