Luzerne County real estate increasingly selling above assessed values

Real estate in Luzerne County is increasingly selling for more than the assessments used for taxation, but officials are not ready to pull the trigger on another countywide reassessment at this time.

County Chief Assessor/Assessment Director Kristin Montgomery said many other counties are experiencing a similar trend, and she wants to monitor the situation over time to determine if higher real estate prices are lasting or a temporary bubble.

“Considering the state of the real estate market, I would wait,” Montgomery said.

The subject comes up this time each year because the State Tax Equalization Board compares each county’s assessed values to actual real estate purchase prices.

Its conclusion is measured in a number called a “common level ratio.”

An ideal ratio is 100, which means prices paid closely mirror assessments.

The county’s new ratio is 76 based on 4,012 real estate transactions that occurred in the county in 2021, Montgomery said.

Ratios below 100 indicate more purchases are exceeding assessments. The opposite is true for those surpassing 100, which indicates purchase prices are falling below assessments.

Officials have argued another reassessment is not warranted for the county’s 168,000 parcels as long as the ratio remains between 85 and 115, or plus/minus 15 from the ideal figure of 100.

Although the county is now outside that range, Montgomery said the situation may change here and in many other counties that have experienced a “drastic dive” in their common level ratios. She suggests waiting at least a year, possibly two, reiterating each ratio is based on prior-year sales.

“Future common level ratios may continue to go down, or, if the market reverses, may come back up,” Montgomery said. .

The COVID-19 pandemic sparked an increase in remote working, Montgomery said.

“Luzerne County felt the effects, along with many other Pennsylvania counties close to state border lines, of people moving from the city to a more rural setting, creating a spike in sales prices throughout the state,” she said.

Ratio history

The last countywide reassessment took effect 13 years ago, in 2009, and had been the first mass revaluation since 1965. Four years of sales data were used to calculate the worth of all parcels on the fixed date of Jan. 2, 2008. Assessment challenges have led to thousands of value adjustments, most reductions, since then.

With the ratio remaining within the acceptable range until now, county officials have not honored a resolution passed by prior county commissioners calling for reassessments every four years to prevent the values from getting stale.

Initially, the county’s ratio was 99.7 after the reassessment, and it climbed as high as 109.9 in 2013, records show.

The ratio was 101.1 in 2019, before it started a downward trajectory to 94.9 in 2020 and 88.9 in 2021.

No counties in the state have ratios above 100, according to the new state report.

Seven other counties have ratios leaning more favorably than Luzerne’s, it shows.

Those counties, along with their new ratios: Adams, 87.5; Blair, 85.9; Cumberland, 85.7; Indiana, 94; McKean, 80.6; Philadelphia, 92.6; and Washington, 84.3.

With the exception of Cumberland, Luzerne County had a better ratio than other counties grouped in the same “third class” category with populations ranging from 210,000 to 499,999.

The ratios of other third-class counties include: Berks, 45; Chester, 39.5; Dauphin, 52.4; Erie, 71.1; Lackawanna, 8.2; Lehigh, 63.6; Westmoreland, 11; and York, 65.9.

Officials in neighboring Lackawanna County are pursuing a reassessment, which has not been completed in decades there.

Reinforcing opinion

Local attorney Raymond Wendolowski, who regularly handles assessment-related court cases, said Monday he agrees with Montgomery’s approach to wait for further review.

“Ideally you want to be closer to 100, but compared to a lot of other counties I’m aware of, Luzerne County’s common level ratio is not totally out of line,” Wendolowski said.

Wendolowski said many other counties have ratios that are “way out of whack” because they have not completed reassessments in many years.

He continues working on “reverse appeals” on behalf of school districts seeking assessment increases for larger properties with assessments deemed too low. State law allows school districts and municipalities to pursue reverse appeals so they don’t have to wait until their counties perform another reassessment of all values.

The next reassessment would not be as daunting here because the county assessor’s office now has detailed property information, including sales data, that it continues to update as properties are built and modified, officials have said.

The last revaluation cost $8 million and was more involved because each parcel had to be photographed and reviewed from scratch to create a computerized property database.