After years of stagnation, county appraiser says home values are on the rise; property tax bills may follow suit; 2017 home sales off to strong start
Odds are — if you haven’t already — you will be getting an envelope from Douglas County saying the value of your home has increased. Yes, that means your property taxes may go up, too. It also is the surest sign yet that Lawrence’s real estate market is returning to the levels it once enjoyed before the Great Recession.
Nonetheless, get ready to see a bigger number.
“The past few years, the average had been pretty stagnant,” Douglas County Appraiser Steve Miles said of home prices. “This year, we’ve seen quite a healthy increase.”
Miles’ office sent out change of value notices to every property owner in the county on Feb. 28. He said 76 percent of property owners will see an increase in their value. A significant number of residential properties will see values spike by 5 percent or more. Here’s a look at the breakdown:
— 28 percent of residents will see the tax value on their homes increase by 5 percent or more.
— 34 percent of residents will see the tax value increase by 2.01 percent to 4.99 percent.
— 20 percent of residents will see the tax values increase by .01 percent to 2 percent.
— 8 percent of residents will see no change in value
— A little less than 10 percent of homeowners will see a decline in value.
Even homeowners who don’t intend to sell their homes should care about the values. Why? Property taxes. The home values set by Miles’ office are used in determining the amount of property taxes you will pay in 2017.
If your home increases by 5 percent in value, that doesn’t automatically mean that you will see your property tax bill increase by 5 percent. But it might. It all depends on the tax rates — known as mill levies — that local governments set. Those tax rates will be set this summer as governments such as the county, cities and school districts make their budgets for 2018. If governments hold their mill levies steady, and your home increased in value by 5 percent, then you would see a 5 percent increase in your tax bill. If governments decrease their mill levies, your increase would be less than 5 percent. If governments increase their mill levies, you tax bill would jump by more than 5 percent.
Stay tuned on that front. There will be much teeth-gnashing about the county and city budgets this summer.
In terms of who may see the largest increases, rural residents should be on the lookout. Miles said his office did a thorough study of rural property values, and it showed that quite a few rural residences had tax values that were below the price the home would likely fetch if it were put on the market.
The largest increases, though, aren’t coming from homes, but rather from farmland. Miles said the average value for farmland has increased 11 percent in the county. Miles understands the increase comes at a bad time for farmers. Commodity prices are relatively low at the moment. But several years ago, commodity prices were near record highs. Those high prices of previous years are having an impact on tax bills this year.
“We have gotten quite a few questions already about why rural land values are going up so much,” Miles said. “It is the formula. It is still pulling in those high values from past years.”
In simple terms, the state’s formula looks at rolling eight-year averages of commodity prices to help determine the tax value of agricultural property.
For those of you who just own residential property, your value is figured in a more straightforward manner, although not a foolproof one. The county appraiser is tasked with estimating how much your home would sell for on the open market. The office uses a system of looking at what other similar homes have sold for in the past two years.
Tax values are going up, Miles said, because what buyers are willing to pay for homes is also increasing. If you have followed the real estate figures that Town Talk reports on each month, it shouldn’t be a surprise that home values are rising.
Real estate agents for much of 2016 talked about how fewer homes were on the market. A low supply of homes combined with a rising demand equals higher prices.
“Primarily, the lack of inventory is the reason that I hear for the rising prices,” Miles said. “That middle-range home where people want to buy, there aren’t as many people moving around like they did in the past. They are maybe putting some money in a remodel and staying where they are.”
In past years when home inventory has dipped, that’s when Lawrence builders have kicked into high gear to build more new homes. There has been a bit of an uptick in new home construction, but nothing like a boom. Miles is hearing the same thing I’ve heard on that front: Since the Great Recession, the number of Lawrence homebuilders to create that boom doesn’t exist.
“I think a lot of the builders we used to have either moved to another community or gone out of business,” Miles said.
