The rise in property values in Arlington is accelerating post-HQ2.
Late last week Arlington County announced that its assessments for 2020 had risen 4.6% on average — 4.9% for commercial properties and 4.3% for residential properties. That compares to an average property assessment increase of 3.5% last year.
The rise in property values will almost certainly mean a rise in property taxes for Arlington residents. The county, in its announcement, seemingly discounted the idea that tax rates — currently $1.026 for every $100 in assessed value — would come down to offset the rising assessments.
“Although the growth will result in additional revenue, the County faces continued funding choices in the coming fiscal year,” the county’s press release says in the first paragraph. In November the County Board directed County Manager Mark Schwartz to propose a budget that either keeps the tax rate steady or slightly lowers it; his budget proposal will be released in February.
The county says Amazon’s arrival is at least partially responsible for rising property values, though apartment buildings accounted for much of the commercial assessment increases.
Commercial property values were driven by a decline in the office vacancy rate, continued new construction, demand for rental properties, and Amazon-related leasing activity. Apartment property values increased by 8.9 percent, office values increased by 2.5 percent, and general commercial property (malls, retail stores, gas stations, etc.) grew by 1.8 percent.
“Arlington continues to be a place where people want to live and work,” Schwartz said in a statement Friday. “The investment we make in our community through real estate tax revenue helps us maintain the high-quality amenities and public services that make Arlington so attractive.”
The full press release is below, after the jump.
Residential and commercial property values in Arlington ticked up last year, sending more revenue into the county’s coffers, but officials warn the increase won’t be enough to avoid the painful budget gaps facing county leaders this year.
The good news, the county says, is that the total assessed value of all Arlington property increased by 3.5 percent this year, compared to a 2.2 percent bump last year. Today (Friday), county mailed out property assessments, which determine the size of homeowners’ tax burdens. It plans to make all that information available online by tonight at 6 p.m.
The county said in a news release that three out of every four homes saw an increase in assessed value, for an overall bump in residential property values of about 2.9 percent. The average home’s value is now $658,600, up from $640,900 last year.
Commercial property also saw a 4.1 percent increase in value, and the county says the construction of new apartments was “responsible for about a third of the collective increase.” Office properties specifically saw a 4.3 percent bump, a substantial turnaround from the 6.9 percent decrease they recorded last year.
“Rising property values mean Arlington is a place people want to live and work,” County Manager Mark Schwartz said in a statement. “And the revenue we collect from real estate taxes helps us maintain the high-quality amenities and public services that make Arlington so attractive.”
Of course, the county still has its challenges. The release notes that Arlington’s office vacancy rate still sits at about 17.4 percent, and the resulting tax revenue slowdown has led to all sorts of fiscal challenges over the last few years.
Amazon’s arrival in Crystal City and Pentagon City will go a long way toward reversing that trend, but county leaders expect that it will take years for Arlington to start to feel the positive revenue impacts.
In the meantime, Schwartz is warning that the county’s budget deficit could be as large as $78 million in fiscal year 2020, given the gap facing both the county and its school system.
Schwartz expects that the county will need to close a gap of anywhere from $20 million to $35 million all on its own, which is driven by factors including Metro’s increasing expenses, the new raises for public safety workers the Board approved in the FY 2019 budget and new spending associated with the statewide Medicaid expansion.
The county school system could also tack on another $43 million in unmet needs, as it works feverishly to build new schools and keep pace with the county’s influx of students.
The County Board has already directed Schwartz to prepare options for the new budget ranging from tax increases to staff layoffs. He’ll deliver a proposal for a new spending plan next month, as will schools Superintendent Patrick Murphy.
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Flickr pool photo by Kevin Wolf
(Updated at 5:15 p.m.) Property values in Arlington County rose at a slower rate this year compared to last year, according to the latest tax assessments, and slower than projected by staff.
The value of all residential and commercial property rose by 1.9 percent over the past year, compared to 3 percent the previous year. Homes went up in value by 3.9 percent, compared to a rise of 2.5 percent last year.
It means the average home value in Arlington, including condominiums, townhouses and detached homes, is now $640,900, up from $617,200 last year.
