As housing market suffers, property values still on rise

For 6 of 10 El Paso County homeowners, there's no silver lining to the bursting of the real estate bubble.

The latest countywide reappraisal by the El Paso County assessor shows 59 percent of the county's 115,000 residential properties increased in value during the reappraisal period - Jan. 1, 2007, through June 30, 2008.

Those property owners are likely to get higher tax bills eventually, despite real estate values having gone over the cliff with the economy. By the time they have to be paid in 2010, the disparity could be even greater if property values keep falling.

Rising property values contradicts everything homeowners have been hearing about plunging sales and plummeting prices, but there's nothing wrong with the values set by the assessor.

The reappraisal of the county's 260,000 properties, which by state law must be done every two years to determine values on which taxes are based, began in 2007 before prices started to tank and ended in mid-2008 before the downturn became a rout.

Home values in Colorado Springs, mirroring the national trend, have been falling for months. According to real estate Web site Zillow.com, prices in Colorado Springs peaked in late 2006 and early 2007 and have been falling since. In the past year, the average value of homes slipped by about 4 percent to $191,500.

"We know property values in El Paso County are declining in most areas," said Assessor Mark Lowderman.

Lowderman, whose reappraisal is nearly complete, said 15 percent of homes fell by 2 percent to 10 percent. Areas in which values declined included the Hillside neighborhood, Stratton Meadows, Widefield, Southmoor and Fountain.

"The areas of declines correspond to the areas with the highest foreclosure counts," Lowderman said. "Those areas are the more moderately priced - areas ripe for creative financing," which led to the meltdown as homeowners defaulted on loans.

Values of 26 percent of homes in the county remained unchanged. Those areas include Stetson Hills, Knob Hill, Gleneagle, the west side, Pikes Peak Park, Eastborough, Monument and Manitou Springs.

The rest saw values increase from 1 percent to 5 percent. Those areas were among the most affluent in the city: Kissing Camels, Woodmoor, Broadmoor Bluffs, Skyway and Mountain Shadows.

Less than one in five commercial properties rose in value. Those that did go up averaged double-digit gains: office, 15 percent; retail, 17 percent, and industrial, 12 percent. The biggest increases, not surprisingly, were seen in high-traffic corridors, such as Garden of the Gods Road and Powers Boulevard.

Paul Turner, a local commercial real estate expert, said his data show commercial buildings did appreciate in value about 18.5 percent since the previous reappraisal period.

"Yes, the values did go up, incredulous as it seems," he said.

The assessor determines values based on sales during the reappraisal period of comparable properties.

"In all property classes across the board, we had about 40 percent fewer sales in a two-year period than we normally have," Lowderman said.

Although values held steady locally in 2007 while the bottom was dropping out of real estate markets in Florida, Las Vegas, Phoenix and California, sales were scarcer. In the first six months of 2008, sales and prices both dropped.

"We know they're still dropping today," Lowderman said.

The steep decline since June 2008 won't be reflected until the next reappraisal two years from now.

Developers got a break when state officials met with assessors from metro areas, including Lowderman, late last year to authorize a change in how subdivided but undeveloped land is assessed.

The change resulted in a 35 percent reduction in value of subdivided lots, which will drive down the tax bills on those properties, Lowderman said. The goal was to ease the tax strain on developers holding developed lots with no buyers, he said.

Lowderman said the county's assessed valuation will increase by 1 percent to 3 percent when figures are finalized by April 1. Assessed values are crucial, because they determine property tax revenues the county, cities and towns and special districts will collect once they set their tax rates.

Notices of value will be mailed in early May. Appeal instructions will be included, along with 2008 and 2009 tax calculations, so property owners can compare how a value change affects taxes.

Lowderman said normally about 5,000 appraisals are appealed, but this year his office expects a lot more.

"We're expecting a lot of disgruntled people, because the values didn't do what they think," he said.

He noted those who appeal must show evidence that the assessor's value is incorrect based on sales from the reappraisal period, not after it ended last June.

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Call Zubeck at 636-0238

SAMPLE VALUE AND TAX BILL CHANGES

Broadmoor Bluffs home

Value before reappraisal: $460,000
Tax bill before reappraisal: $2,250
Value after reappraisal, $483,000 (5 percent increase)
Tax bill after reappraisal: $2,380*
Change: Increase of $130

Widefield home

Value before reappraisal: $146,000
Tax bill before reappraisal: $810
Value after reappraisal: $134,500 (8 percent decline)
Tax bill after reappraisal: $750*
Change: Decrease of $60.

*Assumes tax rates, set by agencies at the end of 2008, don't change.

El Paso County Assessor's Office