It will be interesting to see whether new builders start to set up shop in Lawrence and whether we see a more aggressive approach to new home construction in 2017.
As for what to do about the envelope you are getting from Douglas County, every property owner has a right to appeal the tax value set by the appraiser’s office. You have to request an informal hearing with the appraiser’s office by 5 p.m. on March 30.
Miles, though, asks property owners to take a little time to study the value. Look around at the prices other homes in your neighborhood are being listed for sale.
“I would like people to think about whether they really could sell their house for what the county has it valued at,” Miles said. “I’m not a crystal ball reader. I can’t tell exactly what your sale price would be, but within reason, are we close? If we are, my recommendation would be to not pursue an appeal, but everyone has a right to appeal.”
In other news and notes from around town:
• While we are talking about real estate, here is the latest report from the Lawrence Board of Realtors. 2017 got off to a pretty hot start.
The board reports that Lawrence homes sales for January were up 24 percent compared with the same period a year ago. Real estate agents sold 51 homes in January compared with 41 in January 2016.
Probably the most important number in the report is the number of active listings on the market stood at 197 homes. That’s down from 260 homes in January 2016 and 286 homes in January 2015. If that trend continues, it would seem home prices are destined to rise.
The good news is that 110 homes did come on the market in January. That’s a higher number of new listings than what we’ve seen in past months. So, perhaps a few more homeowners are deciding to take advantage of the rising prices and cash out of their existing properties.
Real estate professionals are predicting it is going to be a seller's market in 2017.
“This again will be a good year for sellers and a very competitive year for buyers,” said Mark Hess, president of the Lawrence Board of Realtors.
Lawrence's real estate market seems to be returning to its past form, which may mean another annual tradition will return: Notices from the Douglas County appraiser's office that your home's tax value has increased.
The latest numbers from the Lawrence Board of Realtors show July was another strong month for home sales in the city. Real estate agents sold 141 homes in July, up about 15 percent from July 2012 and nearly 64 percent from July 2011.
For the year to date, real estate agents have sold 695 homes, which is a 25 percent increase from the same period a year ago and a nearly 50 percent increase from the same period in 2011.
But the more interesting numbers are found in the selling price data. With seven months of figures in the books, it is now time to start paying attention to pricing trends. In summary, they're up.
Through July, the median selling price on homes in Lawrence has been $168,900. That's an increase of 5.9 percent from the same period of 2012. It also marks a turnaround in the market. At this time last year, home prices were down 5.6 percent compared to 2011. In other words, it looks like home values have found their bottom in Lawrence, and now are on a fairly steady climb.
If that trend holds, it seems likely those higher prices will be reflected in the tax values that are calculated by the Douglas County Appraiser's office. The appraiser's office hasn't provided any guidance yet on what home owners should expect this spring when they get their change of value notices. But the office has been running its own reports on home sales, and it is showing an increase in selling prices as well. Countywide, selling prices are up about 5 percent, according to the county's data.
That doesn't necessarily mean the average property should expect to see its taxable value increase by 5 percent. But an increase is a real a possibility this year, when in the past couple of years falling or stagnant values were more the norm. The second half of the year will be key, because the appraiser's task is to determine the value of the property on Jan. 1. If interest rates rise and housing demand slows in the second half of the year, that will change the equitation considerably.
As for other numbers in the Board of Realtors' report, here's a look:
• Year-to-date, real estate agents have sold 62 newly constructed homes. That's up almost 41 percent from last year.
• Through July, the median days-on-market for a house is 42, down from 60 in 2012.
• Total sales volume for the year thus far is $140.5 million, up 33 percent from the same period a year ago.
• The number of active listings on the market at the end of July was 437, down from 500 at the time period in 2012.
• The number of pending contracts at the end of July stood at 124, which is down from 136 at the end of July 2012. That may mean August numbers will be down a bit from August 2012 numbers.
