REPORT OF REAL ESTATE MARKET TRENDS
AS WE APPROACH THE 2022 CITY-WIDE REVALUATION
We are still one year away from finalizing property values for the 2022 city-wide revaluation. Citizens, taxpayers,
and municipal officials are understandably curious and concerned with the final results of the revaluation. All
concerned parties are attempting to plan for budget provisions. Vision Government Solutions (Vision), the
contracted firm conducting the revaluation project, is still in the data collection phase of the project. Vision will not
enter the statistical analyses phase for valuation for several more months.
The valuation date for the revaluation is April 1, 2022. It is important to analyze the valid, arm’s length property
sales that occur up to April 1, 2022, so that the most recent sales data is utilized in any sales analysis. The real
estate market, especially the residential market, has been very hot for the past year, with considerable increases in
market values being realized. However, we cannot accurately predict what the real estate market will experience
between today and April 1, 2022. Additionally, different classes of property (single-family residential, commercial
office buildings, retail properties, etc.) can experience different trends, based on demand. One class of property
can be experiencing very high demand, while another class has very little demand. As a result, property value
trends can be entirely different between property classes.
For these reasons, it is very difficult (and unwise) to attempt to predict what the real estate market will be next
April. An incorrect prediction can wreak havoc on budget planning. However, we can analyze current market
trends, and this report attempts to provide some explanation and verification of current market trends, overall and
by class.
Pursuant to state law and the state constitution, each municipality must complete a general revaluation of all
properties at least once every five years. Once the values are established, the municipality must hold those
assessed values until the next revaluation. During the five year period between revaluations, the real estate
market can experience different trends, which can affect market value. Strong demand for real estate can increase
property values, while weak demand can lower property values. An assessment/sale ratio study compares the
assessed values established during the last revaluation to current market values. Example — a property with a
market value of $140,000 in 2018 is assessed at $140,000 during the 2018 general revaluation. But strong demand
for real estate after 2018 creates upward pressure on the value of properties, so in 2021 the market value of that
property is now at $200,000, as determined by a 2021 sale of that same property. The assessment/ratio for that
property would be 70% ($140,000 assessment / $200,000 sale price).
| have performed two sales/assessment ratio studies for recent sales, in order to estimate a current ratio. These
studies compare the current assessed values (established during the 2018 city-wide revaluation) to current market
values; One study involves all sales from April 1, 2021 to July 7, 2021. The other study involves all sales from
October 1, 2020 to July 7, 2021. | did not include older sales, since doing so would skew the results. The two
reports show a clear reduction in the ratios from the October 1, 2020 study and the April 1, 2021 study. A
reduction in the ratio tells us that property values are increasing. The assessed value is an estimate of market value
for each property as of April 1, 2018, the last city-wide revaluation date. The assessed value of recently sold
properties is compared to the sale prices of those properties, giving us a comparison of assessed value to current
market value. Listed below is a summary of my findings. NOTE - MANY OF THE SALES IN THE OCTOBER 1, 2020
REPORT HAVE NOT YET BEEN VERIFIED BY THE ASSESSING DEPARTMENT, AND NONE OF THE SALES IN THE APRIL
1, 2021 REPORT HAVE BEEN VERIFIED. IT iS POSSIBLE THAT SOME OF THE SALES ARE NOT VALID SALES.
HOWEVER, | DID NOT INCLUDE SALES THAT WERE KNOWN INVALID SALES (FAMILY TRANSFERS, FORECLOSURES,
ETC.)
The two study groups (October 1, 2020 and April 1, 2021) are broken down into several sub-groups. The first
report will be a ratio study of ALL sales. The groups are then broken down by Land Use Code (LUC) and by Class (All
Res Sales and All Commercial/Industrial Sales, etc). The Class/LUC breakdowns are identical in each report, so that
there is a clean comparison between the October 1, 2020 and the April 1, 2020 study groups.
