Tax values of homes in Douglas County hit a new high; homeowners could face 15% or more tax increase
photo by: Rochelle Valverde
A key piece of paper arrived in the mailboxes of homeowners in recent days. It is the document that explains how much the county thinks your home is worth, which is important because local governments are going to charge you property taxes based off that value.
Upon opening those letters, homeowners may have wondered whether they expanded their homes and simply forgot. Perhaps they had built a vault — filled with gold.
In other words, home values have taken a big jump, according to the county, which may mean a big jump in property taxes due later this year.
Most homeowners in the county have seen the taxable value of their homes increase by more than 15%, Douglas County Appraiser Steven Miles told me. That’s the largest average increase Miles has ever seen in his approximately 30 years in the appraiser’s office.
And, no, none of this really has much to do with whether you have made any improvement to your home in the last year. There has been no need for home improvement, window washing or even light dusting to cause your home to go up in value. A frothy real estate market is driving the increases in home values.
“The market has just been totally crazy for the last year and half to two years, Miles said.
We’ve been reporting monthly for a couple of years that the Lawrence Board of Realtors is seeing homes sell in just four or five days, on average, and that the number of homes going on the market is not keeping up with the number of people looking to buy a home. That’s a recipe for surging home prices.
“People are able to command what they want,” Miles said of sellers and their asking prices.
In recent months, information from the local Realtors board has shown an increasing number of homes actually are selling above their asking prices.
In more normal times, such a hot home market would lead to a surge in new home construction to try to meet the demand of what is a large number of potential buyers. But Lawrence has not seen a surge in home construction. Supply chain problems and inflation have made building material expensive, and thus have raised the prices of newly built homes. That’s happening everywhere. Some in the real estate community argue that Lawrence faces additional challenges that include a lack of land that is shovel-ready for new home development.
Miles’ office, by state law, is required to come up with what it believes is the fair market value of every property in the county. In general, the definition of fair market value means what a well-informed buyer would pay and what a well-informed seller would sell a property for.
“I have to make that determination without regard to what it may do to people’s taxes,” Miles said.
Of course, the tax impact is what’s on the mind of many county residents. Lawrence and Douglas County homeowners could be facing a big tax bill later this year, thanks to the rising home values.
I say “could” because there is still a lot that local government officials can do to avoid such a tax increase. The value of your home is only half the equation used to determine how much you pay in property taxes. The other half of the equation is the tax rate — known as a mill levy — which will be set by local governments when they make their 2023 budgets this summer.
This historic increase in home values surely will bring into play a conversation of a property tax rate decrease from local governments such as the Douglas County Commission and the Lawrence City Commission.
Miles’ office currently is estimating that the county’s total property tax base — assessed valuation is its technical name — has increased by 14% from a year ago. That means if the County Commission left its tax rates unchanged, it would receive a 14% increase in the amount of property tax revenues the county receives.
To put that in perspective, most years the county’s property tax base goes up by 2% to 4%, with a few extraordinary years of 8% or so. The large increases of 7% or 8% were more common in the 1990s and 2000s, and those types of increases did lead to some property tax rate decreases.
More recently, rate decreases have become less common, as the property tax base has grown more slowly. These budget sessions this summer will be some of the more interesting in recent memory. Normally, city and county commissioners declare victory if they can hold the tax rate steady. But a steady tax rate this year will mean a nearly 14% tax increase. It will be interesting to see if that creates a new dynamic for budget hearings this summer.
Of course, that 15% figure is an average, and is subject to change. It also is likely to be impacted by what part of the county you live in. Home values have increased in every part of the county, but not equally. Here’s a look at the median market values for the major markets in Douglas County, and how they compare with 2021 median values, according to the appraiser’s office:
• Baldwin City: $215,400 median, up 18.1%
• Eudora: $212,500 median, up 13.2%
• Lawrence: $245,100 median, up 17.3%
• Lecompton: $158,525 median, up 22.6%
• Rural: $335,000 median, up 20.7%
The county appraiser’s office also creates tax values for commercial properties in the county. Commercial values also are up, but they are up much less than home values. Miles estimated that many commercial properties saw their values increase by about 4% over the last year, compared to many homes increasing by around 15%. (The county saw the total value of commercial properties increase by about 8%, meaning that 4% came from existing properties that grew in value, while the other 4% came from newly constructed commercial properties that weren’t on the tax roll a year ago.)
Why are commercial values going up much less than home values? Supply and demand is the simply answer. When an office building goes on the market, it generally is not selling in a matter of days, unlike the typical single-family home. Less demand from buyers looking to purchase commercial property has stopped those properties from seeing the large increases that homes have experienced.
In fact, Miles said he was surprised that some commercial properties increased as much as they did. He said retail establishments have fared better than expected during the pandemic, which has led to some increases in their property values.
Here’s a look at the major types of property classes in Douglas County and how much their values have increased from a year ago. Note that these are the total values, meaning they measure both how much existing properties have increased in value, plus any newly constructed properties that have been added to the tax base.
• Residential: $1.17 billion, up 16.2%
• Farmstead: $56.4 million, up 36%
• Vacant land: $18.8 million, up 9.9%
• Agricultural: $26.1 million, up 5.3%
• Commercial: $357.6 million, up 8.2%
Another interesting thing to do with those numbers is to compare the residential property tax burden with the commercial property tax burden. When I consider the residential tax burden, I look at both the residential total and the farmstead total, since that captures the many rural homes that exist on farms. In 2022, those two categories comprised 75.3% of the county’s total property tax base. Compare that with 2019, when those two categories comprised 70.7% of the county’s tax base.
The opposite has happened in the commercial sector. In 2022, the commercial sector comprised 21.8% of the county’s total property tax base. In 2019, it made up 26.1% of the tax base.
If you are a homeowner and feel like you are carrying a heavier load of the county’s taxes, you are.
Property owners can appeal the tax value the county appraiser has set for their properties. To start an appeal, property owners need to request an informal hearing by March 30. They can make the request at the appraiser’s office in the Douglas County Courthouse at 11th and Massachusetts streets, or via email at email@example.com.