As we struggle through the COVID-19 pandemic, I have been asked how this will affect real estate values in Gila County.
While we are vitally concerned with the health and well-being of the public, our staff, and the future economic recovery, this COVID-19 situation is affecting all of us in the county and city governments, and all of their subdivisions. Everyone is feeling some pain.
But how will it affect our property values?
The valuation discipline that we use relies on historic data to estimate a future value. It is way too soon to have a clear picture of how the virus will affect the real estate market. Having said that, we are already beginning to see the signs of a local economic downturn.
Building permit activity remains steady, so new construction, remodels and other improvements to property seem to be relatively unaffected so far.
We have noticed the number of deeds that convey property (sales) decline and that can show a weakening of the real estate market.
April showed a 25% reduction in the number of recorded deeds from March, and May was virtually the same as April.
These recordings are happening when the spring weather is warming up and historically, we would see a sharp increase in real estate activity. Obviously, that is not happening.
Are real estate prices declining too? We do not have enough data yet to determine that, but we should have a better picture of the affects of COVID-19 in late summer.
While we do not yet know if the real estate market is declining — but let us assume that it is — how will this affect property values and then affect property taxes?
Arizona’s property tax system is on a schedule known as the “Two Year Roll,” meaning the real estate values and then tax assessment rates are determined almost two years ahead of time.
For instance, this year — calendar year 2020 — we will look at market data and determining assessment values for tax year 2022.
Specifically, we will start the appraisal process (called MASS Appraisal) in June and July, analyze and update values and their multipliers countywide, and then send our results to the Arizona Department of Revenue by Dec. 15.
We will send Notices of Value out to all real estate owners in February 2021, notifying them of their tax year 2022 valuation.
This gives everyone the opportunity to appeal their Full Cash Value (FCV) or Property Classification before Jan. 1, 2022, which is the date the new valuation takes effect.
The benefit to this schedule is that property owners may appeal if they believe their valuations are inaccurate.
The drawback to this is any movement in the real estate market (increasing or decreasing) cannot legally be applied in the current year by the Assessor’s Office.
If the real estate market is negatively affected by COVID-19 and property values are significantly reduced, we will not see those changes until property tax bills come out in the fall of 2022 (assuming our jurisdictions’ tax rates do not increase).
Seniors 65 years or older may qualify to have their assessed values frozen. Widow/widowers and 100% permanently disabled persons may qualify for a property tax exemption. See the Assessor’s Office website or call the office for more information on these programs.
For more information, call 928-402-8714 or visit https://www.gilacountyaz.gov/government/assessor/.