Appraisal climb to offset levy decline
By Rod Haxton, editor
A slight drop in tax mill levies isn’t likely to mean a lower tax bill for most Scott County property owners.
A 1.2 percent drop in the mill levy for Scott City property owners will be more than offset by home appraisals that are 5-10 percent higher than a year ago.
For farmland owners the impact will be even greater with land values climbing about 18 percent this year, following a 24 percent jump a year ago.
There has been little change in commercial property values.
The trend in rising real estate valuations is a reflection of a strong housing market, Scott City’s proximity to Garden City and a strong business environment that continues to supply a workforce for a limited amount of housing.
The demand for residential housing has remained consistent for several years. While that demand is what drives real estate values
“Homes that were bought and sold again in the last three years, and there were 60 to 70, have consistently gained about five percent in value,” says Scott County Appraiser Randy Sangster.
As for a “paired sale” - in which a home has been purchased and sold again within one year - the inflation rate has been 8-9 percent.
“If a vast amount of remodeling was involved, then we look at those situations differently,” says Sangster. “When looking at factors that contribute to the increased value of a home, we compare apples to apples. Are we looking at market conditions or was a lot of carpentry work involved?”
Sangster says the analysis of these sales affects all housing values in the community.
Factors Driving Values
One of the factors driving home sales is whether or not a property is going to require major remodeling.
“People are finding that it’s better to pay someone $10,000 more for a home than it is to settle for a lower-priced home that will require $20,000 in renovation,” observes Sangster.
With a typical home, says the appraiser, an individual will only recover about 30-40 percent of their renovation costs when they decide to re-sell.
The length of time that a home remains on the market can also be reflected in the appraised value.
“When the housing market is hopping and there’s a lot of activity, that’s going to drive appraised values a little higher. “Even though the market is still pretty strong, we’re seeing more housing that’s out there for six to 12 months before it sells. That tells me the market is slowing down,” Sangster says.
“You might eventually get what you’re asking, but it might also take three months longer to get it.”
With new construction for most homes ranging from $175 to $200 per square foot, more people are looking at existing homes that will range from $80 to $100 per square foot, even if they require some renovation.
“Why buy new?” asks Sangster. “That’s what’s driving the market for real estate, along with the fact a lot of towns don’t have very many good homes ready to move into.”
The local housing market is much stronger than in surrounding communities. In Leoti, for example, Sangster says the appraised value of homes increased by only 1-2 percent during the past year.
“Being somewhat of a bedroom community to Garden City helps and you can’t underestimate the impact of the hospital and the employment it brings to town,” Sangster says.
Ag Land Climbing
At the same time, owners of agricultural land will continue to see a sharp climb in values because of the rolling eight-year period that’s used in calculating use-value for farmland.
“We’re still figuring $6 wheat and $6 corn in those values,” says Sangster, who noted that the eight-year cycle does not include the two most recent market years. “It will be another two years before current crop prices are figured in the formula.”
He warns ag producers to expect use-value numbers to jump another 12-15 percent in next year’s assessed valuation calculation, and possibly another increase the following year before they start trending downward.
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