Ames Residential Real Estate Values Increasing
Based on over 600 residential sales that took place in 2016, single family residential values have continued to increase. This is evidenced by the market measures shown below:
The market measures shown above indicate increasing values from 2015 to 2016. The average sale price per square foot increased 10.5%, while the average sale price increased 11.58%.
The median sales ratio is the measure relied upon for assessment equalization purposes. It decreased over 4% from 2015 to 2016. The median sale ratio is derived by dividing the assessed value by the sale price of the property. These ratios are then arrayed in numerical order, and the one that is in the middle is the median. When it decreases, it indicates an increase in values. If the median sales ratio is above 105% or below 95% equalization orders will be applied by the Iowa Department of Revenue. We feel it’s our office’s job to revalue properties, rather than just wait and receive equalization orders.
Prior to this year, six different multiple regression models were used to value residential properties. This was cumbersome to administer and sometimes resulted with inconsistent values among properties. Our office partnered with an outside expert to develop just one model that was used for 2017.
Responding to sales, this model produced an overall increase of 10.7% for one and two-family dwellings. This doesn’t mean that every single property went up 10.7%. Some individual values went up, some stayed the same, and some went down.
Multiresidential Values Increasing
The newer Multiresidential class of that came into existence in 2015 consists of property that is primarily used or intended for human habitation containing three (3) or more separate dwelling units. This includes apartment buildings and dwellings converted to three (3) or more apartments which were classified as commercial. It also includes mobile home parks, manufactured home communities, assisted living facilities and nursing homes.
In 2015 we had only two sales that were considered good for equalization by the Iowa Department of Revenue. Two sales weren’t enough to draw any solid conclusions from, so no changes were made for 01/2016. In 2016 we had eleven sales we believe are good for analysis, and their median ratio is 74%, which means that a substantial increase was necessary and made.
Commercial Values No Change
In 2016 we had eleven sales that believe are considered good for equalization by the Iowa Department of Revenue, with a median sales ratio of 96%. Therefore no changes were needed.
Assessment notices are being mailed on April 3rd. Any property owner who believes the new value isn’t reflective of market value for their property can call our office at 515-239-5370 and ask to schedule an informal review. The last day for this review to be held is April 25. You can skip the review process and you have until April 30th to file a protest to the Ames Board of Review. The protest form to fill out can be found on our website at:
The Board of Review doesn’t accept electronic filings, so be sure to fill out the protest form, date it and sign it, and then either mail it to the Ames City Assessor, or bring it to our office.
THE END OF PRESS RELEASE
EXPLANATION OF EQUALIZATION PROCESS
Iowa Code requires the Iowa Department of Revenue to conduct sales ratio studies in order to see if equalization orders are necessary. Equalization is the process of insuring that the median sales ratio of an assessment jurisdiction is between 95 and 105. These orders can be issued every odd year. The sales that are used are the ones that take place during the year preceding the assessment date i.e. (1/1/17). The City of Ames had over 600 residential sales that were considered good for this study that took place in 2016. The ratio is calculated by dividing the assessed value by the sale price. All of these ratios are then arrayed and the one in the middle is the median. According to this study, the median ratio for our sales was .90. (this is different than the 89.4 shown above because the Department of Revenue released their final study on 4/5/17). If no revaluation was done by our office, we would have received an across the board equalization order in August of 2017 that would increase all properties classified as residential by1.11 (1.00/.90=1.11).
We feel it is our responsibility to revalue the properties in lieu of just accepting equalization orders. We did this by the use of a new multiple regression model that was developed with the aid of an outside consultant. This new model replaced six different models that had been used. The new model was different from the previous ones used as it only estimated a total value. The previous ones estimated both a land value and a dwelling value. The only reason a land value is shown is because the Department of Revenue requires it. Both the District Court and Property Assessment Appeal Board have ruled that only the total value can be considered during the appeal process.
In order to remain uniform in our calculation of the land value, we used a 25% ratio of land to total value. Thus if your total value is estimated at $200,000, the land value was allocated at .25 X $200,000 or $50,000. The dwelling value was estimated at $150,000 ($200,000 -$50,000).