“Year after year, we see through our rising residential property values that Arlington is a place people want to live,” said County Manager Mark Schwartz. “At the same time, we’ll have some challenging budget decisions in the months ahead, given that our overall property values did not grow as much as projected.”
While residential real estate continued to rise, the value of office buildings was down significantly.
“Office properties, which represent 17.6 percent of the County’s total property tax base, saw significant declines — down 6.9 percent since last year,” the county said in a press release. “This decrease was driven primarily by office vacancies as well as rent concessions.”
The slower growth overall will mean a budget shortfall for Fiscal Year 2019, with debate on county spending levels to continue this year. Staff initially projected a 3.2 percent increase in the value of all real estate, so with actual growth of 1.9 percent the county will need to find savings to balance the budget.
Schwartz and Arlington Public Schools Superintendent Patrick Murphy will present their respective budget proposal late next month.
The full county press release is after the jump.
Arlington County said today that property values rose 2.9 percent over 2016. The increase includes a 2.1 percent rise for existing properties and another 0.8 percent rise for new construction, with both residential and commercial properties seeing gains.
The value of the average Arlington home, defined as existing single-family properties like condominiums, townhomes and detached homes, increased 2.3 percent to $617,200, up from $603,500 last year.
Commercial properties, such as office buildings, apartments, hotels and retail, increased 3.4 percent over last year. The increase “was fueled by 1.6 percent growth from new construction across the commercial sectors and by 14.6 percent growth in existing hotels, reflecting the strength of Arlington’s tourism market,” the county said.
The commercial growth wasn’t totally even, however. While existing office property values remained flat, apartment properties increased in value by 1.9 percent. The two represent 82 percent of the commercial tax base, according to the county.
“It is good to see continued strength in both our residential and commercial properties,” County Manager Mark Schwartz said in a statement. “Arlington remains a desirable community in which to live and do business.”
Real estate assessments are scheduled to be mailed to all Arlington property owners tomorrow, Jan. 14. The 2017 assessments will also be posted online and made available at 11:00 p.m. later tonight.
Read the full press release from Arlington County, after the jump.
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Flickr pool photo by Erinn Shirley
Last year, the average rent in Arlington was $1,834 per month, according to the Dept. of Community Planning, Housing and Development.
That’s a dropoff from $1,934 in 2013 and $1,999 in 2012. It’s the cheapest average apartment rent since 2011, when the price was $1,768 per month, according to county records.
The average rent has declined for two years in a row after consistent, steep increases. A decade ago, in 2005, the average rent in Arlington was $1,270 per month, and the average three-bedroom apartment cost $1,803. Today, the average three-bedroom costs $2,671.
This drop in average rent comes at the same time as soaring assessments for residential properties — the average assessment in the county went up 4.9 percent, with some areas increasing by an average of 11 percent year over year. That jump, concentrated in some of the poorest areas in the county, cost homeowners an additional $400 in tax bills this year compared to last.
The higher assessments also hit the apartment market — existing apartment assessments jumped by 4.7 percent in 2015, but it appears that price bump has not yet been passed on to apartment renters.
It’s unclear if the two-year decline in rents is a trend or a blip. Arlington’s rental vacancy rate is at 3.8 percent — its office vacancy is at 20.4 percent, by comparison — and there are currently 2,055 net new apartment units under construction in the Metro corridors, per planning staff. Some of those units — like the Central Place development in Rosslyn — won’t come online until after 2016.
Since 2000, Arlington has added more than 23,000 residential units in the Metro corridors, many of them upscale rental apartment buildings. Metro ridership continually increased over that time, until recently. From 2010 to 2014, Arlington lost several thousand weekday Metro riders in both of its Metro corridors.
So far, developers aren’t showing signs of being scared off. Arlington still projects its Rosslyn-Ballston and Jefferson Davis Highway corridors will add a combined 35,000 apartment units by 2040.
Arlington’s Dept. of Real Estate Assessments will be giving representatives from countries like China, India, Turkey and Greece “guidance on proper property tax management, including an overview of how Arlington County values land and property, and how these processes have generated revenue, while promoting fair and equitable property tax collection methods,” according to a press release from Thomson Reuters, which organized the meeting.
