Hi, I'm Gary Edelbrock, and this week I thought it would be a good idea to sit down and chat with Pam Pearsall, our Yavapai County Assessor about home values, taxes and what's happening next on this roller coaster. 

How Home Values and Taxes Go Hand in Hand

The dark blue line in the graph on the right represents the Yavapai County Median Single Family Residence Sales Price, as you can see we were steadily increasing from 1995 through 2002, but from 2002/2003 through 2005/2006 we saw a clear bubble forming, that bubble appears to have broken in mid 2006 and sharply fell. Values in Yavapai County continue to decline and though we may be approaching the bottom, we haven’t seen evidence of a leveling out of values in Yavapai County yet.

If you compare and contrast the Yavapai data with the National data (the green line) you will note that while the National level saw a bubble it was not as pronounced as what we see in Yavapai County. Our values are now lower then the National median values, which some would declare is a good sign saying we now have more affordable homes and perhaps some good deals on the market. Most expect that when the market stabilizes both National and Yavapai median values would be close (as they were from 1995 – 2003).

On the chart above red indicates Yavapai County Full Cash Value percentage change for a typical house compared and contrasted with the blue line which indicates the percentage change of the Tax Bill on the average house. We don’t know what tax rates are for 2011 or 2012 so we aren’t able to provide that information, but as you can see tax rates did not see the dramatical increase that values did.

The Assessor of each county does not set or establish tax rates; taxing jurisdictions such as schools, fire districts, etc. set their own tax rates. The Arizona Assessor’s job is basically limited to identifying, classifying and valuing property, within the guidelines of the law. In addition, the Assessor works to improve the property tax laws in the State of Arizona.

It will be interesting to see what happens with property tax rates and property taxes as values continue to decline. While values are declining, they are declining pretty much in tandem, and unless taxing jurisdictions (schools, fire districts, etc…) decrease their budgets (levy), property taxes will remain about the same or maybe even increase.

If budgets remain about the same, some taxpayers may see an increase in their property taxes due to changes in Arizona Statutes. For an example, there has been a change in the way state aid to education is calculated. So while a school may not increase its budget, they may have to collect more from property taxes then they did in the past because they will receive less from the states general fund.

Similar events are taking place now with our State budget. The County may decrease their overall budget however, they may need to collect more from property taxes than they have in the past. This is in part due to a shift in revenue the State is considering from their general fund (State keeps more and Counties receive less). In addition, to the changes previously mentioned, there have also been a couple of classification changes proposed in state law (i.e. Low Income Housing Credit and Commercial Equine as Agriculture). When changes such as these are passed by the Legislature and signed into law by the Governor, it serves to further shift property taxes from special interest groups which qualify for these new tax breaks and onto those property owners that do not qualify for these tax breaks.

We could be headed into a perfect storm when it comes to property taxes and it is possible that when everything comes together property owners may see a substantial increase in property taxes.

Thanks,
Pamela J. Pearsall
Yavapai County Assessor
928.771.3220
1015 Fair Street
Prescott, AZ 86305