Assessments Soar by 6.7% in L.A. County

Southern California’s robust real estate market and strong economy have propelled Los Angeles County property assessments to record heights this year, county officials announced last week.

The Los Angeles County Assessor’s Office reported a net total of $569 billion, a $37-billion or 6.7% gain, over last year in the county’s total assessed property values. Single-family homes accounted for 57% of the increase.

“The real estate economy of Los Angeles has been so good for two years, that people are buying properties and trading up,” said Los Angeles County Assessor Rick Auerbach. “The result is that home values are going up too.”

The lion’s share of the assessed property value increase was attributed to the surge in sales and transfers of existing homes in the county last year. Under the terms of Proposition 13, when a property changes hands, it is reassessed at the current market value.

For example, a house bought 20 years ago and sold today would net about a fourfold increase in the tax base, said Radha Bhattacharya, associate professor of economics at Cal State Fullerton. “Therefore, it’s no surprise the county’s flush with new property tax revenue.”

Those revenues added $14.9 billion to the county’s property assessment roll, a 12% increase over the previous year, according to the assessor’s report.

The second-greatest factor in the roll increase stems from so-called Proposition 8 properties, Auerbach said. Those are properties that qualified for temporary tax reductions during the recession that began in 1992, and have now bounced back to the current market value.

A homeowner who bought a house for $200,000 in 1990, for example, and then sought a tax reduction when the value dropped to $150,000 in 1993, would be reassessed today at either the minimum current market value or the purchase price plus 2% a year from 1990.

About 320,000 of these Prop. 8 properties were reexamined this year, and of those, 147,000 were either fully or partially restored to their original values, adding $9 billion to the county’s totals, according to the assessor’s report.

“People are shocked when they get their bills, but the taxes are really no higher than they would have been if we hadn’t had the recession,” said Al Gobar, a housing consultant based in Placentia. “Homeowners get used to paying those lower taxes. The catch-up makes you gasp.”

Auerbach said that property owners whose homes were reassessed this year have already received notification of the change.

For the second year in a row, the total assessed property values in the city of Los Angeles ranked the highest in the county, with a combined residential and commercial property value of $217.4 billion, a 6.9% jump over the same period last year.

A steady demand for beach properties created a significant boost in market values in Redondo Beach, where the assessed valuation of the South Bay community’s properties shot up 11%, to $6.5 billion this year.

The increased demand for luxury homes in rural, gated communities spurred an 11% jump in property assessments in tiny Hidden Hills, which posted a total property value of $589 million.