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F.re N.C. property tax assessments underwater? ~ Coates' Canons: NC Local Government ... _ ,~ 3 <br />than one, then on average that county's property tax <br />assessments exceeded the properties' sales prices. In other <br />words, the properties were overvalued for tax purposes. If <br />we can use mortage Iingo in a tax context, these properties <br />could be considered "underwater." <br />In normal economic times, a county's ASR will decrease <br />in the years following a revaluation because market prices <br />are increasing while tax assessments are constant, When a <br />county revalues its tax base, a process that must occur at <br />least every eight years, its ASR will bounce back close to <br />one because it will raise its assessments (and increase its <br />tax base) to reflect the general appreciation of its real <br />property. <br />'These are not normal economic times. According to the <br />N.C. Association of Realtors, the average sales price of an <br />existing home in North Carolina has fallen about 11 <br />from its peak in 2007. The news is far worse in some <br />areas of the state: the Outer Banks and parts of western <br />N.C. have seen home prices drop 25% or more. Overall, <br />N.C. housing prices today are about where they were in <br />mid-2005. <br />As a result more and more counties are seeing their ASRs <br />grow over time instead of shrink, as they always have <br />before. Four counties now have ASRs over 1.10, meaning <br />that the real property sold in those counties Last year on <br />average was assessed 10% or more above its true market <br />value, Not surprisingly, all four counties are from the <br />mountains or the coast, where prices have been most <br />volatile. Cherokee County takes the dubious honor at the <br />top with an ASR of 1.15. Another six counties have <br />ASRs above 1,05. <br />Allthirty-one counties with high ASRs are ]ilcely to suffer <br />decreases in their tax bases if they revalue their property <br />anytime soon. But even counties with "normal" ASRs <br />could suffer that same fate in these uncertain economic <br />times. <br />Consider Onslow County's experience with its revaluation <br />this year. The county had last revalued its real property in <br />2006, neaz the peak of the market. Despite the fact that its <br />ASR was well below one (.80) in 2004, Ons[ow County <br />saw its real property value increase less than 3% after its <br />2010 revaluation, compared to a typical post-reval <br />increase of 25% or more. Two of the county's <br />municipalities, both beach towns, suffered shocking drops <br />in their tax bases of more than forty percent. <br />Unless these two towns wish to dramatically decrease <br />spending, obviously they will need to either faire their <br />property tax rates or seek other revenue sources. With <br />home prices at best stagnant across the state, many more <br />local goverfunents may be facing similar decisions in the <br />near future. <br />7ltis entry was posted on 77tursday, August 12th, 2010 at 12:05 PM and is filed undo <br />Ge c I 1 I C ~. You can follow any responses to this entry through the ISSS2.4 <br />fad. <br />• <br />• <br />• <br />http://sogweb.sog.unc.edu/blogs/localgovt/?p=2978 10/29/2010 <br />