The value of D.C. real estate will rise an average 7.54 percent in 2009, according to property assessments to be mailed today, a drastic reduction from previous years but still far stronger than in surrounding areas.
The mailings come two days after Chief Financial Officer Natwar Gandhi announced that the District faces a $96 million budget deficit in 2009. That shortfall is blamed on a crash in income, property transfer fees and sales taxes, not the real estate market.
Property tax revenues are still expected to increase by $63 million next year, even after factoring in a new rate reduction that will return $95 million to thousands of commercial property owners.
All told, residential property assessments are slated to increase 2.28 percent next year, down from an increase of 8.57 percent the year before. Commercial property values will jump 14.29 percent, down from a 21.41 percent rise of a year prior. About 190,000 properties were assessed.
The entire Washington region is generally insulated from volatile shifts in the housing market and associated swings in assessments, economists say D.C. and its inside-the-Beltway neighbors, where interest in real estate rarely wanes, tend to fare best.
D.C. communities likely to see the largest home value increases are those populated by moderately priced properties that people can still afford to buy in a difficult economy, said Phillip Appelbaum, the District’s acting chief appraiser.
Values may dip, he said, in high-priced neighborhoods west of Rock Creek Park, such as Colonial Village, Massachusetts Avenue Heights and Observatory Circle, where the “potential pool of purchasers is smaller.” But homes east of the Anacostia River — Anacostia, Barry Farms, Congress Heights, Marshall Heights, Randall Heights — may see their assessment rise the most.
“The basic theory in property valuation is that the more affordable a home is, the more of an increase there’s going to be,” Appelbaum said.
The city remains in good shape comparatively. The value of condos and single-family homes in Alexandria dipped 2 percent in 2008, while its commercial properties rose by an average of 10 percent.
Residential property in Arlington dropped by an average 1.25 percent. Fairfax officials expect home values to fall by at least 4 percent, while residential properties in Loudoun fell by 10 percent.
