As the recession began to take hold in late 2008, Chesterfield County officials revised the county’s financial forecast to reflect a prolonged downturn characterized by softening home prices and correspondingly weak revenue growth. More than four years later, that forecast continues to hold true, though there are early indications that the drag from the real estate sector is beginning to lessen.
During calendar year 2012, the total value of existing residential property in the county declined 1.3 percent, the fifth consecutive year in which the largest component of the county’s tax base has contracted. On the whole, the erosion over that period has reduced the average assessed value of a single-family home in Chesterfield County by 15 percent, resulting in a cumulative reduction in the average residential tax bill of nearly $1,200 during that five-year span.
There were some bright spots in the county’s annual assessment results, however. The assessed value of all Chesterfield County real estate edged into positive territory - up 0.5 percent - as steady gains in the value of existing commercial properties and new construction activity, boosted by major projects such as the Amazon Fulfillment Center and the redevelopment work at Cloverleaf Mall, more than offset the further slide in home prices. Even so, the depreciation in existing residential properties during 2012 was relatively muted compared to the 5.3 decrease posted in 2011.
Moving forward, there is additional reason for cautious optimism on the real estate front as it appears the local market is finally beginning to bottom out. Chesterfield County paced the region in home sales and construction activity in 2012, and while overall existing residential value fell, pockets of improvement did begin to emerge. More than a third of Chesterfield County homeowners saw either no change or a modest increase in their 2012 assessments whereas that figure was less than three percent just a year earlier.
That said, the county’s forecast for home prices remains guarded, with current projections contemplating the potential for another small reduction in calendar year 2013, followed by a return to modest annual growth. The county does not anticipate a return of the levels of appreciation experienced during the real estate bubble of the last decade.
Another facet of the annual revaluation process is determining the revenue-neutral real estate tax rate. The revenue-neutral rate - using the methodology specified in the Code of Virginia - represents what the county’s tax rate would have to be in order to produce the same amount of real estate revenue as the year before after adjusting for fluctuations in existing property values. Chesterfield County’s revenue-neutral rate for tax year 2013 (which aligns with the calendar year) was determined to be $0.97 -- $0.02 above the county’s current level of $0.95.
For more information about the county’s annual revaluation process, please contact the Department of Real Estate Assessments at 748-1321.