17/04/2024
About one fourth of Lexington homeowners recently received new property tax assessment notices and have expressed concern about the size of the increases. I also have serious concerns about the state of the housing market from an affordability standpoint in terms of not only buying and financing a home, but also renting and budgeting for taxes and other expenses. Therefore, I want you to have more information to help explain the process and the economic factors at play.
We are now four years into a period of rapidly escalating home prices in a housing market that was already robust. Home values are a direct reflection of local, current sale prices, which I have attached here in the form of a monthly, ten-year snapshot. Note the March column, the most recent data we have. Since 2014, Lexington home prices have exactly doubled, an average increase of 10% per year, every year.
The industry standard for determining a home's value, whether for taxes, appraising for bank loans, or determining a listing price with a real estate agent is through the analysis of comparable sales. You identify a few sales, preferably in the immediate area, of similar size and style homes with adjustments to the sale price for differences between the home being valued and the homes that sold for things like square footage, number of bathrooms, basements, garages, etc.
The Kentucky Constitution requires property be assessed at 100% fair cash value (what the property would bring in a sale between a willing seller and a willing buyer). And, while the KY department of revenue provides guidance for assessing property once every four years, due to government and industry shutdowns in 2020 and 2021, most homes since 2022 are being reassessed for the first time in five or six years, and this will also be the case in 2025.
Since prices are increasing at 10% and higher per year, reassessing every four years will commonly result in increases in assessments of 30% - 50%, which can be understandably surprising and concerning.
It is important for homeowners to understand the assessment process. I perform "mass assessing" not individual home appraisals. There are 114,000 properties in Fayette County and we only perform a "windshield inspection" of the property once every four years. The assessment you receive in the mail reflects our best, educated and technology-backed estimate of your home's value. But that is not the end of the process. Carefully read the information contained within your assessment notice and utilize the protest process to share additional information that may result in a more accurate assessment. We have moved the protest process almost entirely online and it has never been easier for you to participate in the assessment process - so please do so.
