Property owners fit in two categories: Those who feel wealthier when their principal asset, their home, increases in value. And those who focus on the increase in property taxes such an increase in value nearly always means.
This year those inclined to think about property taxes first will be pleased with the news.
On Monday, assessors in Cedar Rapids, Iowa City and Linn County reported that the values will not change for the vast majority of homes, commercial properties and industrial properties in their jurisdictions in calendar year 2009 unless improvements have been made to the properties. The same is true with homes in Johnson County, though apartments and mobile home courts will see small valuation increases while office buildings and small retail shops will see small valuation decreases in Johnson County outside Iowa City, Bill Greazel, Johnson County assessor, said.
The big exception to the general trend is with the significant number of properties in the flood-impacted parts of Cedar Rapids.
Cedar Rapids City Assessor Scott Labus said he expected to send out assessment notices to about 7,400 property owners among the owners of the 54,000 parcels of property in the city. Many of those receiving assessment notices – some will be for improvements on properties outside the flood areas — will be those whose property was damaged by the flood. In the worst cases, the only value to the property is now the lot on which a flood-damaged house sits, and the value of that lot, too, may now be less than its value had been, the assessor said.
Overall, Labus estimates the city’s residential property has lost $138 million to flood damage, and the city’s industrial value another $11 million.
Labus said he continues to work on valuations for flood-damaged commercial property. Those commercial properties on the west side of the Cedar River might see valuations at 35 percent of what they had been prior to the flood. Meanwhile, those in the downtown core will see property-valuation declines depending on how close they are to the river and how many stories there are in a building. The more stories, the less the property’s decrease in value, Labus said.
Outside of the flood-impacted areas of the city, Labus said his office’s analysis of property sales has indicated that the current valuations of properties in the city have been within 98.9 percent of prices for which properties have sold.
State law requires assessors to keep valuations in line with sale prices, and Labus said the city is so close to that mark now that his office does not need to make valuation changes to most properties.
Julie Kester, Linn County assessor, noted that the Iowa Department of Revenue expects valuation changes if the value of a jurisdiction’s property is off by more than five percent from the sales prices. Kester said her office’s valuation of Linn County’s residential property is 95.1 percent of sales figures in 2008 and so does not require any changes.
Dennis Baldridge, Iowa City’s assessor, said Iowa City’s current residential valuations were at 95 or 96 percent of the sales prices in the city in 2007 and 2008, and so they, too, did not need to be changed. Johnson County’s Greazel put Johnson County’s residential valuations at about 99 percent of the sales prices.
New decisions about property valuations occur in each odd-numbered year, which are the years in which the Iowa Department of Revenue issues equalization orders in an attempt to make sure that local jurisdictions’ valuations are in line with sales prices.
Labus said the state department works with local assessors to signal where local jurisdictions’ valuations are so that the state does not have to issue an equalization order in the fall.
Labus on Monday said he intends to change his office’s practice and will begin making valuation adjustments each year and not just in odd-numbered ones. He said property owners are apt to mind a small valuation increase in each of two years less than a bigger increase every other year.
Labus and his predecessor, Rick Ellars, have divided Cedar Rapids into 173 mini-neighborhoods, each of which can be analyzed to see what sales of property have been in each mini-neighborhood.
In 2007, such a process saw some homes in one mini-neighborhood climb 23 percent in value while mini-neighborhoods saw values drop 10 percent.
As for this year, Labus said his review of sales figures and his discussions with the Cedar Rapids Area Association of Realtors indicates that the housing market in Cedar Rapids is in a period of what he called “stability,” hence the reason for keeping valuations the same this calendar year, he said.
The Cedar Rapids housing market never saw a big price “bubble” like other markets across the country and so it is not seeing a price “burst” now, Labus said.
He said his sense is that homes valued between $85,000 and $125,000 in Cedar Rapids have probably seen valuation increases because of the demand for that part of the housing market from flood victims in search replacement homes.
“I have a feeling that market is a little artificial because of the flood. But I don’t have the facts to back me up on that,” Labus said.