City staff said at a meeting earlier this week that, for the local real estate market, it is both the best of times and the worst of times.
While Alexandria’s taxable property value continued to increase dramatically, on the ground property owners face very different realities in the city based on whether that property is residential or commercial.
“This year is very different; it’s a tale of two markets, a very mixed experience,” said Kendel Taylor, the director of finance for the City of Alexandria. “In the past couple years, no matter what you owned, you were going up around the same rate. This year if you owned a home vs a hotel, your experience is vastly different in this year’s assessment report.”
City reports noted that the residential tax base increased by 6% overall, which a press release said reflected a strong residential market in Alexandria combined with low mortgage interest rates.
“This is the largest increase in the residential category since 2006,” the city said. “The average assessment for all residential property types, including single-family homes, townhomes and condominiums increased by 5.7%, to $615,858. The average single-family home value increased by 5%, to $839,961. The average condominium value increased by 7.7%, to $375,070. The increase in the total tax base for condominiums is only 3.98% due to the addition of luxury condos near the waterfront to the 2020 tax base during the year.”
But on the commercial side, the city’s markets have been devastated by closures from COVID-19, particularly in the hospitality and retail sectors.
“The value of commercial properties decreased $342.5 million as of January 1, 2021, compared to January 1, 2020,” the city said. “The commercial tax base decreased 1.96%, compared to an increase of 2.8% in 2020. A significant decline was offset by an increase of 3.53% in the multifamily rental sector, which included $110.1 million in new growth. COVID-19 pandemic conditions resulted in substantial decreases in the hospitality and retail market sectors, with declines of 29.64% and 10.72%, respectively. Commercial properties, including multifamily apartments, comprise 40.6% of the tax base.”
Taylor said that, despite this past year’s decline, it’s likely that commercial property values will rebound — though full long-term economic recovery could still be years away.
“We are an attractive place to live and still an attractive investment,” Taylor said. “We look at COVID and we hear stories about delinquencies in rent and things like that: investors look long term and COVID is temporary. You make real estate investments in multi-family properties thinking long-term.”
The property assessments will now be used in the city manager’s proposed budget presentation scheduled for Feb. 16, and ultimately for a rate adopted by City Council on May 5.