Rising Prices In Washington County Fueled By Steady Stream Of New Residents

DAMASCUS, Va. – To understand why property values continue to increase here despite doom and gloom in the national real estate market, you have to ask the folks who are buying.

“Living here’s like living in Mayberry,” said Tammy Ginn, who recently bought a house with her husband, Larry, and likens the feel of this small Washington County town to the idyllic setting of the classic 1960s sitcom, “The Andy Griffith Show.”

“We’re just like part of the family,” her husband said of the neighborhood where they bought a three-story Victorian for $180,000. The house with two turrets would easily cost $450,000 back in Hampton Roads, Va., he said.

“It’s a different lifestyle and a different quality of people,” Larry Ginn said. “I feel more a part of that community than the one I spent 30 years making a career living in and growing up.”

It’s a sentiment echoed throughout Washington County, where a steady stream of new residents are helping to drive prices up even amid the current recession.

Between August and December, as the national credit crunch worsened, Washington County saw 415 real estate transactions, and Commissioner of Revenue David Henry said many of those properties – such as the Ginns’ home – sold for much more than their assessed values.

“Everybody says $25,000 is too high,” Henry said, looking at a sheet representing a parcel of land in Washington County that tops a stack of reassessments. “Well, it sold for $55,000. It’s selling for double.”

“People are moving here from other localities, and they bring money with them, and they pay more for land than what local residents are used to seeing it sell for. You can look through here (the reassessments) and just open up a page,” Henry said.

“Just over half an acre, they’ve got that valued at $20,000, and here’s what it sold for. We’re supposed to be in the middle of a big decline, and right before Christmas, in November, that little piece of land sold for $210,000,” Henry said. “People say, ‘Oh, it’s not worth that,’ and I don’t disagree with them, but ... if it’s not worth it, why are people continuing to buy it?”

Recently, notices were mailed to Washington County property owners informing them of the newly assessed tax values of their properties. Since then, Henry’s office has been flooded with calls from county residents who say their property is overvalued, but officials say property is selling for much more than it did four years ago, when the last general reassessment was conducted.

While some county taxpayers suffering from sticker shock say they can’t comprehend skyrocketing tax assessments, local realtors echo county officials in their explanation: People want to move here.

“The downturn in the economy we’re finding is helping the market in places like Damascus,” said Russell McBride, a real estate broker and owner of Damascus Realty, who said he has more buyers looking for property than property for sale.

“As people readjust their lifestyles, they’re looking for ways to create recreation time and family time, and retirees are looking for a good climate, convenience and an active lifestyle.”

McBride said the same factors driving people away from traditional destinations such as Florida – the cost of travel and real estate – are driving them to communities closer to the cities where they and their families live – places such as Damascus, Green Cove, Konnarock and Whitetop. As a result, home values in the area are steady and rising.

“It gets down to basic fundamental economics, supply and demand,” McBride said. “As long as there is a healthy demand for the available property, the property will maintain or have a steady, orderly growth.”

Henry said the average home value in the county rose 15 percent since the last reassessment in 2004; when land is factored in, the countywide average increase since the last reassessment is close to 23 percent.

Henry said despite the economic downturn, the average value of farmland statewide had increased 3.5 percent in a year, to $5,900 an acre, according to government statistics.

“They’re [government statisticians] just beginning to scratch the surface of what these developers are doing: buying family farms and growing houses,” Henry said.

Both he and Dave Hickey, owner of Blue Ridge Mass Appraisal Co., which was hired by the county to conduct the reassessments, acknowledge that some homes have gone down in value. But, they said, while some property values have decreased in the past year, most remain higher than when the last reassessment was done.

Hickey said values in the county rose in 2005 and 2006, began to level out in 2007 and declined slightly in 2008. However, despite the decline in recent months they remain higher than in 2005.

“Washington County hasn’t been experiencing the rapid rises like Northern Virginia and some of the other areas. Therefore, the decline hasn’t been as rapid,” Hickey said.

He credits a stable market, a fairly stable population and a diversified economy – plus the fact that most homes in the area are in a price range for which there is still an active market. He said it’s the high-priced and secondary homes that have taken the hit around the country from the crisis in what he calls “funny money” mortgages.

The one category of homes that have dropped considerably in Washington County, mirroring national trends, is those with a higher-than-average price tag, said Pat McDonald at Callebs Realty in Abingdon.

“A lot of the more-expensive homes are taking a lot longer to sell right now,” McDonald said. “This is the worst I’ve seen it in 10 years.”

She said some homes in the more-expensive Abingdon neighborhoods have sold for 20 percent less than they would have a year ago. For example, a house that was bought for $582,000 for a transferring executive by his company in September 2008 sold for $450,000 in July.

