Fast growth affects tax values

Wake County Revenue Director Marcus Kinrade came to the Wake Forest Town Board’s work session Tuesday night and said the incredibly large increase in new houses built in town in 2006, 2007 and 2008 – just before the recession – coupled with the large percentage of high-end, expensive homes built then have resulted in a slower economic recovery for real estate in Wake Forest and Rolesville.

All those expensive homes, many of which have sold or are being marketed well below their original price points have depressed market locally. One result is that overall Wake Forest residential tax values in the reappraisal just completed are 5 percent lower than in 2008. Commercial property has gained in value in town by 16 percent.

Kinrade’s office mailed notices of the new tax values for the 360,000 county real estate parcels in December and is in the informal appeal process with agents in his office reviewing them personally. Official appeals will be heard by the Board of Equalization and Review beginning in April. Owners wishing to appeal can do so on line – go to www.wakegov.com, go to Revenue, and find the information there. Kinrade said he prefers appeals be done electronically. Also, he said, there are far fewer appeals thus far than in 2008, 4,900 so far this year compared to 28,500 in 2008. The office has not heard from commercial property owners who apparently frequently file appeals. No property owner will know his actual tax bill until June when the county and the towns and cities set their new tax rates.

Kinrade said the large adjustments in tax values for the 2000 and 2008 reappraisal years were “shocking” for many people as they saw their tax values go up by as much as 50 percent. “It scares them. They think their tax bill is going up.”

From 1992 to 2000 – years of vigorous growth in the county – home market values grew rapidly. After the adjustment to align tax and market values with the 2000 appraisal, homes continued to accrue value with a booming home market. The $200,000 house could sell for $275,000 or more.

But in 2008 the alignment of tax and market values began to vary widely again – but in the opposite direction. Homeowners found themselves paying taxes for on a house with a tax value of $200,000 that might not sell at $190,000 if they could find a buyer. “It’s not pleasant to pay taxes on a value that does not reflect the market.”

Thankfully for most people local economic recovery began about 2012 and, Kinrade said, “The market rebounded” and by 2015 “we were virtually back where we started (2008)” in terms of market and tax values being aligned. His office is pleased with the results – in Wake Forest there were 927 homes sales in 2015. When those sales prices are compared to the tax value for the properties using the 2016 tax values, there is only a 4.5 percent difference.

This 2016 reappraisal, however, does reveal shifts in the tax burden, Kinrade said. Because his office reclassified apartment buildings as commercial in 2015, commercial properties in Wake Forest now pay 26 percent of the tax assessment when in the past it was 22 percent. There has also been a shift from a higher tax burden on luxury homes which he calls anything priced at or above $750,000 to lower price point homes. One can see that in Wake Forest by comparing the prices for Heritage – where most homes were built from 2000 to 2012 and homes in the new Traditions.

Because of the reappraisal, Wake Forest’s tax base grew by 1 percent between 2015 and 2016 – from $3,928,115,824 to $3,905,553,576.

All 100 North Carolina counties have been reappraising all real estate on an eight-year cycle (or less with state approval) since 1976, when the state told all counties to do a reappraisal that year. The process assures “equity and fairness between parcels,” Kinrade said. Personal properties – boats, vehicles, aircraft – are appraised each year as are all public properties.

Mayor Vivian Jones asked if the county is contemplating changing from an eight-year cycle to four years, and Kinrade said, “I’m an advocate of that.” He said he believes the county commissioners are in favor also and he plans to ask them to shorten the cycle.

For residences, the revenue department reviewed 195,000 subdivision parcels in the office and went into subdivisions for another 100,000 parcels. There were field reviews of 29,500 residences in rural or unincorporated areas and for older homes where a visual inspection was needed to assess maintenance.

In 2008 when there were 325,000 property parcels, the county paid $9 million for the process, Kinrade said, $27.69 for each parcel. But this time, the estimated cost is $7,100,000 for $360,000 parcels, or $19.72 per parcel because they reused the same software.

Kinrade said it is more difficult now to find former county commissioners willing to serve on the equalization and review board – the practice in the past – because many are busy with jobs or otherwise unavailable. He is asking for citizen volunteers to sit on the board and hear the appeals – hours in a conference room. He said it is interesting.