It should be no surprise that residential real estate values are soaring, and have been ratcheting up exponentially for the past year or two. Exacerbated by the Covid-19 pandemic, the residential market in Northern Virginia has been especially “hot.” Historically low mortgage rates and a demand for housing that exceeds supply mean that properties are snapped up quickly, often for much more than the assessed value, or even the asking price. The requirements for assessing property in Virginia are established in the Constitution of Virginia, especially Sections 1 and 2 of Article X. All assessments are required to be at fair market value.
That “fair market value” is creating frustration and outrage among some homeowners, who are responsible for paying both the mortgage and the property taxes, usually via the escrow portion of the mortgage. If you’ve made no improvements in your house, but your neighbor put an addition on their home, or that infill lot down the block has a brand new house or two on it, the values in your neighborhood, based on the comparable sales (“comps”) most likely went up.
Assessments for most residential properties in Mason District increased between 5 and 19 percent, although one smaller Falls Church neighborhood off Sleepy Hollow Road saw values go up nearly 25 percent, because of six existing properties that sold in 2022 for an average of $1.13 million each. The highest price paid for a residential property in Mason District in 2022 was $3 million, for a half-acre property on Lake Barcroft.
Under Virginia’s antiquated tax structure, revenues to support local county services are derived, primarily, from the real estate tax on residential, commercial, and industrial properties. Reliance on the real estate tax (a structure that dates back to the 1700s, when Thomas Jefferson was governor of Virginia) to fund schools and local services is unsustainable. The Virginia General Assembly caps or controls local governments’ authority to diversify revenue sources, and repeated efforts to get the General Assembly to grant counties some authorities similar to those utilized by independent cities have failed. Additionally, Fairfax County receives less than 25 cents on every dollar of income taxes paid to Richmond; the state formula needs to be changed so that the dependence on real estate property taxes to fund schools, public safety, and other vital services can be reduced for homeowners.
As noted in last week’s column, County Executive Bryan Hill unveiled his proposed county budget for Fiscal Year 2023 on February 22. The proposed budget fully funds the School Board’s operating request (the school transfer), provides a 4.01 percent Market Rate Adjustment for county employees, and addresses priorities such as affordable housing, Diversion First, and public safety staffing. Mr. Hill’s proposed budget provides an opportunity for the Board of Supervisors to reduce the tax rate, which currently is $1.14 per $100 valuation. Board members already are discussing a reduction of several cents, in advance of advertising a tax rate at our meeting on March 8. Once a tax rate is advertised, the Board cannot adopt a rate higher than advertised, but it can adopt a rate that is lower than the advertised rate. Stay tuned.
Penny Gross is the Mason District Supervisor, in the Fairfax County Board of Supervisors. She may be emailed at firstname.lastname@example.org.