Recently, there have been quite a few questions about what Fairfax county assessments represent, and whether they drive the market or not. Fairfax county assessments are supposed to be based on sold prices. There are two important words here: "sold" and "supposed".
I'll tackle the last one first. When I mean "supposed", that implies that the assessor does not always get the comps right. For example, a house sold in 2008, and it was clear from the assessment that the comps had not been updated. The house was originally a 2000 sq/ft colonial with an attached 2 car garage. The garage was extended to 3 cars, and the second floor extended over the garage. There was also an addition to the ground floor behind the garage. All told, the square footage increased roughly 50%, yet the assessment was comparing it to identical models on the same street that had not been updated.
The second word was "sold". The assessment is based on the sale prices of comps, and these, naturally, have occurred in the past. The comps may or may not represent the value of the home today. If the market is flat, then they will align. If values are increasing, the assessment will be less, whereas if values are decreasing, the assessment will be more.
So, how far back do the assessments lag? The first graph below is data taken from 10 neighborhoods taken from the Oakton wedge (my name for the region). This area is bordered to the north by the Dulles Toll Road, to the south by 66, to the west by Fairfax County Parkway, and to the east by 123. So, this area encompasses parts of Vienna, Oakton, Reston, and Herndon (Oak Hill?).
All the homes are single-family homes, 4br with a basement and 2car garage. All are colonial style, and none are split-levels, split foyers, etc.
Because the neighborhoods are at different price points, all of the prices are normed by dividing them by the 2000 assessment. The pink line is the sales price and the blue line is the assessment. You can see that in 2000 they were selling for roughly 30% more than assessed. Interestingly, if you shift the pink line forward by 18 months (yellow line), it aligns with assessments almost perfectly, at least until 2007-2008, where things break down a bit. But nonetheless, it looks like assessments for a given year more often than not reflect sales prices from 18 months ago.
One caveat about the 2009 sales: only 3 of the 10 neighborhoods have had sales in 2009, so the 2009 price point my not be a very representative sample. But, it is certainly suggesting that houses in 2009 (they probably closed late 2008) are selling for less than the 2009 assessment.
[edit: found error in graph -- assessments changed slightly]
