Objective conclusions are difficult to come by these days. That’s one impression we take away from city staff’s presentation of 2023 property values in Alexandria – residential, multi-family rental and other commercial – to City Council on Tuesday night.
After receiving the presentation at the legislative meeting, Councilor Sarah Bagley asked for more information so as to best tie the data together “philosophically” – which many would take to mean “ideologically.” A study from the Urban Institute was cited in the discussion.
It’s important to note that while nonprofit organizations of all stripes are required to be nonpartisan, they are most certainly not unbiased. Many to most engage in some sort of advocacy, which is almost invariably ideologically driven.
A lot is at stake in this data surrounding property values, as many pro- and anti-density advocates in Alexandria would like to use it as evidence for their preferred position on whether increased density is good or bad for the city.
What does the data say on face value? That the value of properties of all categories – single-family, multi-family and commercial – rose, some significantly, in Alexandria in 2022. This should come as no surprise to anyone given that the overall rate of inflation nationwide for the year ending in December was 6.5%.
More instructive is the breakdown between single-family, multi-family and other commercial values. Keep in mind that the numbers discussed here and in our page one story, “Property assessments presented to council,” include both new buildings as well as appreciation of current properties.
In a nutshell, single-family properties – that is, single-family homes, townhomes and condos – increased in value by 5.02% in Alexandria last year. A small percentage of that growth in value, a little more than one-sixth of the total, came from new buildings, while the rest came from appreciation.
Multi-family rental buildings increased in value by even more, 6.19%, with high rise apartment buildings increasing in value by a whopping 11.43% year-over-year from calendar year 2022 to 2023. Much of that value spike appears to be from new construction. Garden and mid-rise apartments increased in value by much lower rates of 3.46% and .82%, respectively.
Conversely, the value of commercial office buildings in Alexandria declined by more than 10% from 2022 to 2023, which dragged Alexandria’s overall property value growth down to a 3.82% increase.
Our non-philosophical takeaways from these numbers:
1) Single-family homeowners are bearing an increasing load of the tax burden in Alexandria, and that’s not going to end anytime soon. The good news is that single-family homeowners have properties that are on average worth 5% more now than this time last year. The bad news is that, unless these families intend to cash out their profits in the near term, that simply means another large increase in their tax bill.
While single-family homeowners have a valuable asset that is increasing significantly in value each year, many of these families are also “house-poor:” home maintenance, taxes and the overall cost of living in Northern Virginia leaves many people with limited cash flow to live on.
2) Much of the value increase of multi-family properties came from new construction of high-rise buildings. Conversely, the 3.46% increase in the value of garden apartments, which are by far the most common type of apartment building in Alexandria, is much more in line with the city’s overall property value average.
Most apartment residents have lower incomes than those living in single-family homes, and that increase in value – and thus in the property taxes paid by the companies that own these buildings – will undoubtedly be passed along in the form of higher rent to low-income Alexandrians.
3) Alexandria’s non-residential commercial real estate situation is a disaster.
Creative plans to convert unused office space to public and residential functions should accelerate. And some of these large, empty buildings should be torn down to create more open space in Alexandria.