Bubble? Advantage Government

April 4, 2006

Our Loudoun County Board of Supervisors are zeroing in on the 2006 tax rate. It looks like it will be in the neighborhood of $0.90 per $100 of assessed value. The 2005 rate was $1.04. Lets do the numbers:

Average assessed values went up 28%.
$0.90 per $100 of assessed value is a rate reduction of 13.5% from $1.04.
Net: Average property tax will increase 14.5% (28%-13.5%).

So, if your property tax bill was $5,000 last year, then (on average) your tax bill will increase $725 to $5,725. For some a lot more because I have seen assessed values up as high as 50%. For few, if any, a little less than average.

The assessor looked backward into a hot market in 2005 when sales prices were going out of sight. The assessor does not visit homes (unless you appeal your assessment) so every home in a given area sort of looks the same. The market has melted in the last several months and many sellers are having to price homes less than assessed value. I know, because we have a few of those listings. So what about next year? Will assessments decrease? Never. Will government budgets decrease? Never. Now, there is a permanent bubble in the cost of government.

Have our assessments been wrong for several years? We used to be able to estimate assessments at 70 to 80% of market value. Has the new assessor determined that the past was in error? Where are the checks and balances? Who checks the assessor's math, past and present?

Market dynamics are pushing many residents out of Loudoun and other jurisdictions in Northern Virginia. Some of us just can't afford to live here any more. Many residents are outraged! Maybe we all should be. Have the political pendulum swings the last two or three elections caused mismanagement? Probably. Will the silent majority wake up and get involved in finding common sense, center focused people to run for office and elect them? I hope so. This year is the wake up call.

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