Area property values keep going upward

Washington County sending notices after new appraisal

FAYETTEVILLE — Reflecting the region’s overall growth, property values and the value of new construction in Washington County continue to grow at record-setting rates.

County Assessor Russell Hill said his office is preparing to mail around 112,000 notices to property owners of changes to their property value after a countywide reappraisal. The notices will be mailed out in three batches beginning the last week of June and being completed by July 15.

Hill said Washington County’s property values have grown rapidly over the last two reappraisal cycles. From 2015 to 2020, property values were up nearly 50%, he said. With that rate, the county was moved from a five-year cycle of reappraisals to a three-year cycle for reappraising property value, with the latest being done this year. Between 2020 and 2023, Hill said, property values increased more than 50% across the county.

“Property values are going up tremendously,” Hill said. “And it’s not just existing property. New construction values are going to be over $1 billion. That’s a record. Last year, new construction was about $910 million, which was also a record.”

Benton County Assessor Roderick Grieve said Benton County’s next reappraisal will be in 2024. Grieve said he’s seeing increasing values in Benton County similar to those reported in Washington County.

A reappraisal “is an assessment review of all real estate parcels in the county. We adjust the values to reflect current market conditions,” according to the Washington County assessor’s website.

Act 1185 of 1999 required all Arkansas counties to reappraise a minimum of every three to five years based upon the amount of growth in market value within that

county. The purpose of Act 1185 was to avoid excessive increases in property taxes due to the long periods between reappraisal cycles and to ensure all counties were appraising properties in a similar fashion and on a related time schedule.

Washington County had been on a five-year cycle but switched to a three-year cycle after 2020. Legislation passed this year will place all counties on a four-year appraisal cycle, with Washington County next scheduled for reappraisal in 2027.

Property taxes in Arkansas aren’t due until October of the year following the assessment, according to the Assessor’s Office. Thus, any change in a property’s 2023 real estate taxes resulting from the reappraisal will not be due for payment until October 2024.

While property values are climbing at record rates, owners will not see as steep of an increase in their taxes, Hill said. Amendment 79 to the state Constitution provides a number of benefits to cushion property owners against increases in values.

The amendment provides:

• A tax credit of up to $425 on real property qualifying as the owner’s homestead used as his/her principal place of residence.

• A 5% limit on the annual increase in the taxable value of a homestead property.

• A 10% limit on the annual increase in the taxable value of a nonhomestead property.

• A freeze on the taxable value of a homestead property owned by a person who is 65 years old or older and/or disabled.

Property taxes provide revenue to counties, cities, school districts and other taxing entities through a property tax millage. Washington County’s 2023 budget projected local current property taxes will bring about $19 million in revenue to the county. About 80% of the revenue from property taxes goes to local school districts.

According to Washington County, a mill is equal to $1 of property tax for each $1,000 of assessed value. The full assessed value of property in Arkansas is 20% of its market value.

So, if a home has a market value of $200,000, the assessed value is 20% of that, or $40,000. The value of one mill in that case would be $40,000 divided by 1,000, or $40. So one mill on a home valued at $200,000 would cost the owner $40 per year.

The amount of tax on a parcel varies according to where it is. Washington County millage rates range from 46 mills for rural areas in the Greenland School District to 57.95 mills in parts of the Fayetteville School District within the city of Fayetteville, according to information from the county.

The increasing property values are in keeping with the economic growth of Northwest Arkansas, according to Mervin Jebaraj, director of the Center for Business and Economics at the Sam Walton College of Business and Economics at the University of Arkansas, Fayetteville. The growing values may eventually place additional stress on the housing market, but that hasn’t happened yet, he said.

“People continue to buy homes, indicating there’s still quite a strong demand,” he said.

Solomon Burchfield, director of New Beginnings, offered a note of caution. New Beginnings is a nonprofit group working to find solutions to homelessness. The group operates a transitional housing project on 19th Street in Fayetteville. Burchfield said people need to be more aware rising values leads to increasing costs, which can shut some people out of the housing market. Burchfield said a study by Harvard University indicated 16,000 renter households in Northwest Arkansas were putting more than half their monthly income toward housing, and 35,000 to 40,000 households were paying more than 30% of their monthly income for housing. Some economists say 30% of the monthly income should be the most a household spends on housing.

“These people are one event away from homelessness,” Burchfield said. “If home values and property taxes go up and we don’t see a commensurate increase in household income, we’re going to be seeing more and more families at risk.”