Resilience of Silicon Valley contributes to record year

 

By Staff Reports

Silicon Valley has a unique resilience to economic downturns. Challenged by the worst  pandemic in 100 years, the Santa Clara County economy has continued to grow, exceeding  expectations, according to the annual assessment roll released by Santa Clara County Assessor Larry Stone earlier this month.

The 2022-2023 assessment roll reflects the total net assessed value of all real and business  property in Santa Clara County as of Jan. 1, 2022. This year’s roll reached a record $619.9 billion, a 7.46 percent increase over the prior year, the fourth highest percentage  increase in the past 10 years.

“This time last year, the nation was in the middle of an economic crisis triggered by the COVID-19 pandemic,” Stone said. “Vaccine availability and a $3 trillion federal stimulus prevented a major collapse of the economy.”

The growth in property assessed values is attributed to multiple factors. The leading  contributors are changes in ownership and new construction, which accounted for $24.5 billion  and $5.9 billion of the total increase, respectively. The pace of new construction is gaining  momentum following the uncertainty of the economic and business outlook during COVID-19.

Technological innovation continues to generate significant investment in the region, including  $3.5 billion of office and commercial building acquisitions last year. The assessment of business property, including machinery, equipment, computers, and fixtures, increased by 6.6 percent to $42.9 billion, the second largest in California.

The final component of the 2022-2023 assessment roll growth is the increase in the assessed  value of properties with no new activity or transactions. Proposition 13 limits the assessment  of those properties to the California Consumer Price Index or 2 percent, whichever is lower. A rebounding economy throughout 2021 added $11 billion to the assessment roll.

“Even when real estate values are soaring, Prop. 13 limits the increase in assessment to 2 percent, a significant financial benefit to property owners,” Stone said.

As homeowners benefit from the difference between assessed values and market values, it  comes at a cost to schools and local governments dependent on property tax revenue to provide  quality education and public services.

Silicon Valley was not entirely immune to the pandemic recession. Many sectors including  hospitality, brick and mortar retail, restaurants and entertainment, all suffered financially.

When the market value of a property is lower than the current assessed value, the owner can  request, or the Assessor can proactively undertake, a Prop. 8 review of the  assessment.

“In 2020, my office launched multiple programs to assist property owners and businesses seriously impacted by COVID-19,” Stone said. “As assessor, my job is to get it right. When the market value of a property declines below the original purchase price, we lower the  assessment.”

At more than $1.7 million, Santa Clara County has the second highest median home price in the Bay  Area, an increase of more than 17 percent year over year. Prices of condominiums are up 11 percent.

More information is available at (408) 299-5088, or at www.sccgov.org/assessmentappeals.