Lawrence home sales increase by nearly 28 percent in 2012, but home values on the decline, according to two new reports
Another day and another sign that Lawrence’s economy had a bit of a bounce-back year in 2012.
Yesterday we reported on strong growth in retail sales in Lawrence. Well, Lawrence homebuyers are not to be outdone. They actually increased their buying pace faster than shoppers did.
A new report shows homes sales in Lawrence increased by 27.9 percent in 2012 compared to 2011 numbers. Real estate agents sold 899 homes in the city limits during the year, according to numbers compiled by the Lawrence Board of Realtors.
Sales hit an abysmal level in 2011, so having a large increase over those numbers is one thing. But also important to note is that sales totals for 2012 were about 8 percent above 2010 totals. So, the local real estate market made up for more than two years worth of losses in 2012.
Sales of newly constructed homes jumped by nearly 40 percent, totaling 88 for the year. But new home builders haven’t yet returned to the 2010 level of activity, when they sold 102 new homes.
Not all of the numbers indicated a housing rebound. Some indicated that sellers adjusted their expectations downward on what their homes are worth.
The median selling price in Lawrence checked in at $159,500, down 5 percent from $167,900 in 2011. The Board of Realtors report comes out at the same time that the Douglas County Appraiser’s office is finalizing its work on change-of-value notices that will be mailed to Douglas County homeowners.
While the Board of Realtors data shows a 5 percent drop in selling prices, most homeowners shouldn’t expect to see that type of decline in the home values that the county creates to figure your property tax bills. But many will see a decline, and for some this will be at least the second year in a row they’ve seen their properties lose value.
The preliminary numbers show about 28 percent of residential homeowners will see a decline between 2 percent and 4.99 percent in value.
Another 24 percent are expected to see declines between .01 percent and 1.99 percent, while another 8 percent are expected to see values drop by 5 percent or more.
About 33 percent of homeowners are expected to see their values remain steady.
The appraiser’s office is estimating 7 percent of residential properties in Lawrence and Douglas County will see some sort of increase in values.
When you add it all up, local governments may see their tax bases decrease by 1.2 percent to 1.5 percent as they begin building 2014 budgets this summer.
Homeowners should start receiving their change-of-value notices on Feb. 28, and then can begin determining whether they want to contest their values through the county process.
If you are wondering why the Board of Realtors numbers show a 5 percent decline in the average selling price, yet the appraiser is projecting most homeowners will see declines far less than that, there are some reasons.
The biggest is sample size. The Board of Realtors number is a selling price for just 900 homes. The appraiser’s office is trying to create a value for about 30,000 residential homes in the county.
A second factor is randomness. There’s no guarantee that the 900 homes sold by local real estate agents are representative of the type of housing stock that exists throughout the county. For example, four-bedroom ranch homes may have been the big seller in 2012. (This is just an example. I don’t know what the big seller was.) But four-bedroom ranch homes don’t make up the majority of the homes in Douglas County, so it would be difficult to use the selling price of those ranch homes to determine the value of other dissimilar homes.
But perhaps the most interesting reason is foreclosures, or their close cousin, short sales. I don’t have final 2012 foreclosure numbers yet, but I’ll work to get them. What I do know is that the Douglas County Appraiser’s office is not considering many of those foreclosure sales to be valid in terms of being comparable sales to set values for other properties.
On foreclosed properties, banks don’t get to keep the amount of money that is over and above the amount owed on a foreclosed mortgage. So, banks don’t have a lot of natural motivation to negotiate a deal that represents the full market value of a property. Their motivation is to get the foreclosed homes off their books. At least this is how Douglas County Appraiser Steve Miles has explained it to me previously.
In a recent report, he noted he’s seen several foreclosed properties bought and then almost immediately sold for double the purchase prices. That leads him to believe the foreclosure sales aren’t representative of fair market value in most cases.
All of it leads me to believe that it will be another interesting year in Douglas County real estate in 2013.