The market shows no signs of stopping | North West

Homeowners in Nez Perce County can expect dramatic increases in their property values ​​this year, based on what officials call “the most aggressive seller’s market we’ve ever seen.”

Final numbers are not yet known, but some categories of residential properties will likely see increases of 20% or more. Some detached homes can skip three times that amount.

“I’ve seen the markets go up and down, but I’ve never seen the kind of sustained growth (in house prices) that we’ve had in recent years,” said Nez Perce County assessor Dan Anderson, who held this position. since 1988. “It’s unheard of. I remember when I first became an appraiser, the county had three sales over $125,000 and we were wondering when that was going to stop. Today, you couldn’t buy a garage for $125,000.

This surge in market prices drives up assessed assessments — the amount used to calculate a homeowner’s property tax bill.

Anderson is quick to note that higher property assessments do not necessarily equate to higher property taxes. Depending on what happens with tax district budgets and the overall tax base, individual homeowners may not see an increase in the amount they owe.

Nonetheless, he still wants to give people advance notice of the 2022 Assessment Notices, which will be mailed out the first week of June.

“Residential properties are where we have the most sales, so they will be hit the hardest,” Anderson said.

An appraisal is an estimate of the current market value of a property.

By state law, county assessors are required to physically inspect a property once every five years. This allows them to keep track of any changes or improvements that have been made.

However, property assessments are also updated annually based on comparable sales. This means that if the market for a certain type of property is really hot, everyone who owns that type of home will likely see their valuation go up, even if they haven’t made any upgrades.

For example, Jeff Freeland, senior appraiser at the appraiser’s office, noted that sales prices for class 4 homes in Lewiston have increased by 21% in 2021.

A Class 4 home — which has a main level and a basement — is the most abundant type of residential property in Nez Perce County, he said. Over the past three years, a total of 544 Class 4 homes have been sold within the city limits. It is one of six class 4 houses in the city.

Prices for Class 4 homes in Lewiston Orchards have risen about 18% over the past year, Freeland said. Those located downtown are up about 25%.

Chief Assistant Appraiser Brad Bovey said his office does a lot of statistical analysis to try to ensure appraisals are based on apples-to-apples comparisons of home sales.

Sales of Class 4 homes in downtown Lewiston, for example, would not be used to determine comparable sales values ​​for Class 4 homes in Lewiston Orchards. Likewise, a one-story house with a full basement would not be compared to a one-story house without a basement.

The goal, Bovey said, is to provide an accurate assessment of the true value of each property in today’s market.

“And you can imagine, when we have a year like this, we analyze things to death,” he said.

Bovey has personal experience of the impact today’s booming real estate market has on appraised values.

“I have a class 6 bungalow on a half acre,” he said. “We built it four years ago. Last year my assessment went up $25,000. This year, it increased by $224,000. That’s a 61% increase.

And there is no indication that the market is slackening. In the past month, 96 single-family homes have been sold in Lewiston; two-thirds of them sold for over $400,000. another 18 homes sold outside the city limits; none of them went for less than $500,000 (see sidebar).

“We had thought for five years that the market would plateau, but it’s not,” Freeland said. “We’re not seeing a slowdown, so we’re following the law and doing our job.”

State law requires property assessments to be set at 90% to 100% of market value. Anderson’s policy is to set them at 97%. He could bring that down to 90% and potentially save homeowners a bit at tax time, but in a market like this, he said, that’s not doing anyone any favours.

“I had a friend who did exactly that for two years, and now he has to double the values ​​(to meet legal requirements),” Anderson said. ” I will not do that. You may think I’m doing you a favor, but it’s a huge disservice in a market like this because at some point it catches up to you.

If his office were to completely ignore the 90% to 100% requirement, he said, the state tax commission could step in and raise everyone’s assessment to 100% — without recourse to appeal.

Even with its 97% policy, however, valuations are not keeping pace with market prices.

Anderson receives daily reports showing recent home sales. He pointed to one where the valuation went from $293,000 in 2021 to $355,000 this year.

“It just sold for $427,000,” he said.

Another property was valued at $186,000 last year and $283,000 this year, an increase of 52%.

“It just sold for $300,000,” Anderson said. “I could go on and on. That’s what I see on a daily basis.”

A similar activity takes place in the commercial field.

Commercial property transfers have increased 30% over the past two years,” Anderson said. “They are selling for an average of 16% above estimated value.”

Over the past year, he said, the total assessment value of commercial properties in Nez Perce County has increased by about $200 million. New construction accounted for less than 10%.

“And that still pales in comparison to what we’re seeing with residential,” Anderson said.

How all of this affects a specific homeowner’s property tax bill, however, is a more complex question.

Nez Perce County Clerk Patty Weeks noted that assessed value is only one of three variables needed to determine a person’s tax liability. The others are local government budgets and what’s happening with the overall tax base, and those numbers won’t be available until later this year.

“We don’t have all the pieces of the puzzle yet,” Weeks said.

The annual property tax levy for a given taxing jurisdiction is determined by dividing its budget – the amount of money it must raise from property taxes – by the jurisdiction’s property tax base.

For example, Nez Perce County’s net tax base was approximately $4.07 billion in 2021. This is the combined assessed value of all property classes, minus exemptions, such as exemption on residential properties.

County commissioners approved a property tax budget of $19.3 million. This amount was divided by $4.07 billion to produce a levy rate of 0.00476, or 0.476% in 2021.

As new construction takes place and assessed values ​​increase, the county’s overall tax base will grow rapidly. Assuming the base increases at a faster rate than the budget, the 2022 property tax levy will be less than 0.476%.

This number will then be multiplied by the net taxable value to determine the tax hit for a given property. Only then will owners know if they owe more money this year than they did last.

“It’s like baking a cake,” Anderson said. “You have the flour, the eggs and the sugar, but it’s not until you mix them together and bake them that you know what the cake will taste like.”

Nez Percé County typically sets its budget and levy rate in September. Other tax jurisdictions follow their own schedules. The dates of their public budget hearings are included in the assessed value notifications.

Weeks said his office and the Assessor’s Office are also happy to walk people through the process and help them understand what’s going on with their assessment and why.

“We try to make it easy,” Anderson said. “Most of the time you don’t even need an appointment.”

Comments are closed.