This home sold for $240,000 in late 2003, and is now valued at $1,359,365 with the new home. R-6 lots on this street are now valued at $450,000. The house is valued for $900,000 on this lot.
The City of Raleigh has mailed its property tax bills based on the new revaluations. As reported earlier, the rate is not revenue neutral as was suggested when the new property values came out.
It is an interesting cycle. As reported in the N&O this morning, it has potential of driving new market forces.
Several streets over..., Michael Rulison, who paid $17,000 for his home in 1968, said the high property values will accelerate the tearing down of homes inside the Beltline. Boosted values and higher tax bills make it harder for longtime residents to stay put. Rulison, a retiree whose ranch-style home is now valued at $346,574, says he won't move.
"This is going to gentrify the neighborhood and soon it will be filled with McMansions," Rulison said.
This resident speaks the truth; the land portion of the revals increased by 300% in many ITB neighborhoods. According to Emmett Curl, Wake County Revenue Director until June 30 of this year, these values are based on "comps." That means: what are comparable properties selling for in your neighborhood? So if there is speculation going on in your neighborhood, where properties are being bought for teardowns and new house construction, the sale price minus the cost of demolishing the house is now the land value. Similarly, the sale of million-dollar mansion up the street may raise the land value of that street. Thirdly, as land values go up, they begin to exceed the house value. So a formerly typical home on a side street in Anderson Heights might have a sweet value of $249,00, but property value of $350,000 and rising. Over time, the house depreciates and if the land appreciates, a very good house may become mismatched to the land value and begin to look inviting for a rebuild.
Since the favorite formula for speculative redevelopment of a lot is 3 x the land value, then we are quickly looking at homes that are at least double the cost of surrounding homes, and that generally happens by building houses 2-3 times the size.
Gentrification is a good word for what is happening in older neighborhoods. Suburbization is too. Soon an older neighborhood will be just another new upscale development.
See also in the N&O, The New Tax Rate and You. The comments indicate there is a campaign to blame the cost on the City / County rather than the cost to residents of real estate speculation in older neighborhoods.
Be sure to look up your property online at Wake County Real Estate site. When you click LAND, you can see what a unit of land in your neighborhood is valued at. For the first time in recent revals, that unit is not valued just as 1 Lot. So the size and build-ability of your land will be factored into that resulting number. (If you looked this up last year, all lots on your street would show the same number). You will also notice the land under a mansion nearby and the land under your home are valued the same. When that house sold, it increased the value of land on your street, and decreased the value of your home if it was older.
This is the way Raleigh of the future will be unless the residents get involved in NCOD's and appealing to the City for protection.
Makes Fallonia very sad.
If you are concerned, see the Respect4Raleigh petition above, and share. The City is watching for citizen concern.