Boise property values are up 25%, due to an “unprecedented” year of real estate sales across Ada County, assessor Bob McQuade told the Boise City Council on Tuesday.
Meanwhile, due to multiple factors, Boise homeowners this year will see increases in their share of property tax burden for the city of Boise, regardless of whether the city chooses to increase its tax base at budgeting time for FY 2022.
One of the fastest growing areas in the country, Ada County saw more than 13,000 home sales in 2020.
“We’ve never had anything close to that before,” McQuade told city council members during a work session presentation. “In a year when the economy was facing some real strong headwinds, and we had the pandemic we were trying to deal with, that … is just an amazing number in light of those conditions.”
The Ada County Assessor’s Office, which is responsible for allocating taxes to taxing districts, such as cities, the county and highway district, on Tuesday released its property value assessments for 2020. The assessments consider market value changes to calculate taxes due for properties throughout the county.
Taxable value rises
In Boise, the total taxable value of both residential and commercial property is $35.4 billion, a 22% increase from the previous year. Between 2019 and 2020, the median value of a single-family existing home in Boise increased 25%. By comparison, the increase from 2018 to 2019 was 6%. At the same time, the occupation rate of new homes slowed in 2020 compared to 2019.
“I don’t know if that’s really a surprise to you or not,” McQuade told the council. “A lot of people, they are aware of what’s been going on.”
The Treasure Valley is in the midst of a dramatic spike in home prices, due to a shortage in available homes and a surge in demand, compounded by the coronavirus pandemic. In Ada County, median home prices jumped from $367,250 in March 2020 to $467,325 in March 2021, a 27.3% rise, according to Intermountain Multiple Listing Service data. It was the biggest year-over-year percentage increase in the county since January 2013 (34.7%). Back then, the median price was $185,909. The county’s 2020 median single-family assessed value — which represents 98% of sales prices — is about $400,000.
The rise in property values does not directly correlate with an increase in property taxes. But in Boise, a number of factors are coalescing to spell an increase for homeowners this year.
“When any individual property owner sees very significant year-over-year increases on their property taxes, that doesn’t correlate to the same level of increase on city collections,” said Boise Budget Manager Eric Bilimoria. “What that represents is that individual property owner’s slice of the overall property tax pie increasing.”
Bilimoria said Boise homeowners will shoulder an increasing burden of the city’s property tax share, an ongoing trend over the last five years. That’s because construction of residential property is increasing at a higher rate than commercial property, 17.5% and 9% over the last five years, respectively.
Shift to residents continues
This year, residential property owners will be responsible for 71% of Boise’s tax base. That’s compared to 68% in 2019. The last time Boise’s residential and commercial property tax burden was evenly split was 2001, when commercial properties were responsible for 51% of the tax base and residential covered 49%. Boise residents are shouldering less of that burden than most other Ada County cities. Eagle, Star and Kuna residents will cover 89% or more of their cities’ tax share.
Additionally, the state’s homeowner’s exemption, which recently increased from $100,000 to $125,000, is not keeping pace with rising home values. In 2017, the average Boise home was assessed at $226,000, of which 58% was subject to property tax. But the most recent average home, valued at $455,000, is subject to a tax on 73% of its value.
“Within the city of Boise and in many other areas throughout the state, we can expect property taxes to increase when the bills are received later on this calendar year,” Bilimoria said. “That’s regardless of the amount of increase, or no increase, taken in the budget by whatever municipality we’re talking about.”
On top of increased values, widening residential and commercial burdens and a lagging homeowner’s exemption rate, Gov. Brad Little’s one-time property tax relief, which Boise took advantage of last year, will be removed from tax rolls. In total, the average Boise homeowner’s property tax bill could increase by $368.95, even without the allowed 3% increase the city could choose to take.