Saturday, December 11, 2004

Boom or Bust

Homeowners can expect an increase, but not a huge one
Susan Voyles

Despite a booming real estate market in Washoe County the last two years, many homeowners might be pleasantly surprised that higher sales prices do not mean large property tax increases.

After taking new construction out of the picture, taxable property values will be up an average of 6 percent for the new property tax roll, according to the county assessor’s office.

Residents are receiving postcards this week, listing property values that will be used for assessing next year’s taxes, to be billed next July.

Ron Hankins, 25, a university student, for instance, will see his land value go up 26 percent for his D’Andrea home in east Sparks next year.

But he’ll pay only $135 more in property taxes, assuming the Sparks tax rate remains the same.

Hankins said he considers that a small price to pay for his investment. He recently had his 1,662-square-foot home appraised and said its value has jumped to $351,000. That’s a $100,000 increase over the past year.

But for taxes, the home will be valued for only $187,243 next year, up by $10,499 from this year, according to assessor records. His property tax bill will go up $135 to about $2,369.

“Since I work, it’s no big deal,” Hankins said, who freelances in public relations. “But for a retired couple on a fixed income, that would be pretty hard. Their income isn’t going up.”

Land values improve

In Nevada, market prices drive the value of only land.

Buildings are valued on their replacement costs after depreciation — no matter what the market is doing. Together, they make up the taxable value of a property. Then only 35 percent of the taxable value is assessed for taxes.

Bonnie Smith, a retired bookkeeper in Silver Shores in Stead, said the increase is not as bad as she expected, given the real estate market.

Her annual tax bill will go up $73 if the tax rate remains the same.

Her new tax bill will be $1,750 for her home. She and her husband Clarence bought it for $154,000 in 1996. Now she wouldn’t sell it for less than $290,000.

Only one-fifth of the county is now physically reappraised each year. And this year’s target was central Reno where property values largely remain unchanged, officials said.

For the other four-fifths of the county, the factor, or multiplier, is applied against land values in an attempt to bring them up to date with the market.

The Washoe assessor largely studies only vacant land sales to determine market values, which also tends to keep down land values.

Real estate cooling

Real estate brokers say the market has started to cool off in the last few months.

“It’s still a seller’s market,” said Valerie Mapes, Prudential Nevada Realty regional manager. “However, we are seeing a little bit longer market time, more price reductions and a few properties that do not sell in the initial period.”

Given the economy, RE/MAX broker Amy Lessinger said she believes the market will be strong in 2005, but it won’t be a repeat of the “amazing appreciation” seen in the first three-quarters of 2004.

“You can’t sustain those levels. Eventually, they will taper off,” she said, “and climb at a more reasonable rate. We’re sliding back into reality.”

Delores Martinez, an Assist-to-Sale agent, agreed the market is stabilizing, and homes will not sell as quickly as they have. She had one earlier sale where the buyer paid $15,000 more than the list price.

“It was out of control,” she said.

She attributes most of the demand to people moving here from California. “They can come here and get more money for their home than in California,” she said.

These same new residents also bring with them their expectations for property taxes, retiring Nevada counties lobbyist Bob Hadfield has said. For years, they have lived with California’s Proposition 13, which limits tax hikes.

He believes they’re really what’s behind Clark County Assessor Mark Schofield’s proposal to cap property taxes at 6 percent as real estate prices have skyrocketed in Las Vegas and elsewhere.

“They will be the first ones,” he said, in demanding change in the state’s tax system. “Ironically, they are the ones who have driven up the market and the value of housing and Southern and Northern Nevada.”

Incline protest

Incline Village residents already are organizing to protest an 8 percent increase in land values for the north shore at Lake Tahoe. They filed 1,361 tax protests that were heard by the Washoe County of Equalization earlier this year.

Next year, they are hoping 1,500 people join their fight. But they are planning to hire one lawyer to present one mass appeal — rather than 1,500 separate appeals, according to Ted Harris’s latest newsletter for the Nevada Property Tax Revolt group. Incline residents are still mad about a 31 percent increase in land values in 2003.

“That’s their right to hold the assessor’s feet to the flame,” Washoe County Assessor Bob McGowan said.

He is urging residents who have questions about their new property values listed on the postcards to call his office at (775) 328-2233 and ask to speak to an appraiser. Residents have until Jan. 15 to file written appeals with the county board of equalization.

* The average of 6 percent for the new property tax contrasts with a 35 percent increase in the median value of homes sold through the Reno-Sparks Association of Realtors through this year’s third quarter. Countywide, the median sales price jumped from $218,000 to $295,000.

* The median price of a home in Reno is now $351,000, up 35 percent from a year ago; $287,500 in Sparks, up 45.8 percent, and $233,000 in the North Valleys, up 45.6 percent.

* That’s on top of a 28.8 percent increase for the countywide median price of homes for 2003. The median is that point where half of the sales are for over that amount, half under. Before that, increases averaged about 4 percent a year.


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