King County property values rise at ‘unprecedented’ rates; tax hikes likely

The region’s hot real estate market has led to “unprecedented” increases in home values that will drive up next year’s property tax bills, according to the King County assessor’s office.

Home values are up all over the county, but particularly in Eastside areas such as Redmond (43% on average), Woodinville (44%) and Kirkland (44.5%). The Sammamish Plateau topped the list with a 52% increase from the previous year. That’s double the still eye-popping 26% increase in Federal Way. 

In Seattle, values are up 19% in Rainier Beach and 20% in Magnolia, according to the assessor’s office, which released a sample of data Thursday but is still finalizing values in other areas.

The increases are significant, even for the overheated Seattle-area market.

The local market has taken off since early in the pandemic, spurred by a combination of few houses for sale, a flood of buyers taking advantage of low mortgage-interest rates, and a continuing influx of highly paid workers with stock options. That has driven up home prices across the region and worsened housing affordability. The median sale price for a single-family house in King County hit nearly $1 million last month.

The value increases are likely to increase property taxes — but not quite yet.

This year’s property tax bills are based on last year’s assessed values, and these new values will determine next year’s taxes. The assessor’s office will mail out valuation notices starting this week.  

The county hasn’t yet determined next year’s property tax bills, but the hottest local housing markets are likely to see “a double-digit increase,” said King County Assessor John Wilson.

Property taxes won’t increase at the same rate as property values because of the way local taxes are calculated.

While it may seem unusual, rising property values don’t always have a huge effect on property tax bills. Instead, local levies are usually the biggest cause of higher property taxes.

The assessor’s office essentially determines how much property tax revenue is owed to various public agencies. The total amount the county generates can only increase by about 1% each year, except for voter-approved tax increases such as school and parks levies. Then, to reach that total amount, the assessor determines how much to charge each property owner, based on the value of the property.

When values climb dramatically faster in some areas than others, property owners can see spikes in their bills as the county adjusts the proportional share of total taxes.

That’s what will happen next year, Wilson said.

“It isn’t a direct ‘my value went up 30% so my taxes will go up 30%,’ but when you hit this magnitude it has some impact,” he said. “We don’t want to kid the public.”

The county’s high assessments on the Eastside roughly echo home sales data from the Northwest Multiple Listing Service, which The Seattle Times maps each month.

With mortgage rates on the uptick, the market has recently started to show signs of cooling off. But county assessments are based on estimated values as of Jan. 1.

For many homeowners, rising home values have brought higher net worth and, if they want to sell, a chance to cash out. At the same time, higher property taxes can also strain lower-income homeowners who bought long before values climbed or tenants whose landlords cite property taxes to justify rent hikes.

King County offers property tax reductions for certain seniors and people with disabilities, but that program has been overwhelmed with applications, forcing people to wait months for a decision.

Property owners can appeal their valuation within 60 days of the date on the card they receive in the mail. Find more information about exemptions and appeals at kingcounty.gov/depts/assessor.