Assessed real estate values on Mercer Island — one of the priciest communities in the Puget Sound — continue to slump as the Great Recession drags on.
According to the most recent report for 2011, the average value of residential property (excluding condos) on Mercer Island was $958,800, a 4.6-percent decline from 2010. That's 25.4 percent less than in 2008, when average assessed property values peaked at $1,286,500. According to King County, the last time the average Mercer Island residential property was worth less was 2006 when the average price was assessed at $942,400.
The decline in local real estate values mirrors the recession in home sales activity, but King County Assessor spokesperson Debra Prins said Mercer Island and other neighborhoods near job centers have fared much better than than neighboring suburban and rural communities.
"We are generally seeing urban areas have certainly retained their values more than rural areas where development has stalled," she said. "There is a recognition that the urban core, in the downward market, has retained it's value better, at a greater rate, than rural areas."
Local taxing authorities use the assessor's annual area reports to determine levy rates for property taxes each year for local towns and cities. Prins said the 2011 average property value was determined by a statistical update by extrapolating 466 home sales prices over a three-year-period, rather than the usual two years — a reflection of the dramatic slow-down in the local real estate market. Prins, a director of the office's residential division, said the assessor's office added the extra year of sales to calculate a statistically accurate and "fair" representation of local property values for the Island's 6,981 improved residential parcels.
"I'm looking at prior value, the general assessment and comparing that to these sales that give me an indication of what value should be," she said. "Then I'm looking for larger characteristic that may indicate a differentiation from one area (of Mercer Island) to another. The only thing that was needed was an adjustment to where the sales level should be."
The last time a three-year period was considered in local property assessments was in 2006, at the height of the so-called housing bubble. Over 1,000 property sales were examined in that report.
The assessor's report also provides a unique window into what the county regards as an "average" home sold on Mercer Island. The average single-family homes size it sampled was between 2,000 to 3,000 square-feet, are an average of 40 years old and are constructed with higher-quality materials than the average home in King County.
Local property owners began receiving their Assessor's Area Report in early July which reflects the average value of residential real estate on Mercer Island. The average sales price of a property on Mercer Island from Jan. 1, 2008 to Jan. 1, 2011 was $1,066,000. The county assessor also conducts a physical inspection of all single-family residences in the community every six years to inspect and measure the value of the property. The last physical inspection of Mercer Island properties occurred in 2008.