SIOUX CITY -- A robust housing market in Sioux City last year has fueled a 8.5% surge in residential property valuations, compared to the last biennial reassessment in 2019, according to new figures from the city assessor's office.
City Assessor John Lawson attributed the increase in valuations for most homes in Sioux City to low interest rates and reduced inventory of homes, which drove prices higher in 2020. Home sales jumped by over 30 percent last year, despite the COVID-19 pandemic that brought on a recession.
"If you ask Realtors, the number of houses on the market is probably a little lower than normal. which means it's a sellers market and they can ask for a little more," Lawon said. "... it creates an increase in value."
Commercial property assessments in Sioux City grew by an average of 6.5 percent, while multi-residential properties, such as apartment houses and conversion properties, took an even bigger hit, increasing by about 27% on average, Lawson said.
Property owners started receiving their new assessments in the mail Thursday. The percentage change in valuations varies house by house and neighborhood by neighborhood, with some homeowners facing even larger increases, others staying roughly the same, and a few actually decreasing.
In some of the fast-growing areas of Morningside, for example, average valuations jumped by about 13 percent, Lawson said.
The 2021 assessments will be used to calculate local property taxes for the 2022-23 fiscal year, with the first of two payments due in September 2022.
Many owners with higher valuations could face higher tax bills, but they won't know for sure until local governments set their new tax rates next spring. Other factors, such as the "rollback," a state-imposed limit on assessments, and various state tax credits, also will determine whether owners pay more or less in taxes.
State law requires city and county assessors every two years to reset valuations between 95% and 105% of the fair market price to ensure equity in the property tax system. Assessors consider factors such as local sales, new construction and changes to individual parcels.
Based on the 1,094 residential sales that occurred in 2020, the median assessment level was 89%, Lawson said.
This year's increases are on top of double-digit increases in residential and commercial values in the last round of assessments. Under the 2019 assessments set by Lawson's office in 2019, residential property rose by an average of 10 percent, while commercial property assessments jumped by an average of about 35 percent. State officials later ordered an additional 8 percent increase in residential values after finding the local assessor’s office did not fully establish the valuations.
Sioux City has roughly 28,800 residential and multi-family parcels of land and 3,200 that are industrial, commercial or agricultural.
Lawson noted that many residential values have continued to climb since Jan. 1, 2021, which was the cutoff date for data used to calculate the 2021 assessments.
Since Jan. 1, some properties have sold by as much as 30 to 40 percent more than the new assessments, he said.
"There’s a high demand right now. There's something driving the market right now," said Lawson, who questioned whether a population increase was driving the growth.
Last year, last Realtors attributed the uptick partly to pent-up demand from the pandemic's peak. During the unsettled months beginning in mid-March 2020, they said fewer people purchased homes. By the summer, buyers who waited had returned to the market.
Between now and April 1, owners who feel their new assessments are in error are encouraged to contact the assessor's office.
"What we're looking for is to get the correct information on all the properties," Lawson said.
From April 2-25, owners who are still dissatisfied with their assessments can file an informal appeal, he said. They also have the option to lodge a formal appeal with the local Board of Review from April 2-30.
Under state law, property owners have the right to challenge their new assessments if they believe they are not equitable or assessed for more than state law allows. Other grounds for appeal include tax-exempt property that is misclassified or an error or fraud by the assessor’s office.
The Board of Review will start hearing appeals on May 1, and are required to finish their work by the end of the month, Lawson said.
Owners dissatisfied with the board’s ruling can appeal to the Iowa Property Assessment Appeal Board or in U.S. District Court. The former was created in 2005 to provide a free alternative to the costly option of filing in court.