King County assessed property values decline as housing market cools

For the first time since the Great Recession 15 years ago, King County homeowners will see lower property values on assessor notices this summer — another sign of the dramatic slowdown that has hit the local housing market over the past year.

King County Assessor John Wilson said Thursday that while his office is still finalizing property valuations across much of the county, it’s already clear that values are on the decline in many areas, particularly on the Eastside. 

In Seattle’s Queen Anne neighborhood, values declined 8% on average this year, compared with an increase of nearly 14% last year. In Sammamish, values are down 22% on average, after shooting up 50% last year. This year’s property values help determine next year’s tax bills.

The decline marks a correction after home prices skyrocketed earlier in the pandemic.

From 2020 to 2022, the Seattle-area housing market saw extreme competition as a result of a confluence of factors — remote workers looking for more space, millennials starting families, low interest rates and a slim supply of homes for sale. Interest rates began climbing in spring 2022, pushing monthly payments further out of reach for home shoppers. Red-hot markets like Seattle cooled quickly.

The local housing market is not “crashing at all,” Wilson said. “But the fact is, it’s finally kind of peaked.”

The assessor’s office has not finalized values in other cities or neighborhoods, but Wilson said early assessments show the decline playing out in most areas across the county. A small number of areas may see an increase or very little change, such as Normandy Park and South Seattle, according to the assessor’s office. The county sets values based on a property’s value in January.

The commercial real estate market is more of a mixed bag. Industrial lands and storage properties are on the upswing, while some office building values are declining 15% to 20%, Wilson said.

Outside of King County, the housing market has cooled, but some areas will see less dramatic change.

Residential property values in Snohomish County declined 7% on average this year, said Assessor Linda Hjelle. The most affordable properties are holding their value more because buyers squeezed by high mortgage rates are seeking out those properties. More affordable homes “probably will not see as much of a decline” as others, Hjelle said.

Pierce County is still finalizing its values, but is also likely to record a decline. “We know the residential values in Pierce have generally leveled off following the 19% increase we had last year, but indications are we will not see as sharp a decrease as King has experienced,” Assessor Mike Lonergan said in an email.

Kitsap County values are relatively flat, with values changing for only about 28,000 properties this year, compared with 110,000 last year. Changes range from declines of 12% to increases of 38%, with waterfront areas seeing the biggest increases, said Kitsap County Assessor Phil Cook. “The overall trend is relatively flat,” Cook said. 

Assessors will mail valuation notices throughout this summer, and property owners have 60 days to appeal their property’s new value. 

While property values are a factor in determining property tax bills, property taxes don’t rise and fall at the exact rate of property values. Local voter-approved levies, which make up about 40% of property tax bills, are a bigger factor.

To calculate tax bills, county assessors essentially determine how much property tax revenue is owed to various local governments, then determine how much to charge each property owner, based on the value of the property, to reach that total amount. Under state law, the total amount the county generates can only increase by about 1% each year, except for voter-approved taxes such as school levies. 

Dramatic declines in some areas, including Sammamish, could result in a decline in tax bills next year, Wilson said, but it will be months before the tax numbers are determined.