Editor’s Note: The first in a three-part series follows on Lincoln County’s booming real estate market, recently reduced property tax rates, and the outlook ahead as growth is expected to continue across the region for some time to come.
Simply put, the real estate market in Lincoln County is hot right now, and in many cases, properties are selling at above asking price.
“One of the reasons that is driving our market is that you’ve got a shortage of quality housing,” said Lincoln County Assessor of Property Paul Braden. “Two, you’ve got a better, more comfortable market right now because of low unemployment, and for many of those in the workforce, wages are rising ... People have a comfort level that makes them want to invest, and one of the things they’ll buy is a house.
“You’ve got first-time homeowners buying houses, you’ve got people who have rented for years buying houses, and it’s caused the shortage,” he said. “A really good property doesn’t stay on the market for months or even weeks – it stays days, sometimes a day, and if it’s a good selling property, realtors aren’t having any problem moving it.”
The same is true, if not more so, for land – “Land is selling really well,” said Braden. “Acreage tracts are going really high, and small acreage tracts are off the chart. Things are just selling that well.”
The tremendous influence of Huntsville and Madison, Ala., to the south isn’t hurting either, said the property assessor, explaining that higher property values there, as well as their higher property tax rates and their state income tax all combine to make Tennessee living more appealing.
“People are looking north to get housing that’s more affordable at a better tax rate but still within a commutable distance,” he said.
From 2013 to the start of 2019, land values here in Lincoln County rose by approximately 22 percent while home values increased by about 18 percent, said Braden, adding that in just the first six months of 2019, those values are up by another six percent.
The only exception to the trend is commercial properties, he said. “Commercially, the other final aspect of reappraisal, didn’t have a lot of movement,” he said, adding that commercial properties in Lincoln County tend not to move very much.
New property tax rates
When the assessor’s office conducted reappraisals in 2013, the county was on a six-year cycle, meaning that those values were basically locked in for six years, unless you made improvements, such as adding a structure, or experienced a loss, had something taken away, whether by fire or by some other cause.
In late in 2018, the Lincoln County Commission voted to move from a six-year reappraisal cycle to a five-year cycle, due in great part to the increasing market values across the county – as a result, in accordance with state law, properties had to be reassessed at their current fair market value, said Braden, going on to explain how that is done.
“Our system is based on mass appraisal,” he said, noting that as part of the process, fair market value must be determined at an arm’s length where a good buyer and a good seller come together on a common price or acceptable sale. “All of those accepted sales go into the mass appraisal, and then they are equalized across the county.”
Unaccepted sales – sales generally occurring within a family or due to a foreclosure or, in some cases, as a result of an auction – are not considered in the mass appraisal process.
While on average, land values went up 22 percent and house values rose by 18 percent since the 2013 reappraisal, individual property valuations could have increased by more or even decreased, depending on other factors, such as how much land or homes in the area have sold for – as an example, properties in southern Lincoln County are generally selling for more than properties in northern areas of the county. Because of factors such as that, in addition to improvements, some property valuations increased by as much as 38 or 40 percent since 2013.
“What we’ve heard so much from people is, ‘My property went up that much in a year?’ No, it didn’t – it went up that much in six years,” Braden said, adding that while valuations increased, property taxes did not. “By statute, cities and counties in a reappraisal year are not allowed to take a windfall profit because the tax base has expanded. What you have to do is adopt a certified tax rate to meet the previous year’s budget.”
In keeping with the state law prohibiting governing jurisdictions from increasing revenues due to a reappraisal, the City of Fayetteville lowered its property tax rate in June from $1.65 to $1.50 per $100 of assessed valuation. Likewise, Lincoln County decreased its property tax rate in July from $2.48 to $2.102 per $100 of assessed valuation. Both new tax rates are now effective for the 2019-2020 budget year.
State law also mandates that during each cycle, a representative of the assessor’s office must be on each property in the county to conduct field reviews – “That’s why you may see our vehicle out in the county, on your property, or driving up and down a street,” he said. “We’re actually conducting reviews, checking to see about improvements or other changes that may have occurred to a property.”
In addition, state law requires that building permits be submitted to the assessor’s office on a monthly basis, which also prompts field reviews by the office. In the information age, the office also uses the websites of real estate firms to watch for changes to properties, and that, too, may result in a review.
“If we have something new, we pick it up at that time, and if we have something missing, we take it off,” Braden said. “We also check to see that structures are measured and graded properly ... Any of the information that we collect goes onto the card and will be reflected on the next year’s taxes ... Our oath of office says if we’re aware or if we know, then we must.”