Original Article – https://www.forbes.com/sites/davidrae/2021/08/16/crazy-los-angeles-real-estate-market-leads-to-record-176-trillion-assessed-values/?sh=467b214c5c3d
According to the Los Angeles County Assessor, the annual property tax Assessment Roll has been completed leading to 3.7% growth during an unprecedented year in the Los Angeles real estate market. In plain English, the new Los Angeles property tax roll will be assessed on the new value of $1.76 trillion. Without the help of Prop 13, Prop 19, and Prop 60, which help limit increases in assessed values and property taxes in California, this property tax roll number could be even higher.
Essentially, the Assessment Roll (Roll) is the inventory of all taxable properties in the county. It is the assessor’s job to compile this data each year. Current Los Angeles County Assessor Jeffrey Prang reported that the Roll was completed on June 30, and the results were released on July 15, 2021.
You might be wondering if you should care about this at all? For most years (ok, probably in all years), these numbers will be ignored by the typical homeowner. Most California homeowners are concerned with their own property values and assessed values for property taxes. These numbers are not always the same. The assessment roll is the foundation that our property taxes are based upon. The Roll also gives some insight into the health (and values) of the overall real estate market.
Much of the country is facing a housing shortage, and Los Angeles is no exception. Home values have been skyrocketing, which has led to an increase in the Assessment Roll as well.
“Property assessments are based on the value of the property as of the lien date of January 1, 2021,” according to the report. “This year, the Roll grew 3.7% – the average increase of property values in Los Angeles County.” This increase represents the 11th straight year of Roll growth across Los Angeles County since the great recession when many real estate values plummeted.
For the 2020-2021 property tax cycle, Los Angeles County’s total assessed value for real estate exceed $1.7 trillion. This will generate more than $17 billion in property tax revenue for our local government and schools.
Property sales are the most significant driver of this increase in the Assessment Roll. Los Angeles, real estate sales added $44.9 billion to the rolls. Increases to assessed values for current property owners are limited by Prop 13. The Consumer Price Index adjustment mandated by Prop 13 resulted in a 1.036% increase in assessed values this year, increasing $16.4 billion to the property tax rolls. This year specifically, the Prop 13 adjustment was well below the actual increase in real estate values across Los Angeles County. New construction added an additional $8.8 billion to the property tax rolls.
There are 2.58 million real estate parcels and business assessments that make up the 2021 Assessment Roll for Los Angeles County. This includes 1,885,879 single-family homes, 250,190 apartment complexes, 248,293 commercial and industrial properties, and more than 161,488 business property assessments.
In the report, Jeffrey Prang gave some insights into the increases in the overall Los Angeles real estate market. He stated, “Despite COVID-19 and the economic recession that continues to accompany it, the real estate market in LA County fared reasonably well. The LA County median sales price (MSP) for single-family residences (SFR), not including condos, rose 21.9% – year-over-year to an all-time high in June and our data currently shows MSP for an SFR in LA County is at $816,888.” The unusually high jump in prices has been driven by low inventory combined with historically low mortgage rates.