WHAT IS PROPERTY REVALUATION

Property revaluation is the process of updating your property's assessed value to equal its current market value.

Property revaluation updates all assessed values in the city to be equal to market values. Specifically…your property has 2 values associated with it:

  • Assessed value – this is the value according to the government.  This value is listed in the city tax office and it appears on your tax bill. This value is updated only at specific points in time, including during a citywide revaluation.
  • Market value – this is the value according to the real estate market. This value is constantly fluctuating, depending on the real estate market at large.

WHO CONDUCTS A PROPERTY REVALUATION

Local government green-lights revaluation.

Property revaluation is supposed to be green-lighted by the local municipal government. However, the state government can mandate revaluation if the local government fails to act, as happened in 2018 with Jersey City's first revaluation in 30 years. There are a handful of firms within the state that can implement a revaluation on behalf of the municipality.

WHY IS REVALUATION NEEDED?

In NJ, citywide revaluation is required to maintain property tax fairness.

Property Revaluation happens to ensure everyone pays his/her “fair share” in local taxes.  “Fair share” is dependent on your home’s tax assessed value being equal to its market value.  If your assessed value is NOT equal to your market value, you may be paying too much or too little in property taxes.

Property tax fairness in NJ is a zero-sum paradigm, meaning: if one person is paying LESS than their fair share in property tax, then another member of the community is paying MORE than their fair share in property tax.

WHEN SHOULD REVALUATION OCCUR?

Revaluation should occur when tax unfairness occurs. Generally speaking, this can occur when there are varying degrees of market appreciation in the community.

Property Revaluation happens to ensure everyone pays his/her “fair share” in local taxes.  “Fair share” is dependent on your home’s tax assessed value being equal to its market value.  If your assessed value is NOT equal to your market value, you may be paying too much or too little in property taxes.

Property tax fairness in NJ is a zero-sum paradigm, meaning: if one person is paying LESS than their fair share in property tax, then another member of the community is paying MORE than their fair share in property tax.

The state publishes various municipal-specific criteria to gauge the need for revaluation including to key metrics:  the Equalization Ratio and the Coefficient of Deviation. The equalization ratio is an average of assessment-to-true value ratios within the municipality. The coefficient of deviation is a measure of variance of assessment-to-true-value ratios within the municipality. Taken together, similar to a thermotmeter

These are annual metrics published for each municipality by the NJ Division of Taxation. N.J.A.C. § 18:12A-1.14 states that an equalization ratio of less than 85% and a coefficient of deviation of greater than 15% are potential indicators for a need to revalue.

Learn more about these metrics, and check out your town's equalization and coefficient of deviation, below.

<85%

Equalization Ratio
an AVERAGE

>15%

Coefficient of Deviation
a measure of VARIANCE

CHECK OUT YOUR TOWN'S EQUALIZATION RATIO

On average, what is the relationship between assessed and market values in your town?

Here's how to read this visualization. Each box is a "taxing district," or municipality, in the state of NJ. There are 565 total municipalities. The size of the box shows the relative size of the tax base compared to other districts in the visualization. The color shows how close - or far away from - an equalization ratio of 100% the municipality is. The darker the green, the closer to 100%; the closer to red, the further away from 100%.

An equalization ratio of 100% suggests that assessed values are closely pegged to true, or market, values. For example, a home with a market value of $150,000 is assessed at $150,000.  However, as a municipality's real estate appreciates, the market values start to grow disconnected from assessed values and the equalization ratio starts to decrease.

CHECK OUT YOUR TOWN'S COEFFICIENT OF DEVIATION

How much variance, or skew, exists in your town with respect to assessment-sales ratios?

Here's how to read this visualization. Each box is a "taxing district," or municipality, in the state of NJ. There are 565 total municipalities. The size of the box shows the relative size of the tax base compared to other districts in the visualization. The color how high the coefficient of deviation is. The darker the green, the closer to 0% (the less variation within the town with respect to assessment-sales ratios). The closer to red, the higher the coefficient of deviation, meaning there is variance among the assessment-sales ratios.

FEATURED VISUALIZATION

SCATTERPLOT: EQUALIZATION RATIO & COEFFICIENT OF DEVIATION

I've provided below a scatterplot graph showing each town in NJ with its equalization ratio charted on the Y-axis and the coefficient of deviation charted on the X axis.

the “Green” Zone:

The upper-left quadrant is the “green” zone, containing towns and cities that have an equalization ratio greater than 85% and a coefficient of deviation less than 15%.  These metrics suggest assessed values that are still both uniform and relatively close to true, or market, value

the “Orange” Zone:

The lower left quadrant contains towns and cities with an equalization ratio of less than 85% meaning they are below the threshold codified in NJAC § 18:12A-1.14(b)(1)(v). This lower average suggests an increasing disconnect – on average – between assessed and true values. 

The upper right quadrant contains towns and cities with a coefficient of deviation of greater than 15% meaning they are above the threshold codified in NJAC § 18:12A-1.14(b)(1)(i).  This higher variation suggests increasing non-uniformity between assessed and true values. Meaning, more properties like “A” above which are spread further out from the mean. 

the “Red Zone”:

The lower right quadrant contains towns and cities triggering the thresholds established in both NJAC § 18:12A-1.14(b)(1)(v) and NJAC § 18:12A-1.14(b)(1)(i). These measures suggest both an increasing disconnect between assessed and true values AND an increasing variation, or spread. 

FEATURED VIDEO

What is REVALUATION?

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