Property tax values versus sales prices
North Carolina law requires that counties reassess property values for tax purposes at least every eight years, but until recently the rapidly increasing home values led to more frequent revaluations. Durham and Wake County reassessed values in 2007 (effective 2008) which was at the peak of the market, and Chatham and Orange reassessed in 2008 (effective 2009) which was after values had started to fall.
Three of the four Triangle counties have put off the reassessment project for a couple of years, noting that since properties values have fallen the counties would have to increase the tax rates in order to result in a “revenue-neutral” situation. Commissioners in Chatham County originally decided to go ahead with the revaluation, but then reversed themselves and delayed the revaluation until 2014-2015.
I thought it would be interesting to see where tax values stand today in relationship to sales prices now that we are seeing some price stabilization, so I took a random sample of homes that have sold over the past few weeks:
| Street | Area | Town | Sale price | Tax value |
| Edgestone Pl | Falconbridge | Durham | 250,000 | 242,518 |
| Hathaway Drive | Hope Valley | Durham | 385,000 | 383,766 |
| Cofield Circle | Weldon Downs | Durham | 372,900 | 388,946 |
| Branchwood Dr | Hope Creek | Durham | 395,500 | 393,524 |
| Rock Creek Rd | Coker Hills | Chapel Hill | 405,000 | 314,426 |
| Telluride Trail | Silver Creek | Chapel Hill | 749,000 | 790,258 |
| N. Circle Drive | Dogwood Acres | Chapel Hill | 185,000 | 168,236 |
| Carolina Forest Rd | Carolina Forest | Chapel Hill | 435,000 | 538,880 |
| Overlake Dr | Southern Village | Chapel Hill | 485,000 | 572,409 |
| Oval Park Pl | Meadowmont | Chapel Hill | 900,000 | 1,078,329 |
| Turner | Governors Club | CH/Chatham | 505,000 | 700,466 |
| Pine Ridge Dr | Hawfields | Chatham | 240,000 | 319,975 |
| Bynum Hill Rd | Bynum | Chatham | 105,000 | 105,772 |
| Barn Owl | Chapel Ridge | Chatham | 460,000 | 507,591 |
| Bear Tree Creek | The Preserve | Chatham | 527,500 | 571,124 |
| Rebecca Lane | Cattail Creek | Chatham | 240,000 | 273,362 |
| Beechmast | Fearrington | Chatham | 206,610 | 232,887 |
The tax assessments in 2007-2008 were taken from sales over the previous four years, and especially in Orange County in many or most cases the tax assessments were far higher than the likely sales price at the time the assessments were published.
It’s clear that property values in Durham have remained relatively flat, with homes selling very close to the tax values. In Chapel Hill the higher price ranges have fallen to a greater extent than the lower price ranges which in some cases have actually increased. Property tax assessments have never been a good measure for determining property value, which is why sites like Zillow are so inaccurate.
Chatham County has the most disparity, with every home in this random sample selling at a price significantly lower than the tax value. During the last revaluation Chatham County was experiencing a development fever in which over 6,000 housing units were approved and it was thought that the market was going to experience a boom. That turned out to be overly optimistic, and as the overall housing market began to sink Chatham sank harder than the other communities because of the over-development that had occurred over the previous few years.
The current economy has been hard on North Carolina counties, especially since the state budget shortfalls have put more pressure on the counties than ever before. Property taxes are the main vehicle through which counties pay their expenses, so they are understandably reluctant to reduce their revenue stream. But in the meantime, it would be a mistake to rely on your property tax appraisal as a guideline for determining the market value of your home.
If you have questions about your own home’s value, I’ll be glad to give you a realistic assessment of value. Just email me or fill out this form to receive this information within 24 hours!
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