Portsmouth home values increase by 13.4 percent

The Virginian-Pilot - March 10, 2005

PORTSMOUTH — The average assessed value of homes in the city has leapt 13.4 percent, the biggest jump since the early 1980s.

The increase is more than in the recent past, but still nowhere near what some other South Hampton Roads cities have experienced.

Virginia Beach and Chesapeake have already announced assessment increases of about 22 percent and 19.2 percent, respectively. Suffolk has not announced its assessments, and Norfolk officials have said only that they expect a 16 percent to 18 percent increase.

But in Portsmouth, longstanding problems with the way assessments are done have left home values low and made bigger increases difficult, Assessor Alethia Bryce said. The city is looking to hire a consultant to address the problems in the upcoming year.

“This is more of an increase than we’ve gotten in many years,” Bryce said. “But in order to bring the values up to what they should be, 13.4 percent is still not enough.”

Assessment notices are being mailed to property owners this week, she said. On average, the owner of a house currently assessed at $115,000 would see an increase in value to about $130,000. If the City Council enacts a promised one-cent tax rate decrease, that homeowner’s real estate tax bill would rise by about $205 in the coming year. The city’s current tax rate is $1.45 per $100 of assessed valuation.

Revenue from real estate taxes makes up roughly one-third of the city’s annual general fund budget.

Last year’s average assessment increased 11 percent in Portsmouth. The back-to-back double-digit jumps reflect the bustling real estate market, where many homes sell within days – and for more than their asking price.

“The whole city is hot, it really is,” Bryce said. She said the increases in value were seen across the city, even in lower-priced neighborhoods.

According to a study released by Old Dominion University’s Center for Real Estate and Economic Development, Portsmouth home sale prices in 2004 increased 15 percent over 2003.

Although assessments are supposed to represent the full value of a home, the values usually lag several years behind, especially in a boom market.

Bryce, who was named city assessor last summer, has said the market has been one reason for Portsmouth’s assessment troubles.

According to documents obtained from her office, when a house in the city was sold, assessors immediately changed city records and increased the assessed value. That made the difference between sales price and assessments fairly close – but only for properties sold in the past several years.

Properties that don’t trade hands are assessed at the end of each year by applying the average difference between sales prices and assessments from homes in the same neighborhood. But because the sales-to-assessment ratio was flawed and much smaller than it should have been, the city was left unable to detect a boom market or raise the other houses up to their true values, Bryce has said.

The problem has resulted in some houses being assessed accurately, while others – mostly those that have not sold recently – remain dramatically underassessed. The problems have compounded each year that assessments were done incorrectly, Bryce said.

Reach Meghan Hoyer at 446-2293 or meghan.hoyer@pilotonline.com