by West + Main agent Janell Arant
The Good, the Bad, the Ugly...
In the last several years, Colorado homeowners have seen the good, the bad, and the ugly of what comes with an absurdly imbalanced seller’s market resulting from a high demand for housing with not enough inventory.
The good? We all love that part– unprecedented home equity gains, of course! The bad? Bidding wars made for either discouraged, maybe-next-year, buyers or new homeowners left feeling like they paid more than they should have but had no choice. The ugly? Well, let me tell you about the perfect storm...
Bomb Cyclone PTSD...
Picture a typical spring storm in Colorado – a little wind, a little rain turning to giant snowflakes that melt the next day, right? Maybe a few broken branches, but people are outside walking their dog and getting on with their day. Then, picture the bomb cyclone spring storm we had a few years back. It was a culmination of extreme weather conditions all joining forces, never seen before in one storm. Records were broken, businesses and schools shut down, and thousands were left stranded.
Reporting live from your mailbox...
Now picture your 2023/24 property taxes as that bomb cyclone (yes, it’s a stretch, but stay with me). In this scenario, the County Assessor’s office is the weather reporter, simply gathering the data and delivering the report to you, good or bad.
What exactly is the Assessor’s office? To keep it simple, the appraisers working for the county Assessor’s office, by law, gather sales data occurring during a select period of time, to value homes equitably so property taxes can be collected by the County Treasurer to pay for public services such as schools, roads, water, sewer, libraries, and public safety! All the things we need to run our cities well.
On May 1st the news of that that bomb cyclone is hitting homeowner’s mailboxes in the form of a little postcard known as your NOV (Notice of Value) sent by the Assessor’s office. Essentially, it’s the weather report based on the data they found, and this time it’s ugly!
The Makings of the Perfect Storm...
Just like the volatile conditions that have to come together to create the perfect storm, Colorado’s property tax conditions have all come together in the worst possible way, wreaking havoc to home owners across the state...and it all started brewing a few years ago:
- The repeal of Colorado’s Gallagher Amendment in 2020
- Rising home values at unforeseen rates between 2020 and 2022
- Peak values occurred April-June 2022** (keep this date in mind)
- Interest rates rising sharply in the summer of 2022
- The housing market cooling down because of interest rates
...add in our long-standing Colorado statutes:
- Every odd year, homes are reappraised by the county Assessor’s Office - 2023
- Residential properties are valued with the market approach, using sales occurring during the pre-designated study period
- The study period for this reappraisal = July 1, 2020 – June 30, 2022**
- All sales occurring in the study period must be time trended as if they sold on
June 30, 2022**
What does this mean for homeowners?
Essentially, it comes down to this: While unprecedented housing market conditions were great for earning equity, homeowners are now going to be paying for it in their property taxes. Without the Gallagher Amendment, which mostly benefited densely populated residential areas by keeping property taxes balanced, the protective shield is gone.
Homeowners are going to feel the pinch starting January 2024 when the increased property taxes kick in, but by how much? Denver County Assessor, Keith Erffmeyer, states, “Denver’s median increase for single family homes is 36% for this reappraisal, and even higher for mountain areas like Crested Butte.”
Tom Kammer, analyst for Douglas County’s Assessor’s office, reported an average increase of 49% for Douglas County homeowners! It’s like nothing either have seen before. Kammer warns the biggest misconception by homeowners, that may spark unnecessary property tax appeals, will be the discrepancy they see between the June 30, 2022 appraisal date value on their NOV and their home’s current value as seen on popular public websites like Zillow. He states, “The NOV is going to look high because it was when values were at it’s peak.”
Since spiking interest rates have demanded for a cooling in the housing market, the “Zestimate” homeowners see may not match up. He recommends if homeowners are using sites like Zillow, to use the Zestimate History sliding timeline graph or table view, which can both be found on the desktop version, which will show what the property’s value was as of June 2022.
County Assessors, like Erffmeyer, are working hard to educate homeowners as well as stay in front of Legislation to deliver the message that homeowners will need relief. Legislation has been presented with recent bills to help provide relief, but none have been adopted as of yet.
Next steps for homeowners...
1) Educate yourself on the home valuation process, visit your County Assessor website
2) Property tax appeal season begins May 1st and runs through June 8th, however please check your county’s policies and deadlines as they may differ.
Protesting your property value is every tax payer’s right and is easily exercised online, in person, or by mail (see your NOV for instructions).
However, as a former Douglas County residential appraiser, I recommend that you follow these guidelines when protesting:
- Have a good reason to protest
- Know your value could increase if big-ticket items are found missing
- Provide comparables in your neighborhood that look like yours of same style (don’t mix Ranch-style homes with 2-story’s, for example.): similar size, similar lot properties, similar quality.
- Only use comparables that have sold in the study period (July 1, 2020 – June 30th, 2022)
- The closer the sale is to the appraisal date of June 30, 2022, the better
3) Reach out to your Legislators
4) Talk to your trusted Realtor® for guidance, they know the market better than anyone and are here to answer all of your real estate related questions.
Look on the bright side...
To end on a positive note, Colorado has some of the lowest property taxes in the entire nation – yes, even with the bomb cyclone style conundrum we’re in! Plus, Colorado is just simply amazing to live in!