Thomson Reuters’ Tax & Accounting Division helps corporations and governments improve their bookkeeping and revenue-generating practices. Arlington boasts an enviable tax revenue split of 50 percent residential and 50 percent commercial tax revenue, and the assessor’s office is responsible for determining the value of each piece of property.
“Arlington County’s strong, successful tax management system has attracted the attention of government officials from emerging nations,” Brian Jaklitsch, a spokesman for Thomson Reuters, said in an email.
“Officials will get a first-person look at how a government in the US processes and records land rights, and how the information is then used to assign a land value and then to process and bill property tax,” according to a press release. “More than 70 percent of local government revenue in the US is generated from property tax, and generating similar revenue could be a major coup for countries that are impoverished and/or lacking proper recording channels.”
Photo via Google Maps
Arlington’s residential real estate assessments rose by 4.9 percent on average for 2015, but some of Arlington’s lowest-income neighborhoods, which can least afford the corresponding rise in property taxes, are experiencing the biggest spikes.
According to the trend map (left) provided by the county’s Department of Finance, the area hit hardest by the assessment rise was the southwestern-most part of the county, from Columbia Pike to the border with Alexandria (area 10).
The average assessment for this area rose 11 percent, from $362,527 to $402,404. Homes in this area were the least valuable on average in the county last year and, despite the $40,000 jump, are the least valuable this year. If the tax rate remains at around one dollar per $100 of assessed value, the owners of houses in this area will pay about $400 more on average this year than last year.
The area with the second-least valuable homes in the county is area 8, which includes the Columbia Heights West, Barcroft and Glencarlyn neighborhoods. The average assessment rose 9 percent in this area, from $388,215 to $423,115, or an average increase of about $350 in property taxes this year over last.
By contrast, the wealthiest area in Arlington — area 3 in the northernmost part of the county — experienced almost no rise in assessments. The average home was valued at $1,011,423 last year and $1,014,566 this year, a 0.3 percent increase.
The full list of changes, with area numbers corresponding to the above map:
- Area 1: $713,202 in 2014; $748,523 in 2015; 5.1 percent increase
- Area 2: $810,380 in 2014; $853,100 in 2015; 5.3 percent increase
- Area 3: $1,011,423 in 2014; $1,014,566 in 2015; 0.3 percent increase
- Area 4: $646,590 in 2014; $683,000 in 2015; 5.6 percent increase
- Area 5: $698,305 in 2014; $710,175 in 2015; 1.7 percent increase
- Area 6: $514,552 in 2014; $551,594 in 2015; 7.2 percent increase
- Area 7: $554,480 in 2014; $598,880 in 2015; 8.0 percent increase
- Area 8: $388,215 in 2014; $423,115 in 2015; 9.0 percent increase
- Area 9: $410,274 in 2014; $438,993 in 2015; 7.0 percent increase
- Area 10: $362,527 in 2014; $402,404 in 2015; 11.0 percent increase
- Area 11: $524,082 in 2014; $553,954 in 2015; 5.7 percent increase
Assessments county-wide rose 3.4 percent over 2014 values. The 4.9 percent rise in residential values (including condos, townhouses and single-family homes) was paired with a 4.7 percent rise in the assessments of existing apartment buildings.
Dragging down both was a 4.5 percent decline in existing office property assessments. Arlington County has been struggling with an office vacancy rate north of 20 percent.
“Arlington’s overall real estate market remains resilient,” Arlington County Manager Barbara Donnellan said in a statement. “The strength of our residential market balances the tremendous pressures we see in the office building market due to the effects of BRAC and regional competition.”
Real estate assessments are being mailed to all Arlington property owners today. The 2015 assessments will also be posted online and made available at 11:00 tonight.
Unless the Arlington County Board decides to lower the property tax rate, the rise in assessments will mean higher tax bills for homeowners. Either way, it should mean lower tax bills for commercial office building owners. Despite the rise in assessments, the county is still facing a multi-million dollar budget gap for its FY 2016 budget.
The full press release from Arlington County, after the jump.
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