Second homes may skew property values
SUMMIT COUNTY – Had you been able to purchase just one acre of land along Ensign Drive in Corinthian Hills last year, come 2003 you could have realized nearly a $500,000 profit, according to the county assessor’s land valuations.
Thirty-seven lots that account for a mere 5.8 acres in the Dillon development increased in value by a total of more than $2.8 million from 2002 to 2003. However, the increases were hardly uniform, with the value of one lot shooting up by more than 150 percent while another just down the street increased only 28 percent.
This has some residents crying foul and pointing to inattentive second homeowners as a principal cause of skyrocketing property values and apparent discrepancies in valuation.
“This year it looks like the Dow,” Corinthian Hills resident Marian Whyte said of a chart her husband Robert created to compare the increase in land values. “One day it’s up 100, one day it’s down 100.” The Dow is the Dow Jones industrial average of New York Exchange trading.
The Whytes own one half of a duplex in the area that was valued at $420,546 just last year. By May, it was assessed at $560,634, a growth of more than 33 percent. The land value alone more than doubled, jumping $102,000.
The Whytes challenged the assessment and received an adjusted valuation of $522,289, still a 24 percent increase.
Come tax time, this will eventually hit their pocketbooks, as will the overall increases for every homeowner in the area. How much the average tax rate will grow, however, is still impossible to quantify, said Summit County Treasurer Larry Gilliland.
According to Gilliland, the amount assessed to an individual taxpayer stems from a formula that multiplies the property’s valuation by a set annual assessment rate and the individual amounts levied by local governmental bodies including towns, special districts and school districts.
Those amounts are determined at different intervals during the year. Therefore, even if homeowners know the assessed value of their property, the exact amount they will be taxed is not determined until months afterwards, when local governments finalize their tax levies. That would be the end of this year for tax bills going out next January.
“Property tax is probably the most hated tax in the United States today because people feel they have no control over it,” Gilliland said. “It’s much worse than income tax and sales tax.”
What upsets the Whytes, however, is that many homeowners in their area are wealthy, absentee owners who seem not to notice the discrepancies in the amounts they pay from year to year.
“I just think the fact that because these people don’t live here, they don’t pay attention,” Marian Whyte said. “They don’t care if the valuation is out of whack. It’s just so frustrating.”
Gilliland agreed that may be the case, pointing to various homeowners who don’t pay their taxes directly but delegate the responsibility to assistants or mortgage companies. In one recent case, a homeowner’s property had been overvalued by $1 million, yet it wasn’t until he reviewed an escrow analysis that he realized what had happened.
“He said, “I’m not responsible for paying the taxes, the mortgage company is,'” Gilliland said.
In that particular case the owner protested the assessment and will receive an abatement, Gilliland said, but many similar instances may go unnoticed.
“It’s the ones who don’t live here – they just look at it and say, “Oh it’s only $500 more in taxes,’ not realizing what happened to the people right next door to them,” Whyte said of the problems with assessed values fostered by the prevalence of nonresident homeowners.
Gary Severson, the executive director of the Northwest Colorado Council of Governments (NWCCOG), which recently published a study on the effects of second homeowners, said that may be the case, but it isn’t the only factor in rising values.
“I think that’s very real – the fact that if you’re paying your taxes through your mortgage company, (values) are going to go up and the mortgage company is going to send out a statement saying that your house payment has gone up (amount) and you’re just going to pay that,” he said. “But that happens with full-time residents as well.”
Severson also pointed to the desirability of the limited land available in Summit County and the higher incomes of nonresidents.
“It’s a simple matter of supply and demand,” he said. “You’ve got people competing for those limited plots of land – and the second homeowners are obviously competing as well – and that affects the property values and the fact that the land sells for such a high price.”
“They have the ability to pay more and hence we have property values going up,” he said.
That’s what the Whytes believe ultimately affected them. In the past year a plot of land on Ensign Drive sold for more than $400,000, and they point to that as the spur of the property value spike.
“Some person just came in and paid that much for an empty lot,” Whyte said. “Then what happened because of that – I’m assuming because of that – it was like they took the property in Corinthian Hills, rolled the dice, and if a property came up a certain number, our property values doubled.”
She said she believed that mitigating factors such as views, size and location did not account for the large variations in value.
“It’s just the whole matter of the unfairness of it now that has us so irritated,” she said.
Aidan Leonard can be reached at (970) 668-3998, ext. 229, or email@example.com.
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