New county valuation— Property taxes to increase
- Published: October 19, 2017
Local property values are once again on the rise thanks to a strong housing market, but the new values could lead to bigger tax bills for some Yellow Springs homeowners.
Property values in the village grew an average of 9.3 percent since 2014, a rate nearly twice the county average of 5 percent, according to the latest property valuation by the Greene County auditor. It is the first significant increase in local property values after remaining flat for six years.
Villagers, who should have received a letter from the auditor in late September, can contest their new property valuation by calling the auditor’s office at 937-562-5621 or filling out a form at its website. The deadline to do so is this Friday, Oct. 13.
The new property values will be used to calculate property taxes starting in 2018. Though higher values may lead to small tax increases, the percent increase in taxes will be less than the percentage increase in valuation, according to Auditor David Graham this week.
There are always a few errors in the process, but most properties in Yellow Springs likely did gain at least 5 to 7 percent since 2014, Graham said.
“I always hate to say this, but values in Yellow Springs are very rarely too high because sales always show the market is going up,” Graham said. “Even when we were going through the Great Recession, prices in Yellow Springs were not going down. It’s a unique community that has limited housing and a lot of desire to live within the village.”
The 2,417 village parcels were assessed by looking at sale prices over the last three years within eight residential districts in town, Graham explained. The growth in property values is a reflection of the robust local housing market, which several local realtors confirmed this week.
“We’ve had a strong market, but this past year prices have gone through the roof,” said local realtor Craig Mesure of Coldwell Banker. The average sale price of local homes for 2017 so far is $269,797, up from $260,322 in 2016 and $206,580 in 2015, according to figures from the Dayton Area Board of Realtors.
Elsewhere in Greene County, property values this year rose 10 percent in Cedarville, 9 percent in Bellbrook, 7.5 percent in Xenia, 7 percent in Beavercreek, 4.5 percent in Clifton and 2.8 percent in Fairborn, and only dropped in Jamestown, by 0.7 percent.
Property owner response
Some local homeowners were surprised by their property value increase. Laura Curliss saw a whopping 30 percent increase in the value of her Livermore Street home, from $200,000 to $260,000. Curliss purchased the property in 2014 and has not done significant work to the two-bedroom, two-bathroom, 1800-square-foot home, she said. Curliss plans to contact the auditor’s office to question the figure.
“I know the market’s been good, but seeing that was a surprise,” Curliss said.
Gayle Sampson, who lives on Jacoby Road outside of the village, did contest her new property value. She saw her valuation go up by $50,000, a 19 percent jump.
“The average in our area was 8 to 11 percent so we thought that was high,” Sampson said. “It’s not like the economy has shot through the roof.”
After several calls to the auditor’s office, the Sampsons got their increase lowered to 11 percent, but it took persistence and patience with the official handling her request, Sampson said.
“You’re definitely going to have to be pushy a little bit — keep on top of them,” Sampson said.
When Eric Oberg received his letter from the county auditor in the mail, he was surprised to see the value of his home, in the Fair Acres neighborhood north of Fairfield Pike, rise by 14 percent, or $17,720, higher than the local average.
Oberg, who bought the home three years ago, also said he has not made any significant improvements, though this year’s appraisal process would not measure those changes. He has noticed that the neighborhood has seen an uptick in recent sales, which could be a factor in his property value increase.
“Since we moved in there have been close to a dozen houses that have turned over, which is apparently not the norm in this neighborhood,” Oberg said.
Moving from rural southwest Ohio, the Oberg family saw an increase in their property taxes, but to Oberg it’s worth the price to live in a walkable town with good schools.
“I don’t love paying higher taxes, but I love what the taxes afford us as a lifestyle,” Oberg said. He said he does not plan to contest his new valuation.
Real estate reality
The rise in local property values is a sign that the housing market in Yellow Springs has rebounded since the subprime mortgage crisis of 2007–08. Though the trend extends to much of the Miami Valley, some areas are growing faster than others.
In Yellow Springs it took 10 years for average sale prices to climb above their pre-recession high of $244,688 in 2006, dipping to a low of $194,948 in 2012, which was on par with sales in 2005. Average home sale prices have increased by 38 percent in the last five years.
But comparatively, in Yellow Springs values never fell as low as in other communities. During the last reappraisal in 2014, the values for local residential and agricultural property fell around 1 percent, compared with a 4 percent drop in Greene County, and in 2011 the village saw just a 0.5 percent drop in residential and agricultural property values compared to a 5.6 percent loss in the county, according to figures provided by Graham.
Longtime local realtor Sam Eckenrode said although Yellow Springs always has a shortage of homes for interested buyers, it has become especially pronounced in the current recovering housing market leading to a seller’s market and higher prices. But demand for homes here is perennial.
“I can’t think of a time when there hasn’t been high demand,” Eckenrode said. “Yellow Springs is a wonderful village — it’s a great place to live. It’s just tiny and there’s no way we can possibly accommodate all the people who would like to live here.”
Eckenrode said the recent price rise is probably not a bubble, as in period from 2004 to 2006, when more and more villagers put their homes up for sale to cash out in a strong market, though “only time will tell.” Instead, real estate in Yellow Springs is a good example of the laws of supply and demand at work because it is an “island economy like Manhattan.”
