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County property values show signs of stabilizing
Following a sharp drop in recent years, the assessed value of homes in Elmore County showed signs of recovery over the past year with the value of commercial businesses showing similar signs of stabilizing.
Figures released recently by the Elmore County Assessors Office showed home property values fell by less than a half percent -- roughly $5 million -- compared to a seven percent drop the previous year.
Those figures are based on an annual appraisal study conducted by the assessor's office of residential and commercial properties across the county. Different properties in different areas of the county, such as Mountain Home, Glenns Ferry, Featherville and Chattin Flats, were assessed within their respective zones during the annual review, which covered a 14-month period that ended in December 2011.
"We are mandated by state law to appraise properties each year at 100 percent of market value as of Jan. 1," said Elmore County Assessor Ron Fisher. The state tax commission then compares the county's appraised values against the reported sale prices of residential and commercial properties to ensure the county's estimates are within 10 percent of the market values.
Meanwhile, a separate study conducted by the state tax commission looks at the value of the county's "operating properties," which include utility systems such as rail and phone lines.
When the local housing market collapsed in recent years, the county used a "blanket decrease" in which the assessed values fell at the same rate across the county. However, officials saw a significant difference in property values between communities during its latest assessment, according to Fisher.
That prompted the county assessor's office to adjust property values based on their location in the county versus a one-size-fits-all approach.
Fisher said the method used this year was fairer to property owners in areas of the county where sales had started to stabilize.
It also took into account that newer homes tended to yield better prices on the housing market versus older ones, he added.
Despite more optimistic numbers collected during the county study, Fisher emphasized that most home sale prices were still lower compared to those sold prior to the housing market crash in 2008.
Of all the homes bought during the latest assessment period, more than 55 percent were listed as "distressed" sales.
Homes that fell into that category included repossessions, foreclosures and short sales that were sold close to their "break-even point" -- or below. Those distressed sales continued to account for approximately half of all houses sold over the past three years, according to Fisher.
With repossessions and short sales continue to remain the "normal" housing market in certain communities across the county, it remains a challenge to accurately make those property assessments, he said.
However, there was some positive news reported in the latest study, with newer houses showing "a substantial increase in value," Fisher added. He seemed cautiously optimistic that property values across the county will continue to improve in coming years.
"The prices seemed to have leveled out," he said. While the county saw a similar number of sales last year compared to the last two or three years, the average prices haven't fallen.
In fact, Fisher reported that home sales yielding better prices were newer structures versus older ones. He credited those sales, in part, to military families, who prefer buying new homes versus buying out a seller's equity and having to spend a considerable amount of money to renovate an older residence.
While homeowners saw some relief during the county's latest property assessment, commercial and business property values saw little change in values, Fisher said.
"Commercial land values did not change inside the city limits of Mountain Home or Glenns Ferry," he added. However, those values fell by as much as 15 percent elsewhere in the county.
The reason why some commercial property values fell and others remained unchanged was likely due to sales and new construction in some areas along with discrepancies identified between similar properties during the assessment.
At the same time, a study conducted by the county in 2011 showed that commercial properties were undervalued by as much as 25 percent. To compensate, local officials raised those initial estimates by 5 percent to come close to the median figures set by the state.
"This year, we're right where we want to be" with regards to commercial and business property values, Fisher said. "If things continue the way they are, they may level off... and may be on the increase."
In fact, the study was completed before new industries starting to take shape in Mountain Home, including a new livestock food processing plant on the city's north side.
How much a property's assessed value changed -- either an increase or decrease -- all comes down to their location, according to Fisher. Properties located in areas with a higher number of "distressed" transactions tended to see a greater change than those located in more market-stable areas.
Significant changes in the assessed values of residential and commercial properties pose a separate challenge when it comes to determining how much these owners will pay in yearly property taxes. Simply put, it doesn't mean people will necessarily pay less in taxes next year, according to Elmore County Clerk Barbara Steele.
However, lower property values do affect the dozens of taxing districts within the county that collect funds from this source of tax revenue. These taxing districts are responsible for collecting revenue to run everything from city and county government services to the local school districts.
As property values fall, it essentially leaves city and county governments with fewer tax dollars to work with during the new fiscal year. According to state law, these taxing districts can only increase their respective levies by a set percentage each year to compensate for the revenue shortfalls.
For example, the City of Mountain Home has a levy increase limit of 3 percent. If the city reaches that ceiling as it puts together next year's budget, it's only choice involves making cuts to city services and departments to make ends meet.
As county officials look ahead to the next property assessment, it's not clear it changes to the state's personal property tax tables could seriously affect next year's assessment numbers.
Earlier this year, state legislators eliminated a portion of the revenue collected in personal property tax from commercial property owners. The law provided an exemption for businesses with less than $100,000 in taxable property, retroactive to Jan. 1.
The state has replacement money in its budget to compensate for revenue the counties expect to lose due to these changes in the state's personal property taxes, according to Fisher.
"So that really didn't impact us like it would have had they (the state) gone with the full personal property tax exemption," he added.