2023 Reassessment Notice – sticker shock

Last week I checked the mail and found my 2023 Reassessment Notice from Warren County. While not a bill, the assessment change was up nearly 33%.

I took a hard swallow, even though I had been forewarned, for I had been in the audience at the January 3rd Board of Supervisors meeting when it was discussed that these reassessments, expected to show 25-35% increases in many cases, would cause sticker shock.

The BOS more or less acknowledged the need to lower the tax rate toward a level that — offsetting the assessment increases — would be “revenue-neutral” for the county.

However, I would suggest a more drastic approach. Throw out the reassessments altogether. They are based on outdated information.

While it’s unclear exactly what data was used to calculate the increases, the fact is that the real estate market peaked in May or June 2022 and has been in a precipitous decline ever since.

The reported prices used in any assessment calculation come with a serious time lag. For example, the oft-referenced Case-Schiller index is only up-to-date through October closings, which reflects contracts that were signed in the July-to-September timeframe.

Whatever selling prices were used to develop the new assessments, they were based on a roaring market and constituted prices that almost no one selling a home could get today.

Today, 30-year fixed rates are 6.15%, up from 3.45% a year ago. This rapid increase has kneecapped the housing market.

And in December, existing home sales posted the 11th straight month of declining volume.

Pending home sales are down about 35% year over year.

Days on the market (selling time) is up nearly 25%. The percentage of asking price offered to sellers is shrinking, and affordability is getting worse except for all-cash buyers.

Consider a local couple that has saved up $84K to buy a house and can afford a $1500 monthly payment (not including property taxes and insurance).

With $84K in hand, at the 3.45% interest rate a year ago, they could have bought a $420K house with 20% down.

Today, at a 6.15% rate, they can only buy a $330K house with their nest egg.

That is $90K in purchasing power lost into thin air due to rising interest rates.

Since our market is roughly balanced in terms of buyers and sellers, it means that the seller of that $420K home just lost $90K in equity. Yet Warren County sees fit to increase her assessment by 30%.

In all likelihood, anybody who thinks they can sell their house today for what it may have sold for a year ago is in for an unpleasant surprise.

Most of us would be unable to sell our homes for the newly assessed value in any reasonable amount of time, even if we wanted to.

This is why the reassessments should be scrapped altogether, or at a minimum; the increases should be cut in half to reflect the recent downturn in the market. And on top of that, the BOS should indeed lower the tax rate to offset any increase in assessments, such that the real estate tax haul for the county is revenue-neutral.

Families in Warren are paying more for food. Car taxes are up based on increased assessments. Electricity prices will likely increase as well.

A real estate tax hike based on outdated data is too much for our families to stomach.

John Stanmeyer
Warren County