TWIN FALLS — Like many in Twin Falls, Shane Hohnhorst saw a significant jump in his property value a few weeks ago.
The property assessment Hohnhorst received from the county in May amounted to a 7% increase over 2018, or more than $11,000.
That probably means higher taxes.
Since buying his home eight years ago in east Twin Falls, Hohnhorst’s annual property taxes have gone up about $2,400.
A higher home value is good, but his taxes have outpaced salary raises from the Idaho Army National Guard, and it’s unlikely his property in east Twin Falls could be sold for the county’s assessed price, Hohnhorst said. An independent appraisal May 7 valued his home about $17,500 less than the county’s estimate.
“I have proof that this is what my house is really worth,” he said.
He’s now forced to pay taxes for value he doesn’t think he has, or appeal the county’s assessment and risk raising his property taxes farther.
He’s not alone.
Twin Falls property values increased, on average, by about 10% this year, continuing a three-year trend of rising assessments in the Magic Valley. Average property values in Kimberly and Filer have gone up by about 12%, Twin Falls County Assessor Bradford Wills said.
“There’s a low inventory of homes for sale, which normally drives prices up,” Wills said.
It’s the same story in other nearby counties. Cassia County Assessor Dwight Davis said he’s seen an increase of about 8% this year.
“They’re going up, up, up,” Davis said about home values. “Our whole area’s growing.”
A lack of housing and rising construction costs play roles in the spike. Housing is more affordable in Cassia County, too, which makes it a draw.
“We have seen more people moving away from Twin Falls and commuting because of the value differences,” Davis said.
Minidoka County Assessor Janice West said new homes have gone up by about 5% this year, while older homes rose as much as 30% on average. Some of that massive jump is because assessors often react slowly to market changes, in case the market increase represents a mere blip. After three years of rising sales prices though, assessors have to adjust.
“We may have been 5-10% low last year,” West explained. “We had to catch up to the market.”
Residential values have gone up between 5 and 25% in Gooding County this year, but that kind of rise isn’t surprising these days.
“I don’t think this year’s market is as hot as last year’s,” Gooding County Assessor Justin Baldwin said.
The rise in values applies to Jerome County as well. Assessor Rick Haberman said that properties saw an increase of about 10-15% across the board, and he doesn’t see the upward trend ending in the immediate future.
One kind of property, in particular, has seen a marked increase in value, and rarely lingers on the market: Starter homes priced up to $220,000. Baldwin said properties in that sweet spot “sell like hotcakes.” Homes that were upper-end back in the ’70s and ’80s s are also in high demand.
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Those two kinds of properties stand out as useful market indicators, Baldwin explained. They’re often the first to start selling in a good economy, and the first to foreclose at the onset of a downturn. Baldwin thinks the market could level out soon.
“Right now, I want to say we’re nearing the crest of a boom,” he said.
Associated Taxpayers of Idaho President Miguel Legarreta said that the increases seen in the Magic Valley aren’t outliers in the state. He added that some homeowners’ complaints about rising values are fair.
“I think there are probably some that are a little high, and some that are probably around the range that they should be,” he said of this year’s assessments.
Why have values gone up?
Assessors don’t actually have too much choice in how they value homes.
“We just look at what the market’s doing,” Wills said. “If the market’s going up we need to stay at market value.”
The state mandates that county assessors value homes based on sales and physically inspect properties every five years. Your home’s assessment is based on what similar homes went for in your neighborhood.
Wills said his office’s estimates tend to be conservative; typically less than what a property owner could get for their house on the open market.
Keller Williams Realtor Associate Rebecca Ewell said the assessor’s office numbers do tend to be conservative. Ewell added that demand for homes has increased in recent years as more people and businesses come to the area. That drives up prices.
“I think that the industry is stable, but growing per demand,” she said.
County assessors have their work checked by the state, too. For example, if the Twin Falls County Assessor undervalued Twin Falls County properties too much, the Idaho State Tax Commission would take action and raise the numbers. That’s uncommon.
“It’s pretty rare, because counties know the rules of the game,” Idaho State Tax Commission Property Tax Bureau Chief Alan Dornfest said.
Assessments v. taxes
An increase in property values does not directly correlate to an increase in taxes.
“Very rarely will an increase in value translate to an increase in tax,” Dornfest said.
In Idaho, there’s no cap on how much home values can rise annually, but taxing districts can’t raise their budgets by more than 3% in a given year. New construction and annexations can play a role, too, but the 3% figure ensures that taxes don’t spike too dramatically.
Legarreta pointed out that while some people buy property in hopes of long-term returns, that’s not on every owner’s mind.
“The reality is it’s not necessarily an investment,” Legarreta said. “It’s where you live.”
While individual property owners, especially those on fixed incomes, can be frustrated by large valuation increases, government officials typically see property value increases as indicators of good economic times.
“(It’s) what you want to see,” Baldwin said. “No one wants to see a depreciating asset.”
While rising values are positive for the overall economy, assessors are aware that high valuations can sting for many homeowners.
“We understand this affects peoples’ pocketbooks,” Wills said. “We don’t mean to be insensitive to how we affect their bottom line.”
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