Nearly half of all homeowners should expect large jump in taxable value of their homes, latest county numbers show
photo by: Thad Allender/Journal-World File Photo
While we are dealing with a multitude of problems related to living in a deep freeze, Douglas County homeowners soon may get a reminder that living in an oven can be challenging too. Indeed, Lawrence’s housing market is a bit like a rapidly heating oven, and property owners later this month will be getting a letter from the county appraiser’s office reminding them of the costs that come with it.
In short, those costs may involve another jump in property taxes. The latest estimate from the county projects 45% of all homeowners will see the taxable value of their homes increase by 5% or more for the new tax year.
Douglas County Appraiser Steven Miles plans to mail change of value notices to all property owners on or before Feb. 28. Those change of value notices list the taxable value the county has determined for your property. Those taxable values will be combined with local property tax rates — which will be set by various city, county, township, school board and other elected officials this summer — to compute the amount of property taxes you will owe in December.
Understanding the property tax equation can be a bit like figuring out how to plug in the battery charger for my long johns — confusing and potentially painful. Let me try to make it simpler: If the taxable value of your home increases, you will see a property tax increase, unless local governments agree to a corresponding decrease in property tax rates. In recent years, that hasn’t been the trend for tax rates. Douglas County and area cities generally have held the property tax rates steady, but they haven’t been dropping them significantly.
If that trend holds true this summer when rates are set, many homeowners will be looking at their second consecutive year of property tax increases, both coming during a time when the pandemic is challenging finances on other fronts.
The scenario shouldn’t come as a surprise. Journal-World reporter Dylan Lysen last week reported that Miles is estimating the county’s total property tax base has grown by a little more than 4% in the last year.
But in some ways, that estimate undersells what homeowners may be facing. That’s because the county’s total tax base includes all types of property, not just residential property. Some types of property are expected to see a decline in value, bringing down the overall average.
Miles is projecting that about 55% of all commercial properties in Lawrence and Douglas County will see their values hold steady or decline, according to his most recent monthly report. Businesses in the lodging and entertainment sector have experienced some of the largest decline in values.
The picture is much different in the residential market. While 55% of commercial properties will hold steady or decline, only about 9% of residential properties are expected to have steady or declining values.
Here’s a look at how property tax values are expected to shake out for the county’s roughly 31,000 residential parcels of property.
• Decline in value by 5% or more: 525 properties, or 1.7% of total
• Decline in value by 2% to 4.99%: 233 properties, or 0.7% of total
• Decline in value by .01% to 1.99%: 815 properties, or 2.6% of total
• No change in value: 1,341 properties or 4.3% of total
• Increase in value by .01% to 2%: 4,985 properties or 15.9% of total
• Increase in value by 2.01% or 4.99%: 9,166 properties or 29.1%
• Increase in value by 5% or more: 14,384 properties or 45.7%
Property owners should watch their mail on or after Feb. 28 to see which group their homes have landed in. Property owners can file an appeal if they think their properties have been valued incorrectly. Look for details on how to do so on the change of value notice you will receive in the mail.
If you file an appeal, you had better be ready to argue that your home wouldn’t sell for the amount listed by the county appraiser. Determining the fair market value of a home is how appraisers set the taxable value of a home.
In Douglas County, we have been reporting for months now that home values are on the rise, as buyers are outnumbering sellers in Lawrence. The median selling price of a home in Lawrence finished 2020 with an 11% increase, according to statistics kept by the Lawrence Board of Realtors.
The first report of 2021 shows that trend actually may be accelerating. The Lawrence Board of Realtors reported the median selling price of a Lawrence home sold in January was up 16.7% from the same period a year ago. The median selling price checked in at $249,900. Total home sales in Lawrence were up 22% for the month, totaling 61 sales.
In other words, the market remained red hot. One statistic that shows just how hot is that the median number of days a home sat on the market before selling in January was just four days.
All the statistics point to an imbalance in the supply and demand of home sellers and buyers. There were only 84 homes on the market in Lawrence in January. That’s down from 215 homes that were on the market in January 2020.
It will be interesting to watch whether the market remains red hot all year. At some point, basic economics would suggest that the demand for homes will slow as prices continue to rise. But with mortgage interest remaining near historic lows, there’s some belief the market can remain hot for a bit longer.
There was one sign in the January numbers that could indicate a slowdown is coming. The number of pending contracts for sales was at 101 in January. That’s down from 130 during the same time period a year ago. The statistics for pending contracts can sometimes be a good predictor of home sales for the coming month. But, I’m not sure I would bet on a slowdown. The pending contracts may be low simply because homes are selling so fast they don’t have much time to sit in the “pending” category.