Each year, the King County Assessor’s Office values over 700,000 properties in the county—physically inspecting one-sixth of them. Starting in May, the office started sending out property valuations for 2014, which will be the basis of the 2015 property tax. Property valuations will continue to be sent out through October.
King County Assessor Lloyd Hara said he expects to see an overall increase in this year’s property values. And while neighborhoods such as Rainier Beach saw a general increase in their property values this year by as much as 25.7 percent (individual properties may vary), Hara said the increase could be attributed to a number of factors.
Some neighborhoods may simply be recovering from the housing market crisis, Hara explained.
“There’s a close correlation between jobs and real estate values,” Hara said. “And King County has one of the strongest job markets in the country, and for several years now. So things are quickly coming back. And we see now in the county it’s now 4.3 percent unemployment, which is a good thing.”
In 2013, the Assessor’s Office saw a residential property value increase in 76 out of 86 residential areas in King County. Hara said the numbers told a different story when he took office in 2009, when property values were going downward in double-digit numbers.
Hara said areas that are seeing a bigger increase in property value today are likely on an upswing of recovery, while areas with a slighter increase in property value are steadily rising with the economy.
Areas in Capitol Hill saw only a slight raise in value, less than 5 percent, in previous years. In other areas, such as in Rainier Valley, property values went down in double digits in 2013 and are expected to go up in double digits this year.
“Areas like Rainer Valley are recovering strongly because the values were so low during the downturn in real estate,” Hara said. “So if you’re coming back into the market place and saying, ‘What can I get for a house that is now $250,000?’ I get a lot more house in those areas than say in Capitol Hill.”
Millennial families changing the game
The overall trend of increasing property values, Hara said, can be attributed to a new generation of homeowners.
“The other element we see is that the young millennials are coming of age,” Hara said. “The average age of first-time homebuyers is now 31. So now you have this crop of young people who are starting their families and looking for a place of their own.”
Millennials who value shorter commutes, good schools, and spending more time with their children are moving their families closer to the urban core, Hara said.
“For my generation, the whole idea was that I’m going to get my house in suburbia and be willing to commute half an hour or so to work, now it’s an hour or more to get into the city,” Hara said. “with changing demographics, traffic patterns, people are less inclined to sit in cars for hours on end. This is happening all over the country for that matter and we’re definitely seeing a different attitude by younger people as to how they value their time and what they think is important. … Clearly, a lot of the white-collar jobs are in downtown Seattle. So if you’re a professional family, where are you gonna be?”
Don’t let the numbers scare you
In valuing residential real estate, the Assessor’s Office follows the uniformity of appraisals methods and procedures set by the Washington State Legislature and enforced by the Washington Department of Revenue. The Assessor’s Office uses multiple years of time trended market sales during the assessment process.
Although all three approaches to value (cost, income, and market) are reviewed, the market approach to value is most effective in residential valuation. All values are reviewed each year with the law requiring one-sixth of properties physically inspected each year. In addition, State law requires the Assessor value land as though vacant and ready for development at its highest and best use.
“For prospective homebuyers at the current moment, properties near transit and the downtown cores are increasing rapidly in value,” said Department of Assessment spokesperson Phillip Sit. “This rebound in valuation is a result of the strong economic recovery locally and the large volumes of employees being lured to the Pacific Northwest by corporations in our region.”
Hara said that the increase in property values do not necessarily correlate to the increase in your property tax increase.
“Even though values are increasing that does not necessarily mean that the amount of increase in the value of your home will equal the potential increase in your property tax, Hara said. “So don’t get scared. … There is not a one-to-one relationship between the value of your house and the property taxes that you pay.”
According to state statute, each district is only allowed to increase its property tax each year by one percent, unless a levy is voted on to go beyond that one percent.
Sit explained the process: “Taxing districts, such as schools, cities, and King County are limited to a tax increase of one percent annually. For example, if a city received $1 million in property taxes one year, it can only receive $1.01 million the next year, plus any tax revenues generated by new construction. Individual tax bills are based on a number of factors, including if voters approve tax increases beyond the one percent limit.”
Hara said that through the levy process, voters are in charge of how much their taxes get increased.
“That’s kind of the beauty of it,” Hara said. “You’re in charge, not the bureaucrats.”
Within King County, there are 594 separate tax levy codes that have varying levy rates, and property tax is determined based on a mix of property valuation, taxing authority’s budget and voter-approved special levies. In some areas, over 50 percent of the property tax is voter-approved levies.
The 2015 tax statement will be based upon your 2014 property values. Property tax bills depend upon what special levies are approved by the voters and the adopted budgets by the taxing authorities, as well as property valuation.
APIs should check for senior exemption eligibility
Washington State has two programs that may help senior citizens or disabled persons pay property taxes or provide special assessments. The Property Tax Exemption Program provides a property tax reduction for qualified senior citizens and disabled persons in Washington State. The Property Tax Deferral Program allows the State of Washington to pay your taxes by placing a lien on your property. Once you no longer qualify for the program, the property taxes paid by the state on your behalf will need to be paid back plus a 5 percent interest charge.
In order to qualify for senior exemption, you must be 60 years or older, your house must be your primary residence, and you must have a gross income $35,000 or less.
“We see a lot of older APIs now and they should take a look and ask themselves if they might be eligible,” Hara said. “We can go back three years. So say you’re 65 now and you missed it and your income hadn’t changed and you met the criteria, you get three years of back revenue.”
Sit said that in many API families, the adult children handle the finances for their parents. He said family members in charge of the finances should pay special attention to whether their parents or grandparents qualify for exemptions.
“I think for most first and second generation APIs, they handle a lot of their parents’ affairs, even if they’re not elderly,” Sit said. “My folks are in their mid 50s and I handle all their taxes, all their day-to-day affairs. [Whether the financial caretaker is native English speaking or English speaking], have them look into their parents’ financial situation. See if they qualify. Or see what their tax situation is. A lot of times when someone is taking care of their family’s estate, they’re not sure of their tax situation. If you want to just take a look, all that information is online.”
Hara said that it’s important for the community to verify their information on the Assessor’s Office website, which contains all the information that is used to determine property values.
“We are very much an open data office,” Hara said. “So everything and anything that is related to property in King County is on our website. And most clearly we ask residents to take a look at their personal property to see if the characteristics are correct: the lot size, the size of your house, how many bedrooms and bathrooms you have, etc. because that’s important as to how we value their property. So if they see anything that’s wrong, please give us a call so we can make sure that it is absolutely correct.”
In order to better educate the public on the property valuation and taxation process, the Assessor’s Office holds hundreds of public meetings and presentations throughout the year, Sit said.
“Because your biggest asset, generally speaking for most people, is your house, you want to make sure that the information that we have is accurate and reflects the value we are placing,” Sit said.
For information on the Senior and Disability Exemptions, contact the Department of Assessments at (206) 296-3920. For property tax questions, call King County Treasury at (206) 296-0923. For assistance with tax matters, contact the King County Tax Advisor at (206) 477-1060. The number for the King County Assessor is (206) 296-7300. For more information, visit www.kingcounty.gov/assessor.