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For the second straight year, the Fayette County real estate market has seen significant growth in terms of the number of homes sold. Median sale prices continue to be strong, and the overall property tax roll in Fayette County has surpassed $23 billion for the first time.
During the recession, the number of homes sold declined significantly each year. This began in 2006 and continued until 2012, when total sales exceeded 2011 volumes by nearly 20 percent –– bringing a much welcomed trend reversal. A nearly identical increase was realized for 2013, with approximately 4,200 single-family home sales. Although this represents a promising 40 percent increase over the low water mark of 2011, it’s still a long way from the record high of nearly 7,000 similar transactions in 2005.
Although strong January sales suggested that 2014 could be another year of significant growth, sales dipped during the remaining winter months, only to bounce back in June. Given these ebbs and flows, we will have to wait and see if 2014 will be a year of growth, decline or plateau.
In spite of the slower sales during the long and arduous winter of 2014, we have reason to be cautiously optimistic. In addition to recent increases in home sales, we have also seen a 20 percent increase in residential building permits over the past two years. Although the volume of permits flattened during the beginning of the year, they have been strong throughout the most recent quarter.
Prior to 2012, the local housing market responded to the recession with relatively few home sales, rather than across-the-board declines in property values, such as those that were reported in places like Florida, Nevada and California. Because of this lack of sales data upon which to base accurate reassessments, neighborhood reassessments due to property value increases have been reduced to as few as a dozen neighborhoods over the past five years.
Even though we were not doing a lot of reassessing, the annual property tax roll in Fayette County never decreased. In fact, it has grown at a very modest rate of about 1.5 percent per year. This growth is attributable to sales, property improvements and the use of technologies implemented in the PVA office that have aided in the discovery of improvements not previously listed on the tax rolls.
The accompanying chart is a snapshot that compares home sales in individual neighborhoods from 2010 through 2013. Readers are cautioned against drawing conclusions about overall property values in specific neighborhoods where the number of sales in each area represent very small sample sizes, and therefore may be misleading. For example, one or two sales in which a homeowner realizes an unusually high capital gain or loss would cause anomalies in such a small sample, making the percentage of change misleading.
The transactions represented in the data are single-family residential property sales that the PVA office has determined to be arms-length transactions, or the sale of property from a willing seller to a willing buyer given a reasonable time on the market. The data does not include transactions involving transfers of property among family members, foreclosures, refinancing records, or other atypical sales; nor does it include sales of commercial, condominium, townhouse, duplex and multi-family dwellings. Similarly, building permit data includes only those initiatives that add value to property and excludes items such as sidewalk and driveway repairs and privacy fences.
Home prices have fallen, and assessments have been lowered, in very few neighborhoods over the past few years. These declines are generally the result of one of two situations: either the neighborhood is in transition or the previous assessments were established aggressively near the peak of the housing bubble but never adjusted downward due to a lack of comparable sales data upon which to base a new assessment. Also during the recession, there have been many examples of neighborhoods that remain highly desirable, and where median sale prices have continued to climb. Examples include Harrods Hill, Lansdowne, Kenwick, Beaumont, Palomar, Chevy Chase and downtown, to name a few.
The Property Valuation Administrator (PVA) is required by statute to inspect each of the county’s 110,000 parcels of real property at least once every four years. Additionally, the Kentucky Constitution requires PVAs to assess all real property, not otherwise exempted, at 100 percent fair cash value every year. In Fayette County, we adjust individual assessments when sale prices in the 300-plus residential neighborhoods deviate by more than 10 percent from current assessments. Typically, but not always, reassessments coincide with the quadrennial physical inspections. The chart also indicates (denoted with an asterisk) which neighborhoods are up for inspection and possible reassessment during the upcoming tax year. There is also more
detailed and comprehensive information about the 2015 physical inspection process on the Fayette County PVA website (www.FayettePVA.com).
An assessor from the Fayette County PVA office will visit each property, take a new photograph and look for changes since the previous inspection. PVA staff do not access the inside of homes, but by law may enter backyards to inspect additions or improvements. These inspections are a vital component to the reassessment process.
If a homeowner does not agree with their property assessment, they have the right (and are encouraged) to contact the PVA office. The Fayette County PVA office is currently working on assessments for 2015. If the assessment of a property changes for 2015, the property owner will receive a notice by mail in mid-April. Property owners may conference with the PVA and discuss their assessments beginning on the first Monday in May and continuing for 13 consecutive days. If the property owner remains unsatisfied with the assessed value after the conference, he or she is encouraged to appeal to the Local Board of Tax Appeals. cc
All of the information from the accompanying chart and the info that follows originated from the Fayette County Property Valuation Administrator’s database. PVA data and information on challenging your property assessments and the work of the PVA are accessible at www.FayettePVA.com.