Submitted by Thurston County
Over the last 20 months the COVID pandemic and emergency policies to quell its spread have significantly impacted schools, commerce, and the workplace. Accordingly, the many different subsectors of the real estate market were impacted and reacted differently.
Because of the many shutdowns, commercial real estate did not fair as well as residential. In fact, the overall median increase in commercial real estate was only 1.3%. Apartment values, which before this year were a strong segment of the market saw only a modest growth rate of about 1%. Vacant land and office/medical uses remained relatively flat or saw a slight decrease. The retail and restaurants sector became bifurcated. In that market smaller and independent retail/restaurants lost some value, while larger national and franchised uses saw a modest growth in the 5-7% bracket. Warehouse and industrial uses which had been a strong industry for the last several years saw their value growth slow to about the 1% range.
While commercial real estate was struggling, residential values grew significantly. It has been a seller’s market for the last year, with sale prices often exceeding list prices. Low inventory and buyer urgency were key factors. Whether this is a short-term market aberration, or a structural change remains to be seen. This last year has seen employers adopting work at home practices. Additionally, there appears to be an influx of purchasers moving to desirable suburban locations such as ours from Pierce County and King County. Overall, the median increase has been 20% this year with a detached single family median value of $373,200. For the same time period, Redfin indicated the median sale price of a home was $460,000 while realtor.com indicated a median sold price of $400,000. The Assessment process includes all property in the County. Most properties are not “sale ready.” The listing services base their data only on sales, which are generally “sale ready.” It is important to note that by statute assessment measures market value as of the preceding 1st of January and the Treasurer uses this value to produce tax statements for the following year.
All submarkets increased significantly. The greatest appreciation as a percentage of value, was in small residences and manufacture housing. The growth in the residential market has been deep and broad, with no particular region being disproportionately affected.
In Washington State taxes are determined by the budgets of the taxing authorities, such as school districts, fire districts, cities, counties, and others. The assessment process is separate from the budgeting process. Each property owner’s taxes are derived by dividing each taxing authority’s approved budget, and any voter approved measures, into the taxing authority’s total taxable value. As a result, a change in your assessed value generally has a minor effect on a given property’s taxes.
The Assessor is charged by law to set market values. The Assessor does not set the tax rate, only the market value. We have been doing this function for years and we consistently exceed industry standards for best practices and are among the top counties in the state for accuracy and equity.
Property taxes are based on market value, the levy rates are the same for all property types. As values change across property types the share of the tax burden is the same for everyone.
