Market Values 18.2% Higher Than County Assessments

Question: How accurate are the County’s tax assessment when it comes to determining the market value of a home?

Answer: Arlington’s property tax rate will remain unchanged in 2021 at just over 1%, but many homeowners will pay more in property taxes because of higher assessed values from the County. For those with plans to sell in the near future, the rapid appreciation of Arlington real estate values is a good thing, but for those with no plans to sell, appreciation simply means a higher annual tax bill.

If you’re upset by recent increases in your home’s assessed value, just know that you’re most likely getting a significant break compared to your home’s actual market value. Homes that sold in 2020 sold for an average of 18.2% (14.9% median) more than their most recent assessed value by the County. Last year, the average difference was 14.2% and the year before it was just 7.6%.

If County assessments were representative of actual market values, the average Arlington homeowner would pay just over $1,100 more per year in property taxes. So don’t forget to send the Department of Real Estate Assessments a Christmas card this year for such generous valuations 

Only 5.9% of homes sold for less than their most recent assessed value. On the other end of the spectrum, 6% of homes sold for 38% or more over their most recent assessed value.

Let’s take a look at the data!

Zip Code/Property TypeDifference of Sold Price to Assessed ValueStandard Deviation of DifferenceAverage Difference in Dollars
2220115.0%19.9%$104,341
2220219.3%15.6%$106,849
2220316.8%17.8%$90,066
2220418.5%12.9%$79,353
2220522.1%28.4%$176,473
2220619.0%10.8%$80,432
2220721.5%32.4%$188,480
2220913.0%11.1%$65,674
2221323.1%40.8%$171,539
Condominium15.7%11.2%$61,394
Detached/Townhouse21.1%27.7%$169,877
Arlington Total18.2%21.0%$111,887

If you believe that the County’s assessment of your home’s value is too high, you have the right to appeal the assessed value, but that must be done by March 1. Here are the key steps in appealing your assessment:

  • Your first appeal with the Dept of Real Estate Assessments must be filed by March 1
  • Step 1: Call 703-228-3920 for information on how your assessment was determined
  • Step 2: File your appeal online here (First Level)
  • Step 3: An assessor will visit your home and you can provide relevant info to make your case
  • Step 4: If you’re not satisfied with the decision or have not received written notice by April 1, file your second appeal with the Board of Equalization online here (Second Level) by April 15
  • Step 5: If you’re not satisfied with the decision, your final option for appeal is with the Circuit Court, which will likely require you to hire an attorney

If you’d like to discuss buying or selling strategies, don’t hesitate to reach out to me at Eli@EliResidential.com.

(Tax) Assessment Values Well Below Market Values

Question: The County significantly increased the assessment value of my home this year, should I appeal it?

Answer: It’s that time of year again…time for homeowners to find out they’ll be paying more in real estate taxes this year due to an increase in the assessed value of their homes. Arlington increased the assessed value of residential real estate by an average of 4.3%, which is less than the 6.3% increase in average sold price in 2019 and much less than the 8.9% increase in median sold price.

Tax assessments are based on the sum of the County’s determination of the value of the land your home sits on and the value of the improvements made to that land (your home). The County adjusts each of these values every year to generate the total assessed value, of which Arlington homeowners pay about 1% of each year to the County in real estate taxes.

Based on conversations I’ve had with homeowners around the County, it sounds like most of the increase in assessments this year were driven by increases in the land value, which makes sense.

Assessed Value vs Market Value

While it is frustrating to see your assessment increase so much, costing homeowners an average of a few hundred dollars in additional tax payments, it’s highly unlikely you’re in a position to challenge your assessment. Over the last 14 months, the County’s assessed value was an average of 14.2% below what homes actually sold for.

Here’s a breakdown of how the County’s assessment compared to actual sold prices since 2019, broken out by zip code, property type, and price range. Here are some highlights from the data:

  • If the County’s assessment matched actual market values, homeowners would pay an average of about $800 more per year in taxes
  • Unsurprisingly, the zip codes with the greatest difference between market values and assessed values were all three South Arlington zip codes (22202, 22204, 22206), with homes in 22202 (home to Amazon HQ2) selling for nearly 20% more than the County’s assessment
  • The County has the most difficult time assessing home values in 22205 compared to other zip codes and, unsurprisingly, detached homes compared to condos or townhouses
  • Residents who own homes worth over $1M benefited the most by the County’s low assessments, with market values nearly 19% higher than their tax assessment, resulting in an average annual savings of about $1,900 if the County’s assessments were on par with market values
Zip CodeAvg Sold $ to Assessment $StdDev Sold $ to Assessment $Avg Difference Sold $ vs Assessment $
2220112.3%8.7%$71,412
2220219.7%15.9%$108,083
2220313.1%10.7%$72,268
2220415.4%13.7%$62,933
2220515.4%19.3%$126,150
2220618.1%11.9%$71,783
2220711.1%14.4%$106,188
2220910.7%8.8%$57,149
2221310.4%9.7%$40,016
Arlington14.2%13.0%$79,434
Property TypeAvg Sold $ to Assessment $StdDev Sold $ to Assessment $Avg Difference Sold $ vs Assessment $
Condo13.9%10.6%$50,659
Detached14.0%17.0%$118,925
Townhouse15.0%9.9%$81,220
All14.2%13.0%$79,434
Price RangeAvg Sold $ to Assessment $Avg Difference Sold $ vs Assessment $
<$1M13.3%$58,720
$1M+18.6%$187,718
Total14.2%$79,434

As reported by ARLnow last week, the County will not increase the tax rate (percentage of assessment homeowners pay in annual taxes) and may still decide to reduce the tax rate to offset increased assessments. The hope for many homeowners is that as commercial vacancy rates drop from the historic highs over the past decade, the increased tax revenue from businesses will allow the County to ease the tax burden on homeowners by reducing the residential real estate tax rate.

As always, if you are considering buying, selling, or investing in Arlington/Northern VA real estate, feel free to email me at Eli@EliResidential.com if you’d like to discuss your strategy and/or current market trends.