Home prices continue to soar in Lawrence; will property tax values do the same?
photo by: Douglas County GIS
I’m sure my home once increased 15 percent in value — when I moved my art collection of dogs shooting pool from the bank vault to the basement. But a new report shows that even without that type of event, Lawrence home prices are soaring.
The latest report from the Lawrence Board of Realtors shows the year-to-date median selling price for Lawrence homes has increased 15.1 percent compared with the same period a year ago. That may be great news if you are looking to sell a house, discouraging news if you are looking to buy one and downright frightening news if you pay property taxes on an existing one.
Why is that? Because the county appraiser sets your tax value based off the fair market value of your home. Does that mean that many of us should expect to see our tax values increase by 15 percent in the next year?
So far, the county appraiser is saying no.
“I don’t anticipate double-digit appreciation on values across the board,” Douglas County Appraiser Steve Miles told me recently. “There always will be some homes that see that type of increase, but I’m not expecting that to be widespread.”
Thus far, Miles isn’t believing that the 15 percent jump in selling prices is indicative of all home values in the county. Instead, he thinks the type of homes on the market in Lawrence may be a bit different from the previous year. For example, if the average home sold in Lawrence last year was a 1,500-square-foot ranch, but the average home this year is an 1,800-square-foot ranch, then you would expect to see a higher average selling price. But that doesn’t mean the value of all housing has gone up.
The Board of Realtors report doesn’t provide that type of detail, so I can’t offer any evidence of whether Miles’ theory is correct. But Miles’ office has more data about home sales than anyone else in the county, and he said he’s not seeing signs that houses on a per square-foot basis are increasing at a double-digit pace.
That’s not to say that homeowners shouldn’t expect to see an increase in their tax values. Miles has been doing this long enough to know that he doesn’t benefit from making public predictions about future values, so I didn’t get him to utter a number. But there is a statistic worth watching. It is called the sales ratio. It measures how much a house sold for versus the value the county appraiser had set for it.
Through July, the sales ratio stood at 94.2 percent, meaning that homes were selling, on average, for about 6 percent more than what the county appraiser had them valued at. That is the sort of statistic that could cause Miles’ office to start adjusting tax values upward. Again, Miles didn’t offer any predictions, but based on those numbers, I would guess that there are many homes that could be in line for a 5 percent increase in their tax values. I say that because last year the sales ratio also was about 94 percent, and a lot of homeowners saw tax value increases of about 5 percent. More specifically, about 25 percent of all homeowners saw the tax value of their home increase by more than 5 percent, while about 27 percent saw an increase between 2 percent and 5 percent, according to numbers from the appraiser’s office
But, a lot could still change. New tax values won’t be sent out until March. Currently, Miles’ office is doing much of its preparatory work for setting values. The real work of putting prices to properties will begin in the fall. What prices are doing at that point may play more of a role in determining tax values.
In the meantime, I’ll keep my fingers crossed that I won’t have to sell off an art piece to pay the tax bill.
As for other statistics from the July report of the Board of Realtors, here is a look:
Home sales for July were up about 4 percent from July 2017. They totaled 149 sales in Lawrence.
Year to date, the number of home sales is up 3.2 percent compared with the same period a year ago. Home sales in Lawrence total 826.
Sales of newly constructed homes continue to increase at a much greater pace. Sales of newly constructed homes are up 27.8 percent for the year, totaling 92.
The reason behind the rising selling prices shouldn’t be a mystery for anyone who has been following the local market in recent months. As we’ve been reporting for quite awhile, inventories of new homes for sale continue to shrink. In July there were 247 active listings in Lawrence. That was down 10 percent from July 2017. The big question is why more existing homeowners aren’t putting their homes on the market. Whatever the reason, supply remains tight, and it continues to be a seller’s market.
Perhaps the statistic that best shows how much of a seller’s market it has become is the one that measures how long a home sits on the market before it sells. The median number of days a home sits on the market before it sells is now down to eight.
• The combination of slightly greater sales volume and significantly higher selling prices have produced a good year for the local real estate industry. The total dollar value of homes sold in Lawrence now stands at $196 million for the year. That’s up 13 percent from the same period a year ago.