Mesure added that the recent rise in average home sale prices is because of low inventory of homes and a steady stream of people willing to pay more to live in the village. He said new homeowners are typical of those in the past, including families, couples with two incomes and no kids and older people downsizing.
“It’s the usual flow of people coming in, there is just a shortage of opportunity,” Mesure said.
Mesure added that during a strong housing market, more homeowners invest in their properties because they know they will see a return for their investment, a move which further increases property values and sale prices.
But Graham commented that it’s largely the value of land in Yellow Springs that is rising fastest, not necessarily the built structures.
“If you were to take some of the houses in Yellow Springs and put them in Xenia, they would be worth a lot less,” Graham said. “So it’s the land value that does drive value increases.”
Mesure confirmed more lots have closed in recent years, which could be another reason for the increase in property values in certain neighborhoods.
Mesure added that while the residential market has boomed in recent years, commercial has lagged somewhat behind, with many properties sitting on the market for long periods of time.
“Residential has been our strength, which is good or bad,” Mesure said.
Residences made up 89 percent of the total local property valuation of $110,961,580. The figures came to $98.7 million in residential properties, $9.9 million in commercial, $2.1 million in industrial and $240,000 in agricultural.
Valuation process
The recent valuation, known as a triennial update, is done three years after the more thorough reappraisal process the auditor completes every six years.
During the reappraisal, Greene County appraises the 73,000 parcels in the county using a process that involves aerial and drive-by photography and has a budget of $1 million. Comparatively, the triennial update, which is based upon a computer model, is cheaper and less accurate, according to Graham. Both are required by Ohio law to ascertain the market value of a property at a given point in time.
“The location, the condition of the property, the square footage, the style — these are all factors that go into the appraisal,” Graham said. “With a triennial update we’re just basing it off the change in sales that occurred. … The re-appraisal will always be more accurate because we will inspect the condition of properties.”
Graham added that his office aims to appraise properties at 95 percent of their value, which explains why county appraisals for a property typically don’t match up to historical sales.
“If I shoot for 95 percent, then I have more people under-appraised than over- appraised, and if I over-appraise I have people yell at me,” Graham said.
Because of the large volume of parcels to appraise, the county typically runs the models and then looks for outliers. It’s a “flawed system” especially because every house is assumed to be similar when inside they may be either exceptionally dated or recently updated, Graham said. Especially in a market as small as Yellow Springs, where a few sales could skew a neighborhood, there may be errors, which is why the county provides an opportunity to contest the value.
Graham said that in general, less than 1 percent of property owners countywide contest their valuation. Though no one wants to see their taxes go up, those on fixed incomes and those who have no intention of moving may be particularly vulnerable to value increases, he added.
“It’s not just people on a fixed income, but it’s that group that has the greatest concern,” Graham said.
Impact on taxes
If a local homeowners’ property value increases by 10 percent, does that mean their property taxes will go up by 10 percent? Not really, explained Graham.
The affect of the property value change on taxes varies depending upon the type of levy, according to the auditor’s website. The three types are inside, fixed sum and fixed rate levies.
For inside levies (or “unvoted” levies) which can be no more than 10 mills, the tax rate would indeed increase at the same rate of a property value increase. If someone’s value increases or decreases by 5 percent, their taxes on inside millage would increase or decrease by 5 percent, respectively, according to the county auditor’s website.
But 90 percent of the millage villagers pay taxes on goes to outside levies (94 of 104 total mills), which will be less affected by a property value change.
In the case of fixed sum levies (16.9 mills locally), which are aimed at generating a specific amount of money, a change in local property value would result in no change to a property taxes.
As for fixed rate levies (77.1 mills locally), an increase in valuation would only lead to higher property taxes in the case of new construction. New construction also includes any additions to existing homes or properties and would result in the taxpayer making the improvement paying additional taxes. Only 6 percent of the local residential property value increase since 2014 was due to new construction, according to county figures.
“Let’s say you have the only house in Yellow Springs and they pass a 2 mill levy,” Graham explained. “If your property value goes from $100,000 to $150,000, that 2 mill levy will still cost you $70 per year. Just because I reappraised your property doesn’t mean it costs more to pay for services.”
Taxes are only assessed on 35 percent of the appraised value, Graham added. So a home appraised at $200,000 would only be assessed taxes on $70,000. Because people are more familiar with the appraised values of their homes, during voting season the county provides estimates of the tax impact of proposed tax levies for every $100,000 of appraised value.
Due to the numerous factors involved, the county auditor could not calculate the effect of a property value change on a single tax district such as Yellow Springs, so property owners can either do their own math or wait until they receive their first bill in 2018, Graham said.
Local property owners pay taxes to six government entities according to the following breakdown of voted and inside millage: Yellow Springs School District (69.9 mills), Greene County (14.45 mills), Village of Yellow Springs (11 mills), Miami Township (4.4 mills), Greene County Joint Vocational Services (3.45 mills) and Greene County Health District (0.8 mills).
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GIS/CAMA is plenty accurate if used strictly for the Land itself, which is the best source of taxation. Tax land, not buildings and you incentivize best-use practices, whereas the current system disincentivizes improving the properties.