The U.S. real estate market is facing significant headwinds, but Arlington property assessments are continuing their march upward.
Arlington County announced today that overall assessments of residential and commercial properties rose 3.6% for 2023, compared to 3.5% for 2022. Residential values are up 4.5% while commercial values are up 2.6%.
“The increase in property values continues to show that Arlington remains a place people want to live and work,” County Manager Mark Schwartz said in a statement. “And it’s the revenue generated from these real estate taxes that help to fund the County’s high-quality services and public services for residents, visitors, businesses and workers.”
The average single-family home in Arlington is now assessed at $798,500, compared to $762,700 last year. The rise comes despite the local real estate market experiencing many of the challenges also seen in the national market, precipitated by rising interest rates.
The rate of property value increase, however, has slowed compared to the previous two years. Residential values were up 5.8% in 2022 and 5.6% in 2021. In 2020, residential values rose 4.3% and were outpaced by a 4.9% rise in commercial values, prior to the pandemic causing the office vacancy rate to spike and values to in turn go down.
Arlington has for years relied on a balanced residential and commercial tax base, which allows it to grow its budget and embark on large projects while keeping real estate tax rates at levels slightly below many of its Northern Virginia neighbors.
The weakness in office assessments, while offset by rises in other commercial property like hotels and apartment buildings — and bolstered by new construction — is a contributing factor what is currently projected to be a nearly $35 million budget gap.
Arlington County Manager Mark Schwartz is scheduled to present his proposed FY 2023-2024 budget to the County Board next month.
Local homeowners, meanwhile, will be able to view their new assessments online after 11 p.m. tonight (Friday), the county said. There is an appeal process for those who disagree with their assessments.
More on the newly-released assessments, below, from the county press release.
Arlington’s overall property tax base grew from 2022 due to continued residential growth, while existing commercial values were relatively flat.
The total assessed value of all residential and commercial property in Arlington increased 3.6 percent in calendar year 2023, compared to 3.5 percent growth in 2022. Residential property values increased 4.5 percent, while commercial property values increased 2.6 percent. New construction contributed to 0.8 percent of the 3.6 percent tax base growth.
The 4.5 percent increase in residential property values increased the average single-family property from $762,700 to $798,500. For 2023, approximately 76 percent of residential property owners saw their assessed value increase while the rest remained unchanged or declined. Residential properties include condominiums, townhouses and detached homes.
Notice of Assessments will be mailed to Arlington property owners beginning January 13, 2022.
Real estate taxes provide almost 60 percent of total County revenues. The County’s real estate tax base is spilt roughly equally between residential (55 percent) and commercial (45 percent) property assessments.
“The increase in property values continues to show that Arlington remains a place people want to live and work,” said County Manager Mark Schwartz. “And it’s the revenue generated from these real estate taxes that help to fund the County’s high-quality services and public services for residents, visitors, businesses and workers.”
Commercial property values increased by 2.6 percent from the previous year. Existing office property values showed a very modest decrease but were offset by new construction. General commercial (malls, retail stores, gas stations, commercial condos, etc.) property values improved on their performance last year, increasing 4 percent overall.
Hotel property values increased by 7.5 percent as occupancy and room rates continue to recover from the initial lows observed at the beginning of the COVID-19 pandemic.
Existing apartment property values increased by 0.7 percent over the previous year. Continuing demand for new construction helped contribute to overall apartment growth of 2.6 percent.
Pressures for the Upcoming County Budget
The County is facing challenges in the FY 2024 budget, with a preliminary funding gap of more than $30 million due to the growth in expenses outpacing the growth in revenue. Commercial vacancies continue to impact revenue; expense pressures include increasing costs for goods and services, higher interest rates, and wage growth.
In December, the Arlington County Board directed County Manager Mark Schwartz to develop the FY 2024 budget with multiple options including:
- Service and program efficiencies, including options for service delivery reductions and eliminating activities that are no longer priorities
- Prudent use of one-time funding
- Full funding of the tentative collective bargaining agreements reached this past year
- Funding affordable housing priorities, including eviction prevention, housing grants, and maintaining level ongoing funding for the Affordable Housing Investment Fund
- Funding Arlington Public Schools consistent with the Principles of Revenue Sharing
The County Manager will present his budget to the Board in February 2023.
About Real Estate Assessments
Real estate assessments are the County’s opinion of fair market value for each parcel of real property in Arlington. Assessments are made annually using accepted methods, standards and techniques of the real estate appraisal and assessment profession. For more information, visit the County webpages on real estate assessments.