Property values rise average of 20 percent

As the demand for housing continues to rise, property owners in Island County are seeing big increases in home and land values this year.

The 2016 property assessments were mailed to residents June 1. For some areas of the county, property increases were as high as 20 percent while others were less significantly impacted according to County Assessor Mary Engle.

Many residents contacted the assessor’s office to express confusion and concerns about how the increases affect their property taxes.

“People often think a sudden large jump in value must be a mistake,” Engle said. “Or, they become confused because they immediately think if their assessment goes up, then it’s because their taxes are also going up.”

“But that’s not always the case.”

In fact, Engle said it’s possible to see property values stay the same while taxes increase, and vice versa. It all depends on the budgetary needs of the county and its respective districts, she says.

Assessments that Engle’s office mails out are just one factor in calculating taxes.

State law requires that the assessor’s office annually determine the market value of all property in the county.

Market value is the price most buyers would pay for a specific property and is determined by those buying and selling real estate in the marketplace, Engle explained.

“Right now, Island County is in a boom because we have this influx of military families coming in with these squadrons,” Engle said, referring to the growth at Whidbey Island Naval Air Station.

“The demand means that buyers are willing to pay more, and sellers are getting more for their property.”

By looking at the recent sales of comparable properties in the county, Engle’s office can determine market value for all 47,000 parcels of property in the county. For example, when determining the value of a three-bedroom house, residential assessors review how much a similar three-bedroom house in the neighborhood sold for on the open market.

“State law is very clear that our job in this office is market value, unlike Realtors who are figuring out what the trend is or what a home is going to sell for,” Engle said

“We try to figure out after the sales took place in that neighborhood what is the value we should be placing everyone at … everything that we do is mandated by statutes.”

The state Department of Revenue audits her office every year and provides a “sales ratio” that determines how close the county’s assessments are to market value, Engle said.

Their most recent ratio was 97.6 percent.

“Law states we’re supposed to aim for 100 percent and my office always reaches for 98 percent,” Engle said, “because 100 is nearly impossible, unless you’re chasing sales, which is illegal.”

State law also requires that county assessors physically inspect at least one-sixth of all real property in their respective county each year to observe changes to the properties.

According to Harold Hertlein, Island County commercial appraiser, assessments follow a strict methodology that considers both the structural components and surrounding area of a property, such as possible views.

“We’re looking at it from a mass appraisal point of view and we’re placing values on multiple parcels at a time,” Hertlein said.

“It’s a much larger scale.”

“My job and my goal is to be fair and equitable,” Hertlein said. “There are numerous checks that we do to ensure that.”

Separate from the appraisal process, property taxes are calculated by applying a tax rate, or percentage, to an assessed value. The tax rate is applied as a percentage of the assessed property value, equaling what residents pay in property taxes.

“It can be very confusing for residents,” Engle said. “Because, often, taxes don’t go up because of what the property value does, it goes up because of what levies are voted in or budget needs.”

Engle’s office calculates the percentage at which property within a given district will be taxed by considering the county budget, district budgets and any new levies or bonds voters approve, in comparison to the total assessed value of property in Island County.

“Different districts will have different tax rates, depending on their different needs,” she said.

Once a tax rate is calculated, Island County Treasurer Wanda Grone’s office bills and collects the taxes. At least half the total amount is due by April 30 each year.

Grone said residents may pay their taxes in person, online or by mail. Regardless, she said, residents should be sure to meet the deadline.

“Unfortunately, not getting a statement does not relieve them of the responsibility to pay in a timely manner,” Grone said. “If the first half is not paid by April 30 then the entire year becomes due and interest is applied.”

If owners have concerns with their assessments prior to receiving their taxes, both Engle and Hertlein said they may appeal the value with the Board of Equalization.

“Of course, whenever we send them our valuation statements they have the opportunity to question that value,” Hertlein said. “We use that appeal process to do a closer scrutiny of that property to ensure that we have it fair.”

Engle recommends that property owners familiarize themselves with Washington as a “three-year state,” meaning property sales from 2015 are used to determine property assessments for 2016, which, in turn affect property taxes for 2017.

In total, the process spans three years.

“People have to understand that, with the market we have right now, their property values probably increased again in the last six months,” Engle said.

“It’s always delayed.”

Engle’s office must stop looking at sales on Jan. 1. As a result, assessments residents just received do not reflect market trends for the last six months.

“So, next June, our taxpayers are going to see an even higher increase than this year if the market continues the next six months like it has,” Engle noted. “Which, with these military squadrons coming in, I can only imagine that it will.”