According to some research by Samantha Masone for The Hook, Charlottesville is cherry-picking the data on which they base real estate assessment values. The city recently reported that taxable property assessments are down by just 1.22% for the year (PDF). In calculating that number, city assessor Roosevelt Barbour, Jr. rightly excludes all “invalid” transactions—that is, all transfers of property that are not based on market forces, such as a parent selling a house to a child. Also excluded? Foreclosures and short sales. By Jim Duncan’s math, such sales make up 20% of those in the area and, perhaps not coincidentally, those distressed properties almost inherently go for very low rates. Masone took a random sample of houses to see whether they made the cut for calculating the city’s 1.22% decline, and found that twice as many transactions represented a decrease in value as the inverse, but only a quarter of those at-a-loss transactions were counted as valid by Barbour’s office. This might help to explain the gap between the claimed 1.22% decline and the decline of 32.1% measured by Nest, the local real estate agency.
Whether this is a common practice (and whether it is legal or ethical) is a question that is not explored by Masone, and is worth considering. I’m unclear on whether this has any immediate effect on individuals’ real estate taxes. While assessments of individual properties don’t appear to be impacted by this practice, the information that is presented to City Council to determine whether the tax rate should be adjusted is quite a bit rosier than reality—a difference of 31 percentage points could well be the difference between a rate cut and holding the current rate steady. And that, of course, affects all city property owners.