But, she said, the market in the area remains stable and average homes – in the $200,000 to $250,000 range – don’t sit on the market as long.

“Abingdon has always been a little niche market where people want to live,” McDonald said, noting that people from outlying counties continue to move to the Abingdon area. “It’s a great community, it has a lot to offer, and I think that affects the home values also.”

Zillow.com, which tracks real estate trends in 163 metropolitan statistical areas across the country, states that the nation’s average housing values have slid for seven consecutive quarters – down 9.7 percent from a year ago.

The site also states that a third of the houses are selling at a loss and 14.3 percent of homeowners have negative equity.

Average home values have decreased by more than 20 percent in parts of Florida, according to the site, and more than 30 percent in parts of California.

By comparison, Johnson City, Tenn., has seen a decline of 1.3 percent on average in the past year.

Henry said the Mountain Empire has avoided some of the crunch because of its relatively stable economy and a steady stream of well-funded retirees – those who have worked a lifetime in areas with a higher prevailing wage than Southwest Virginia and are seeking a nice place to live with a lower cost of living.

“I’m not saying it’s good or bad; it’s just happening,” Henry said. “They can build the same house for half the money and bankroll the rest. ... They can really upgrade their lifestyle by moving to areas like we’re living in.”

As long as people are willing to sell their land to the highest bidder, Henry said, it fuels the fire of rising real estate values.

“It’s almost like we’re our own worst enemy. We promote the Virginia Highlands Festival [in Abingdon], we promote Trail Days in Damascus, and you can’t blame people for coming and wanting to stay,” Henry said.

“Washington County has kind of been discovered. ... It’s something that people who grew up here are going to have to face.”

But, Henry said, there’s still a dividing line between locals and outsiders when it comes to taxes. People who keep their land in agriculture rather than develop it pay the same taxes no matter how much the assessed value rises. The county also gives discounts to elderly and disabled residents.

Property owners who participate in the county’s land-use program pay taxes on just $150 an acre for wooded land, $400 an acre for pasture land and $930 an acre of crop land, Henry said. These taxable values remain constant regardless of the property’s assessed value.

“The state rewards you for having open land as opposed to putting a shopping mall on it or a housing development,” Henry said. “They’re trying to preserve the open land.”

Some of those moving here also seek to capture a piece of that rural dream, the same slower-paced lifestyle they’ve sought in other areas that have become more developed over the years.

Jon and Carole Towers, who bought a house in Washington County in August they plan to share with friends, are among those moving to the county for its lifestyle.

“I love Boone [N.C.]. We lived in Boone for 30 years, but the prices are so high and … Boone is not bike-friendly,” Carole Towers said. “I had a horse in Boone but I couldn’t ride where we live, so I had to trailer my horse anywhere we went.”

Now in the process of moving, the new couple said that at their new home on the Virginia Creeper Trail, they look forward to going into town without a car. Where they are situated, along U.S. Highway 58 with a big backyard on the river and the trail, they can walk or ride – by bike or horse – to both Abingdon and Damascus.

They also plan to return to some of the basics – such as growing their own food instead of relying on trucks to transport it hundreds of miles using fuel that fluctuates wildly in price.

“With the economy the way it is, it’s difficult for a single family to afford all the expenses of a home,” Jon Towers said, explaining that they will live with a young family – three generations in one house – in a kind of experiment.

“This way, there’ll be two families sharing a house, we’ll be sharing cars and sharing meals, splitting utilities and working in the garden.”

He said they plan to retrofit the house for solar energy and other reductions in energy use and cost – and demonstrate that the average family can provide the basics in uncertain times.

Washington County, with its trails, its blossoming local food movement, its relatively slow-paced life and strong sense of community, was the place they found after a three-year search.

Jon Towers said it’s the same thing he was searching for when he left New Jersey for Boone 30 years ago.

“I’m driving through Damascus, and right downtown I pass a house where they’re having a [music] jam,” he said, when asked to explain what it is about this place that draws so many outsiders along with those who grew up here and moved away decades ago.

“There’s a dozen musicians out on somebody’s front porch playing music, and it’s that kind of thing that is just appealing to know that that is still going on, that that’s still a part of people’s lives and so instead of watching TV they’re playing music out there, and to me that’s an important part, the music, the heritage, it’s a real important part of what I want to surround myself with,” he said.

Larry Ginn, who bought the house in Damascus, said he, too, was attracted to the simple quality of life.

“Where else could you live where you can walk to the post office, the grocery store, the fire department, the police department, the town hall, the library, you can go to the doctor and walk to get your prescription filled at the drug store, and no matter what denomination you are there’s a good chance you can walk to church,” he said. “It’s just an incredible sense of community, and you can’t put a price on that.”

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