Home Values Fall Almost 1% After Years of Hefty Increases

Average home values dropped by less than 1 percent in Arlington County last year after more than six years of double-digit increases, county officials said yesterday.

Arlington was the first Northern Virginia government to announce its real estate assessment trends, but officials in other counties have been saying since the summer that they were expecting little growth in home values because of the cooling housing market.

In Arlington, the average value of a detached single-family home rose only 1.8 percent last year, and the value of condominiums dropped by nearly 5 percent. Home values had grown 23 percent in 2005.

The average price of a home in Arlington is $537,500, down about .8 percent from $541,800 last year, officials said.

Overall real estate values, which include commercial and residential property, rose 6.7 percent in the county, fueled by a 13.7 percent increase in the value of commercial real estate, due in part to an expanding apartment rental market and some rising rents.

"Real estate values for residential have really moderated, and that's not a surprise," said Mark Schwartz, the county's director of finance. "But we're doing very well in the commercial sector. . . . We've had an [overall] increase of 6 percent, and that's a healthy number. Other jurisdictions could be more severely affected if more of their real estate base is residential."

Like other jurisdictions in Northern Virginia, Arlington is expecting a budget shortfall in the coming fiscal year because of the decline in revenue growth caused by the stalled housing market. Arlington's budget officials had been projecting a $20 million gap but said yesterday that the shortfall has been narrowed to $11 million because of the unexpected increase in commercial tax revenue. The county still faces cuts in services and programs because of the shortfall, Schwartz said.

"That is still a significant gap," Schwartz said. "This is helpful, but it doesn't solve our problems. . . . It's not a magical elixir that made them all go away."

Wayne Kubicki, a Republican watchdog and former member of the county's Fiscal Affairs Advisory Commission, called the increase in commercial revenue "good news." But he said taxpayers would be watching to see whether the county can balance its budget without raising the real estate tax rate.

Last year, the county board approved an $829 million budget that included the largest spending increase in more than a decade -- 9.2 percent. The board cut the tax rate, but homeowners still saw their bills rise.

Arlingtonians will be mailed their assessment notices Friday.