Quite a few Wallingford residents have expressed concern about the seemingly strange property tax statement they just received. In previous years their total valuation seemed to split almost evenly between value of the land and value of the structure. This year they saw a house value of $1000 and all the rest in property. So the Wallingford Community Council invited King County Assessor John Wilson to come to its monthly meeting to answer questions for the folks assembled over Zoom.
He explained that this is caused by the collision of two separate ways that the valuation is determined. First, a total value is determined by comparing your house and lot to sales of comparable properties in your neighborhood. The more sales there are the greater will be the influence of properties physically close to you. A computer program is used to adjust from the gross sales price of the other properties to something that is truly representative of your property. The program considers the lot size, the square feet in your house, number of bedrooms, do you have a view of Mt. Rainier, and many other variable aspects of both your property and the comparables that are being used to estimate your current property value. This gives the Assessor’s estimated total value of your property.
Next they look at what happened with the sales with the same land use zoning code nearby where you live. If the house was just torn down, well most of the value must have been in the land since it costs even more to demolish a building. If that has happened often enough then your house value may sink all the way to the minimum of $1000 and all the rest of the value would be assigned to the lot itself.
So does rezoning automatically result in a change in your property value? Not immediately. It is necessary for some sales to take place under the new zoning you now have. For significant areas of Wallingford, the zones were recently changed from Single Family to Low Rise 2, which could allow three or four townhouses to be built on your
lot, depending on the size of your lot. So if a developer can buy your property for about $1,000,000 and then build and sell four units for about $850,000 each, there is enough profit to encourage them to tear down almost any classic Wallingford house. There has now been enough time since the rezoning that there are comparable properties near you where that has happened. The computer assumes it could happen to you. It normally results in an increase in your property value and your taxes.
Does the assessment valuation of your house as $1000 mean that that is all it is worth? That number is just an artifact of the computer programs, but, yes, to a developer who wants to build townhouses it is actually worth $0. However if someone who is looking for a Wallingford bungalow to raise a family, the attractiveness of your house will be important and the value to that buyer will be almost the entire price they are paying, even though they will complain about the cost. And then they will pay extra to remodel the kitchen and knock out a couple of walls. We can just hope they understand old houses well enough that they don’t also take out the typical Craftsman elements. I’ve seen remodels that meticulously maintain the old features and remodels that even rip out high quality Honduran mahogany woodwork and Tennessee random white oak flooring. There is a reason “nouveau riche” is a pejorative.
If you are looking to do some remodeling, will that increase the value of your house and your property taxes next
year? The answer is, it depends. There are programs that intentionally shield you from an increase in the evaluation if you make certain repairs and upgrades to your house. You might fit into one of those. If not, it will be up to the every seven year inspection and the computer program that describes your house to determine if your upgrades also upgrade your house value. It may not be enough to make a difference in the assessed value. But if you live in an area that is mostly single family homes that includes some new construction of townhouses, your house still may be listed with a minimum assessed value of only $1000 no matter how nice your improvements are.
Does this mean that your house insurance will only pay you $1000 if a fire or a wayward car damages your house? No. I spoke to an agent at the local Allstate office. They tend to have a significant part of the market for older houses since they will insure houses that still have the old-fashioned knob and tube wiring, which actually is no less fire safe than the newer wiring. I was told they evaluate the replacement cost of a house or a part of a house by a computer program that estimates what it would cost, given the current labor and materials costs, to repair the damage, to put it back just the way it was. That calculates the maximum payout value of the insurance you are buying. If you chose that, rather standard, policy, you get the full replacement value. A construction cost inflation adjustment means you don’t need to rerun their computer program every time you renew the policy and a 20% buffer on top of that makes sure you get it back to the previous condition. They don’t “total” it out like they would for your old car. So for them, that $1000 value is meaningless.
Do you live in a part of Wallingford that has not been rezoned? Well, there is still motivation to tear down the lower priced houses. Although only a single house can be built on the lot, there are folks with enough money that they are willing to pay the cost to take out the house and build their dream house. That will also tend to increase the land value and decrease the house value on your property. There is a vacant lot for sale right now in central Wallingford for more than $800,000. I spoke to a former owner who told me he sold it with the house on it more than 10 years ago for about that.
Oh, I’ve said only a single house can be built on the lot. Well, that is not entirely true. If the lot is large enough, you or a new purchaser could build a “Detached Auxiliary Dwelling Unit” on part of the property. There was a recent open house for a new DADU near Wallingford with an asking price above $800,000. So much for all these reforms creating affordable housing.
One last thing. John Wilson wants to be sure you are aware of the programs that can result in a reduction in your property taxes if you are over 60 or a disabled veteran and your income meets certain guidelines. Don’t fail to check the Assessor’s website to see if you might qualify. If you’ve checked before and did not qualify, check again because the income limits have recently been increased.