Last year at this time the real estate market was red hot. Housing was in demand. Interest rates were low. The median price of single family homes in Warwick as reported by the RI Association of Realtors was increasing monthly. It was also a year for implementation of a revaluation.

Mayor Frank Picozzi thought a revaluation on top of inflation would be too much. Even though a revaluation by itself is revenue neutral – it’s the tax rate applied to the valuation that generates a tax bill. Picozzi understood those properties with the greatest percentage in appreciation would be bear a greater tax burden.

Given what was happening with sales, it was apparent homes assessed at under $275,000 would be see the greatest appreciation. They were selling for upwards of $100,000 more than when last assessed in 2019. Homes with higher assessments were also selling for more, but their percentage increase was less.

If the revaluation had been implemented even though the mayor and City Council did not increase the tax levy, taxes would have gone up on those properties with the greatest percentage growth in valuation. Most homes with lower city assessments would be paying a greater proportion of the tax levy. With the revaluation their taxes would go up while the higher assessed homes wouldn’t get a tax increase and may have even seen a decline in taxes.

Picozzi delayed the revaluation, an action requiring City Council and General Assembly approval. His argument and that of City Tax Assessor Neal Dupuis was that the market was unsettled and waiting a year would be best.

That year is coming to a close and the market remains unsettled. Bidding wars are not driving prices up and in some cases sellers are dropping prices. With the Federal Reserve looking to snuff out inflation by rising interest rates, mortgage rates have climbed above 7 percent with monthly payments more than double in some cases. It would seem the market has stabilized, but has it?

Looking at it nationally, a story in the Dec. 8 edition of the Wall Street Journal is headlined “Housing market stumps forecasters.” It reports home sales have plunged and that buyers face the fastest rising mortgage rates in decades. Yet it goes on to say there are contradictory signals that in spite of a decline in demand the supply of houses remains low and prices are well above pre-pandemic levels.

What’s happening nationally appears to be the case in Rhode Island.

Agueda Del Borgo, 2022 President of the Rhode Island Association of Realtors is quoted in the association’s November report, “Inflation and rising rates have been a game changer for the housing market. Fortunately, Rhode Island’s economic indicators are stable and unemployment is below the national average so we don’t expect a drastic drop in prices. The low supply of homes should insulate prices from falling significantly, if at all, in the near future.”

So, has the market stabilized and should the city implement a revaluation this year?

Dupuis isn’t prepared to answer that question…yet.

Foremost is that it is too early to apply values to homes whether they be single family, multi-family or condos. The assessed valuation is of Dec. 31 and while the assessor’s office has been updating data on properties, values won’t be assigned until December sales have been finalized. Even with that process completed, Dupuis is not convinced how the city should proceed.

He boils a decision down to three options:

• implement the values as established on Dec. 31
• seek legislative approval to delay implementation of the revaluation for another year
• implement the revaluation with modified tax rates

Presently, as permitted by state legislation, the commercial property tax rate is 150 percent of the residential property rate and the tangible rate is twice that of the residential rate. Warwick chose this system, rather than creating a homestead rate as selected by other municipalities as also permitted by state law. As a result, and to the relief of Warwick tax assessors, the city is not faced with determining how long a resident lives in a house to qualify for the homestead exemption.

Looking at the current tax categories that lumps properties into two basic classifications, Dupuis said it may work for many municipalities but “one size fits all doesn’t necessarily fit here.” He hasn’t defined how modified tax rates might be implemented in Warwick, noting that proposals will require discussion and review, not to mention legislative approvals.

With elimination of the motor vehicle tax, motor vehicles no longer play a direct role in city revenues. As the state phased out the tax, it made the city whole on what it would have lost. Now that the tax has been eliminated, the city receives $25.2 million from the state. For the moment that amount is fixed. Warwick won’t get more in MV tax revenues should a car rental agency increase inventory or a fleet operation locates in the city.

 Adjusting tax rates by more than the three current classifications would spread the tax burden.

Whether an adjustment in the rate schedule is fair remains to be judged by the classifications and rate differentials. 

Nonetheless, Dupuis points out, should the choice be to further delay a revaluation and that is approved, the city would be faced with implementing a full revaluation the following year. A full revaluation requires assessors to visit each property whereas the statistical revaluation the city postponed is based on Dec. 31 transactions and trends.

A review of single family housing sales as provided by the RI Association of Realtors shows the dramatic increase in the median price of a Rhode Island single family home from $295,000 in August of 2019 to $332,000 the next year, $380,000 in 2021 and $405,000 in August 2022. Median prices in Warwick were lower with $356,000 being the August median price.

Dupuis is not a fan of using median prices to gauge the market. He prefers looking at sales and the types of housing and neighborhoods. He reasons this more accurately reflects values. Nonetheless, median prices are showing the increase in housing costs.

The disparity between the assessed value of properties and the market price illustrates how once lower priced properties have accelerated in price over higher priced properties.

In a survey of Warwick houses selling under $500,000, the Beacon found:

• 22 Millard Ave. was listed for $498,000. The property has a $174,500 assessment for tax purposes, an increase of 185 percent.
• 370 Ring Ave. is listed for $474,900 and assessed at $222,500, an increase of 114 percent
• 8 Friendly Drive is listed at $459,000 and is assessed at $293,100, an increase of 51 percent.

A survey of homes selling for more than $500,000 found that the percentage growth in valuation as compared to the assessment wasn’t as great.

• 20 Lauren Court is listed for $945,000 and is assessed at $612,300 an increase of 55 percent
• 4365 Post Road is listed at $875,000 and assessed at $757,000 an increase of 15.5 percent.
• 15 Windermere Way is listed at $799,000 and assessed at $485,300, an increase of 65 percent.

It should be noted that the list price is not the sales price and that once the revaluation is implemented the assessed valuation may not be in lockstep with the sales price.

Mayor Frank Picozzi said Monday he is waiting for Dupuis’ report before deciding on a course of action.