The region’s hot real estate market has led to “unprecedented” increases in home values that will drive up next year’s property-tax bills, according to the King County Assessor’s Office.
Home values are up all over the county, and particularly in Eastside areas such as Redmond (43%), Woodinville (44%) and Kirkland (44.5%).
The Sammamish Plateau topped the list with a 52% increase from the previous year, according to the assessor’s office. That’s double the increase in Federal Way of 26%. In Seattle, values are up 19% in Rainier Beach and 20% in Magnolia.
The county has only released data for a handful of areas so far, and is continuing to finalize property values in other areas.
The 30% to 50% increases are significant, even for the overheated Seattle-area housing market. Last year, values were up by as much as 18% to 22% in some areas.
This year’s property-tax bills are based on last year’s assessed values, but these new values will determine next year’s taxes. The assessor’s office will mail out valuation notices starting this week.
Since early in the pandemic, local homebuyers have faced stiff competition, spurred by a combination of few houses for sale, a flood of buyers looking to take advantage of low mortgage interest rates, and a continuing influx of highly paid workers with stock options. That has driven up home prices across the region, especially outside Seattle. The median price for a single-family house in King County hit nearly $1 million last month.
With mortgage rates on the rise, the market has recently started to show signs of cooling off. But county assessments are based on estimated values as of Jan. 1
While it may seem unusual, rising property values don’t always have a huge effect on property tax bills because of the way local taxes are calculated. Instead, local levies are usually the biggest cause of rising taxes.
The assessor’s office essentially determines how much property tax revenue is owed to various public agencies. The total amount the county generates can’t increase by more than 1% each year, except for voter-approved tax increases such as school and parks levies. Then, to reach that total amount, the assessor determines how much to charge each property owner, based on the value of the property.
When values climb dramatically faster in some areas than others, property owners can see spikes in their bills as the county adjusts the proportional share of total taxes.
That’s what’s happening this year, King County Assessor John Wilson said. The county won’t deliver tax bills until next year, but the hottest local housing markets are likely to see “a double-digit increase,” Wilson said.
“It isn’t a direct ‘my value went up 30% so my taxes will go up 30%,’ but when you hit this magnitude it has some impact,” he said. “We don’t want to kid the public.”
The county’s high assessments in areas northeast of Seattle roughly echo home sales data from the Northwest Multiple Listing Service, which The Seattle Times maps each month.
Rising property values have created a windfall for owners looking to sell, but can strain lower-income homeowners who bought long before values rose or tenants whose landlords cite property taxes as a justification for rent hikes.