Housing Valuations

Hays Post

Property valuations in Ellis County have been completed and notices sent, but after many in the area saw significant increases in the value of the residential and commercial properties they are asking why and what this will mean when property taxes come due.

Ellis County Appraiser Lisa Ree recently appeared before the Ellis County Commission to explain the valuations and the reason behind the increases.

“Overall, in Hays you can figure a house has gone up 15 percent this year,” Ree said. “And we had an area east of Canterbury where we were seeing 25 percent or greater increases in their values because those homes are selling lot more than what they were last year.”

Those valuations are driven by property sales prices — what people are currently paying for property in the county.

Property valuations, by state statue, must be within 10 percent of sales price and, historically, appraisals have been right on the mark.

From 2009 to 2015, Ree said appraised values were within 5 percent of the sales price, until volatility in the oil market began impacting prices in 2016.

“Then we get to 2019 and 2020,” she said, when national and regional events significantly impacted home prices.

“For 2020, the state is telling us we were only 94 percent on average of the sale prices,” Ree said.

And preliminary reports from the state indicated valuations slipped even closer to the 10 percent threshold in 2021 with valuations coming in at only 91.2 percent of sales prices, she said.

The market

As home prices continue to rise, so do valuations, something Ree attributes to a “hot” real estate market since 2020.

Both the shortage of available homes and low interest rates, she said, are contributing factors.

“Sales prices for Ellis County have increased,” Ree said, “drastically, in my opinion.”

Since 2019, she said the average sale prices increased from $165,000 to $206,040 in 2021.

“I think that the price of housing is primarily based on two things,” said Grow Hays Executive Director Doug Williams. “One is replacement cost, the other is supply and demand. And we have not built enough new homes to have enough supply in our community.”

That lack of supply has significantly increased demand, and the amount people are willing to pay for a home has followed.

“That's why houses sell for more than they're listed for,” Williams said.


He said prices will stabilize — and perhaps decrease — once housing supply is added, but until then prices will be driven by demand.

“Realtors don't set the prices of housing,” said Williams, who also has history as a real estate agent. “They don't determine what houses are going to sell for — the market does. And if you've got an unbalanced supply-and-demand situation where you've got way too little supply and way too much demand, what happens? It doesn't matter what commodity you're talking about, the price of the item goes up. And that's the situation we have here.”

With the rising prices, Ree noted the accuracy of the valuations continued to decline.

“You can just see month by month our value is just getting further and further away of the actual sales prices,” Ree said. “And since our job is to set a fair market value, what we need to do is be closer to that 100 (percent) mark.”

Along with demand driving prices higher for area homes, she said record-low mortgage rates were also affecting pricing.

“One loan officer told me that some of their clients were able to afford a larger purchase price for a home due to the low interest rates,” Ree said.

And those living outside of Hays in more rural parts of the county were not spared from the increase either with rural Ellis County properties also increasing around 15 percent, in general.

“It’s our job to keep up with that and were having to raise values considerable this year,” Ree said.

On the commercial side, she said the market has been far more variable over the years, and with more factors taken into account, valuations fluctuate more. But that sector also saw increases.

In 2020, valuations were only 81.5 percent of sales prices.

And again, this year another push was needed to continue to get closer to the 100 percent mark.

“A lot of that increase is due to … construction costs,” she said. “Construction costs have gone up and a lot of our commercial properties.”

While residential and commercial valuations rose significantly, Ree said, agricultural land saw only a small jump after years of increases.

The big picture

As Ellis County saw higher property valuations, Ree said those adjustments affect far more than just the county.

“These headlines are not unique to us,” she said. “That’s statewide, even nationwide.”

Johnson County — Kansas’s most populous county — issued notices to area residents in late February that most valuations increased.

“In the county, about 95 percent of residential values increased for the 2022 valuation year, which reflects a robust residential real estate market in 2021,” according to information released by the county. “The average increase across the county is around 11 percent (excluding sales and new construction), and approximately 50 percent of residential property values changed by 10 percent or less, or experienced a reduction in value.”

Along with Ree, they attribute the increase to the housing market.

“We continue to experience a seller’s market in Johnson County due to the low inventory,” said Johnson County Appraiser Beau Boisvert. “This was also the situation in 2020, and similar real estate trends are expected as we continue into 2022.”

Higher value, more taxes?

The most prevalent question around property valuations is the impact to taxes. And while most assume higher value will equate to higher taxes, Williams said that is assumption is not always true.

“I think the knee-jerk reaction for most of us, including me, is to think 'Oh my God, my property value went up,' ” Williams said. “Yeah, it's a big jump. I can't believe this. But it doesn't necessarily mean you're going to have this huge increase in property tax.

“And it probably does actually reflect the true value of your property."

He said the belief that an increased valuation creates higher taxes is a common misconception.

It’s “just not the case,” Williams said. “The only way their property tax goes up is if, in fact, the county spends more money next year than they spent this year.”

Property Tax values by type and class for Ellis County in 2021. (Courtesy Kansas Department of Revenue) 
Property Tax values by type and class for Ellis County in 2021. (Courtesy Kansas Department of Revenue) 

With the valuation spread across all property owners, their budget is spread across the valuation total.

“So if valuations double, and they spend the same amount of money, your property taxes don't go up,” Williams said. “By the same token, if valuations would be cut in half, and the county spent the same amount of money, your value your taxes don't go up or go down.”

However, he said property taxes may still rise, but due to other factors.

“I fully would expect property taxes to increase this next year because costs have increased,” Williams said. “But just because your property your valuation goes up 20 or 25 percent absolutely does not mean that your property taxes are going to go up 20 to 25 percent, and I think people need to understand that aspect of it.”

Along with property valuations, he said residents should consider the county’s mill levy as they understand the valuation increase.

“The mill levy in the city of Hays is the lowest mill levy in the state of Kansas,” Williams said. “I don't care where else you go, you can look at all the others. We are the lowest mill levy that exists in the state of Kansas for 2021.”

But, he said, that does not mean Hays residents are paying the lowest property tax rate.

“Valuation is a part of that component and how property taxes are calculated,” Williams said. “Our valuations are high relative to other places, but our mill levy is low relative to other places.

“I don't have information regarding valuation comparisons as far as what a three-bedroom, two-car garage house might sell for in Dodge City or Garden City, but I have looked at the property taxes on a $250,000 house in Dodge City and they are way higher than Hays. So, you know, it's just a matter of your perspective on some of these things. But I think it's important that people understand that an increase in valuation does not necessarily result in an increase in property tax.”

What now?

For Ellis County residents with questions about their property valuation, Ree said they should contact the Ellis County Appraiser's Office.

April 14 is the deadline to discuss valuations in order to give the office the time needed to have valuations filed by May 15 with the county clerk.

“I would expect you will get a lot of phone calls,” said Ellis County Commission Chairman Butch Schlyer.

“I know you’re right,” Ree said.

“I encourage them to ask for their property record card, if they have a home, ask for their comparable sheet,” she said. “That will show a lot of that attributes for their house, plus it will show the same thing for five comparable home sales that were used to value their property.”