Guess what? Your property taxes are about to go up.
Every 24 months, the El Paso County assessor examines sales and market data to determine whether property is worth more than it used to be and, thus, should be taxed more. This probably hasn't registered with many local homeowners for quite a while because property values have largely been flat at best — and no wonder, since the assessment always relies on old data, meaning until now it's been based on data from the recession years.
This new assessment period is based on sales and market data from July 1, 2012, through June 30, 2014, a period when the economy was brightening. The county's homes are valued at an average of 6 to 11 percent more than during the last assessment.
Back in real time, Harry Salzman, a real estate broker who has worked in the area since 1972, notes that the median selling price for an area home in February was 14.8 percent higher than a year before, moving from $196,000 to $225,000.
"We absolutely have appreciation," he says.
Apartment buildings, perhaps due to the large number of renters left stranded by the housing crisis, are appreciating even faster — their value has increased 15 to 18 percent since the last assessment. But the same isn't true for other commercial property. Its value has been flat, despite the fact that the U.S. Bureau of Labor Statistics found that the Springs added 4,900 jobs in 2014, well above projections. Assessor Steve Schleiker says that isn't unusual, and he expects the picture to look rosier in a couple years.
"Usually, the residential is the first to recover and the commercial follows," he says. "We're still seeing a lot of vacancy in the commercial sector."
The first question on your mind may be how much extra you can expect to pay in taxes this year. Notices will go out to homeowners on May 1 with specifics, but keep in mind that the increase will depend on the value and location of your home. From school districts to special districts, differences in taxing entities can have huge impacts on a home's tax load.
Schleiker identifies the median home value and median tax load on homes in seven areas of the Springs to show the difference. (We've rounded numbers to the nearest dollar.)
• A median-priced Briargate home ($244,448) will see a tax increase of $118, from $1,471 to $1,589.
• In the old/new Broadmoor area, a median-priced home ($411,134) will see a tax increase of $130, from $2,161 to $2,291.
• In Palmer Park, a median-priced home ($164,444), will see taxes jump by $58, from $729 to $788.
• In Rockrimmon, a median-priced home ($290,407) will see a tax increase of $117, from $1,668 to $1,785.
• In Springs Ranch, a median-priced home ($216,110) will see taxes raised by $98, from $982 to $1,080.
• In Stetson Hills, a median-priced home ($214,269) will see taxes jump by $98, from $973 to $1,071.
• And in Valley Hi, a median-priced home ($135,702) will see taxes bumped by $48, from $602 to $650.
While those numbers may seem like a bummer, Salzman says they represent healthy, sustainable growth in home value. That's especially true because there are fewer homes on the market — 19.4 percent fewer compared to a year ago — likely because tighter lending standards are finally leading to a drop in foreclosures. Schleiker says that in January 2013, there were 214 foreclosures in the county; in January 2014, there were 201; and in January 2015, there were 96.
Still, appreciation in the Springs doesn't compare to what's happening elsewhere along the Front Range. In November, for instance, real estate education company FortuneBuilders reported that over the last year, homes in Denver had appreciated 10.4 percent, more than twice the national average. Schleiker notes that other Front Range cities are also seeing high prices for commercial real estate. But both Schleiker and Salzman say that the boom in nearby cities may not be sustainable.
"You always have that so-called real estate bubble," Schleiker says. "That's one thing the up-north assessors are wary of — that real estate bubble bursting."
And extremely fast growth in housing prices can also play havoc on government coffers. The Taxpayer's Bill of Rights only allows government budgets to grow by a set amount each year. Higher growth can force a city or county to refund some money and lower mill levies — which actually could still happen here, even with our more modest home-value growth. Lower mill levies can make government budgets more vulnerable to economic downturns.
Meanwhile, experts are predicting that the area's commercial property values will increase soon.
Tatiana Bailey, director of the Southern Colorado Economic Forum, says the University of Michigan's Consumer Sentiment Index shows that consumers are more confident now than they were before the recession — and when they feel confident, they often buy homes. But business sentiment tends to lag behind consumer sentiment, she says, and business owners may hesitate to invest in a larger building.
That unease may be partially justified. The Manpower Employment Outlook Survey for the second quarter of 2015 found that nationwide, 22 percent of employers were looking to hire more workers. That number is 23 percent in the Denver-Aurora area and just 19 percent in Colorado Springs. That's certainly not a bad sign, but it shows that the Springs is on a slower path to recovery.
Roger Lovell, director of building operations for the Pikes Peak Regional Building Department, says he thinks it's also possible that the value of commercial property is simply inflated. He notes that a lot of vacant property is in no-longer-desirable areas, like Academy Boulevard. Besides, he says, many business owners choose to build new rather than remodel existing buildings, because there's not much of a cost difference.
The better question may be, how much commercial property is being built? Lovell says it's tough to measure that, because a permit can mean one office or one hospital. But he says it feels like there are fewer large projects these days, likely because they are expensive and take a long time. Like Bailey, he thinks a lot more thought goes into a commercial building.
"I always think about a house as an emotional decision," he says. "Whereas, a new commercial building is a business decision."