DougCo new home building slows, reappraisal coming in 2023

Mike McKibbin

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Photo byDillon Kydd on Unsplash

By Mike McKibbin / NewsBreak Denver / Dec. 2, 2022

[DOUGLAS COUNTY, COLO.] — Fewer subdivisions and parcels have been built in Douglas County this year while rising interest rates are pricing more people out of owning a home, according to the county assessor and her successor.

The new assessor will face the next property value reappraisal process when tax notices are sent out amid declining actual values next spring.

County Assessor Lisa Frizell said there had been a dramatic reduction in the number of county subdivisions and parcels recorded this year. She added that home loan interest rate hikes led to less buying power for homeowners.

"So we've seen significant corrections from home builders," Frizell said.

Toby Damisch, chief deputy assessor and assessor-elect, said the county recorded 62 subdivisions as of the last part of 2022. That's about half the average of the previous 5-10 years. The office also recorded 1,817 parcels, down substantially from 2021's 5,487 lots.

"I think what we're really seeing is the start of more normalized (housing prices), growth and interest rates," Damisch said. "For so many years, housing was just skyrocketing. You could sell a house in a week, if not days. It hadn't been since about the late 1990s when we had such incredible growth. Now we're starting to see that slow down."

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Douglas County Assessor Lisa Frizell, who was elected a state representative in the general election.Photo byDouglas County

Frizell said higher interest rates priced many people out of the local housing market.

"It's hard to find a $500,000 home in Douglas County so what's available and affordable to most people is pretty slim pickings," she said.

Reappraisal based on 2022 values

The incoming assessor will deal with the property reappraisal required by state statutes to use valuation figures for June 30, 2022. Damisch said that was just after the height of the market.

"So when we release the values on May 1, 2023, they must reflect those values and not the current values," he said.

Values have already dropped 5% to 7% since the reappraisal date, Damisch noted.

Assessors determine the actual or market value of all real and personal property. A percentage of that value is used to derive the assessed value. According to the assessor's web page, residential property is assessed at 6.95%. The assessed value, multiplied by the mill levy, produces the property tax.

The office will face an "interesting and difficult challenge of educating residents about how the reappraisal process works and what we're required to do," he said.

Frizell, elected to a state representative seat, said Colorado law is "slow to pivot" regarding economic factors like reappraisals.

"I think Colorado is uniquely unequipped to handle things like this," she said.

Frizell is drafting legislation to help property owners facing potentially significant property tax increases.

She noted Douglas County property values had increased by 40% to 50% in the last two years.

"So a $500,000 home in 2021 has gone up to $750,000 to $800,000 in the last two years," Frizell added. "That will have a dramatic increase in property taxes without legislative action."

The assessor's office staff has handled many reappraisals, so Damisch was confident they would do the same in 2023.

"We'll have to shift some of the workloads around from analysis and sales because we know we'll have more property appeals and less new construction," he said. "And we'll have staff watch the daily numbers" of economic factors.

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Douglas County Assessor-elect Toby Damisch.Photo bytobydamisch.com

'Affordability crisis' but no housing crash likely

Damisch called the situation an "affordability crisis."

"The final nail in the coffin could be higher taxes due to the reappraisal, so that's why it's so important the legislature does something," he said. "I don't think we've ever had a time in our modern history when affordability has been so low."

Frizell added that home sales are still happening, but buyers must be more patient. She agreed with Damisch's affordability crisis assessment.

However, neither thought the housing market would crash in the coming year.

"That's usually due to larger national and international reasons," Damisch said. "This is not 2008 conditions (when the Great Recession started). People have jobs everywhere in Colorado."

Still, Frizell said the American dream "isn't attainable for a lot of people because they can't afford to buy a home. We'll have to see some changes before we get there."

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