You are misinformed about the state of metro Denver real estate if you get all your information from headlines in the Denver Post.
While their headlines have elements of truth, their negative tone consistently distorts underlying positive realities.
It’s a big problem since the average newspaper reader will look at ten headlines but only read one article. When the headlines mislead, the reader is left with a false perspective on the nine articles not read in-depth.
Let’s just take the most recent example. It will be educational to see how the Post manages to miss a massive benefit while overstating a small drawback.
The Post is wringing its hands over coming increases in property taxes that metro Denver home owners face next year.
The headline says that property taxes are “spiking”. The sub-headline and first 50 words of the article claim that taxes are going “way up” and that lower priced home owners will be hardest hit.
There are three problems with the impression left by the headline and opening words of this article:
- Property taxes are not going “way up”. They are rising slightly.
- Taxpayer friendly laws keep the increase from being as large as it would otherwise be.
- Soaring home values have massively increased your net worth.
Let’s look at each of these in turn. The easiest way to do so is by conducting a case study for a typical metro Denver home owner.
While median values are up anywhere from 17% to 40% over the last two years, most counties have seen a 25% gain. Denver County is typically at 25.9% and the Sunnyside neighborhood, in northwest Denver, is right in line with that average at 27.1%.
In other words, what the average Sunnyside resident will experience is typical of an average metro Denver home owner.
The median home price in Sunnyside had a market value of $340,000 two years ago. It’s “assessed value”, used to compute taxes owed, is 7.96% of that, and that comes out to $27,064. The tax rate in Sunnyside is $0.081546 for every dollar of assessed value, yielding a tax bill of $2,207.
The new property value for a typical Sunnyside homeowner is going to be $432,000. Doing the math, the new tax bill is going to be $2,804.
That is a $597 annual increase. Is this “way up’? Is this “spiking”?
Before you answer that question, consider that the actual tax increase is probably going to be only half that amount.
Due to the Tabor Amendment and the lesser known Gallagher Amendment, cities and counties are prevented from reaping a windfall tax increase just because property values go up. They must modify the formula for computing property taxes to stay within certain limits.
While the exact effects of Gallagher and Tabor won’t be known until later this year, it’s a good guess that they are going to keep the increase for the typically Sunnyside home owner to just $329 per year.
That is $329 per year in higher property taxes … $27.42 per month … 90 cents per day. This is not “way up”. It is not “spiking”.
However, the most dramatic omission from the Denver Post article is the fact that this modest increase in property taxes is occurring because the average home went up by $92,000 over the last two years!
Just ask yourself this question – which option do you prefer:
- Option No. 1: You are $92,000 richer and you owe an extra $329 in property taxes.
— or —
- Option No. 2: You avoided a $329 increase in property taxes by missing out on a $92,000 gain in the value of your property.
If you prefer Option No. 1, we’re with you.
You will get your property tax reassessment around May 1st. Throw a little party and celebrate the dramatic increase in value. You’ll pay a bit more in property taxes but your net worth has improved dramatically.