Property Value Increase During Housing Market Peak.
Just when everyone thought their year was going well, bad news arrived in the mailbox of property owners. In May, the Colorado county assessors are tasked with giving property owners their new valuations based on the current housing market.
And according to several experts, Colorado homeowners will most likely be shocked when they find out how much properties have increased over the last two years. And the bad news is the time period the assessors have to use, shows record-high property valuations that will be reflected this year even though the real estate market has slowed down some the last few months compared to what it was a year ago.
According to the Great Colorado Homes website, the average sales price for a home in Colorado Springs took a 2.9 percent drop between March 2022 and March 2023. The housing market took a drop after the recession in 2008, but valuations started to rise in 2012.
In 2014, the median sales price for a home in Colorado Springs was just over $200,000. The market then shows a steady increase over the next five years with the median home prices being just over $300,000 in 2019.
But then when the coronavirus pandemic struck in 2020, the market took a drastic climb. In 2020, median sales prices climbed to nearly $400,000, and by 2022 the median sales price was $475,000.
El Paso County to See a Large Increase in 2023 Valuations
Every year, the county assessor’s offices put out a notice of values on May 1 to all property owners in their county. But by law, the assessors must re-appraise values every two years on odd years.
However this year, the assessors have to use the numbers of what the valuations were in June 2022, which was most likely the time of the local housing market’s peak. Therefore, the time period between June 2022 and now when the market has dropped, will not be reflected in the 2023 valuations.
When El Paso County’s Chief Deputy Assessor Matthew Arvidson was asked how high property values would be increasing in the county this year, he immediately responded, “Are you sitting down?”
“Our median increase residentially is 44 percent,” Arvidson said.
The chief deputy assessor said that the increase this year is larger than what it has been in the past. Even though the market has climbed steadily since 2012, the increase of residential property values in El Paso County only increased about 25 to 30 percent during the last re-appraisal in 2021. “44 percent is crazy,” Arvidson said. “It is really high and we don’t like it more than anyone else.”
He said that even though the increase is high the number is conservative. By state statutes, the assessor’s values have to be between 95 and 105 percent of the value a house could be sold for. The El Paso County Assessor’s Office aims to keep their valuations on the low end of this range at just under 97 percent.
Teller County Properties Also See Drastic Raises
According to the Teller County Assessor Carol Kittelson, rural areas in the Pikes Peak Region will also be seeing skyrocketing property valuations this year. She agreed that in Teller County June 30 was the high point in the market.
“If we look at the residential median change, in the rural part of the county it was between 43 and 48 percent,” Kittelson said. “In Woodland Park and surrounding areas, it was between 34 and 40 percent. In Cripple Creek, it was 60 to 65 percent. And Victor was also 60 to 65 percent.”
She said that around five years ago housing in Denver jumped to record highs and people start moving north and south along the Front Range corridor. And then in 2020, many started moving out of big cities and wanted to go to small rural communities to get away from other people and germs or due to the fact that they could now work remotely, the assessor said.
Vacant land in Teller County also took a drastic jump in value. “Vacant land in rural areas went up 80 to 85 percent,” said Kittelson. “Woodland Park and surrounding areas went up 90 to 95 percent. Cripple Creek went up 105 to 110 percent, and Victor went up 45 to 50 percent.”
How Do Assessors Come Up with Property Valuations?
According to Arvidson, the assessors have little control over how and when valuations get determined as their work is regulated by state statutes. He said that the El Paso County Assessor’s Office uses data over 18 months and that it always ends on June 30 of every even year.
“We look at all of the sales that occur in that 18-month window to value everything in the county,” Arvidson explained. “We take those 15,000 or so sales and we take the characteristics of the homes that were sold and the sales prices that were arrived at and we project that onto the population. At its core, the market determines the values.”
He said the assessors take all of the sales data and use the 18-month trend to set the values at what they were on June 30.
“Let’s say it’s back in 2008 and the market was depreciating, going downhill wherever the market was on June 30, 2008, that is level we trend the values to, so it might be a negative level adjustment in that case,” Arvidson explained. “But in our case right now, it is a positive time adjustment because the market did nothing but appreciate in a really strong way between January 1, 2021, to June 30, 2022. So we apply a present per month adjustment to the raw sale price to reflect what it would have sold for on June 30, 2022.”
Arvidson said that the greatest concern is when the market drops between June 30 of the even year and when they send out the notices of value on May 1 of the odd year. “The worst situation that can develop for an assessor and an assessor’s office is that the market changes markedly after that June 30 appraisal date,” Arvidson stated. “It’s possible that June 30 was pretty close to the peak. It does look like the market has softened since our appraisal date. That’s pretty much close to our worst nightmare. Because our value may well be higher than what the property could be sold for today. That’s not something we’re a fan of, but it is the reality of the statutory date.”
New Bill Could Bring Some Relief to Rising Property Taxes
At the beginning of the year, a bipartisan group of lawmakers proposed Senate Bill 23-108, Allowing Temporary Reductions In Property Tax Due, that would give some relief to residents facing rising property taxes. Senator Mark Baisley who represents Chaffee, Custer, Douglas, Fremont, Jefferson, Lake, Park, and Teller Counties was one of the bill’s main sponsors. Baisley said on a Facebook post that he was working with county commissioners in his district and others to help draft the bill to give people much-needed relief for shockingly high raises in property taxes this year.
“The bill allows a local government to provide temporary property tax relief through temporary property tax credits or mill levy reductions and later eliminate the credits or restore the mill levy,” the bill’s summary states. “A temporary reduction in property taxes must be annually renewed by the local government.”
On March 1, the bill was passed in the State Senate after the third reading. It was introduced to the House on March 14 and assigned to the Finance Committee. By April, the bill had made it through the committee and was being debated on the House floor before it heads to the governor’s desk.
According to Teller County Commissioner Dan Williams, if the bill passes, places like Teller County could see a property tax decrease before taxes are due next year.
