The timing couldn't have been worse for Raleigh's most recent tax assessment. From a home owner perspective, anyway. At a time when the economy was just starting to hit Raleigh in 2008, the assessment began. Wake county assesses real estate values every 8 years, and the values from 2000 were incredibly low compared to market values. However, this also meant that someone could buy a $320k house in 2006 and pay taxes on a home worth $165k. The good news was that taxes were pretty low. If you owned the same property from 2000-2008, you likely benefited from low property values, and thus low taxes, during the boom times of the housing market.
Fast forward to today where tax values seem unrealistically high when compared to market values. Homeowners are now paying taxes based on what their homes are theoretically worth. While some would argue their assessed value since the market value is lower, remember that the tax value has to last 8 years. So things should balance out, especially for those that benefited from such low taxes prior to 2008.
The challenge arises when it's time to sell. Agents working with sellers have to explain why they can't get tax value for their home. My experienced colleagues here at PruYSU, Jewel Parker and Betsy Brewer, recently conducted an analysis of an area inside the beltline and discovered that the average sales price was 85% of tax value. This validated what many agents believed to be true - that sellers can't expect market value to equal tax value.
So imagine my surprise when I checked the tax value of an upcoming listing that I knew would have a market value in the low $200's. Tax value? $165,000. Eeek! What in the world? This didn't seem to be following the convention of market value being less than tax value. So, I did some research. Low and behold, Woodcrest, a neighborhood inside the beltline, is bucking the trend. Homes in the last 12 months have sold for an average of 25% ABOVE the tax value.
So, I repeat the question: Does tax value mean anything? Not really. It can be a decent starting point, but should be taken with a grain of salt. More perspective and information is necessary to determine market value.
Look up your tax value here.