Be moderate in setting rates
Published 12:00 am Tuesday, April 15, 2003
While there’s no denying Suffolk’s certainly a desirable place to live, there’s more than that at work in making home prices rise here faster than any place else in Hampton Roads.
There’s the fact that there’s few other places for Hampton Roads’ growing population to turn for new house, but mostly, it’s because of low interest rates.
Record low rates over the past couple years have driven the surge in home prices nationwide. And it’s a bubble that’s due to burst.
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Record budget deficits are likely to drive interests rates up. When that happens, the real estate market will level off.
Tonight, Suffolk City Council will be reviewing a recommendation to raise the assessed value of three out of four homes citywide by an average of 9 percent. Under the proposal, some homes will see assessed values go up by more than 25 percent.
That’s a whopping real estate tax increase for some of our residents and one that might not be entirely justified.
Sure, times are good now, but what would happen to the value of these homes if we see a surge in interest rates – something some economists are predicting to begin as early as the latter half of this year? Will city council come back later and reduce those optimistic assessments if this proves the case? Hardly likely.
Certainly an increase in assessments is called for, but assessment increases of 20 percent or more are unrealistic and unfair. Council should use moderation in setting the rates.