Assessing your greatest asset

Editor's note: The Press is examining many aspects of the housing market this summer. This is one story in that series.

Kootenai County property owners found a present in their mailboxes this week: Assessment notices indicating their home is likely worth a lot more than it was a year ago.

For those unclear where that number came from, The Press is here to break it down.

Besides overseeing the vehicle licensing division, the Kootenai County Assessor's Office is tasked with appraising — or evaluating — properties at 100% market value set on Jan. 1 based on the prior year’s sales.

By operating under the level standards mandated by Idaho code, appraisers like Troy Steiner, the county residential appraisal manager, strive for fairness and equity in the distribution of the tax burden for all Kootenai County landowners.

"Everybody has this misconception that we determine what a property's value is, and we add things to it or whatever to make it come to a certain value, and that's not true," Steiner explained. "We're just trying to reflect what they sell for on average on the market. That is what the state requires us to assess with a 10% leeway."

As a result of Idaho's rapidly growing population and lack of housing supply, home value assessments have swelled in conjunction with market prices.

"Right now, with everything so hot, nobody cares that it's an older home - that they're paying the same for the old home as they are a new home," Steiner told The Press. "It's the supply and demand from growth."

Steiner can't just stand outside a house and tell you the value. It takes him hours of data collection, conducting studies, considering the cost of new construction and comparing older sales to determine depreciation changes.

"We try to compare apples to apples as much as we can," he said.

Unlike a fee appraiser who evaluates one home at a time, the county conducts mass appraisals applied to properties of similar values. Once every five years, appraisers like Steiner visit Kootenai County's over 90,000 properties to inspect the condition, landscape, structures and improvements done by landowners.

Before COVID-19, when Kootenai County homes were slightly less desired, Steiner said appraisers could study conditions that caused the one-off wildly overpriced home purchase.

"There are going to be outliers where someone really overpaid beyond what anybody else would have," he said. "The 'my wife just had to have this’ or the young couple who paid extra to be next to mom and dad. We recognize that, and we take a hard look at it in comparison to what is historically representative of the market."

However, the willingness to pay over list price is becoming routine, giving appraisers like Steiner "no choice" but to indicate it in assessments.

"Virtually every house is selling at or over the list price, and there are bidding wars and multiple offers within days. All these aspects reflect in the market," he said. "In years past, when you would see a sale that once in a while doesn't fit the model, it stands out, and we can ignore it. Right now, we can't."

With nine years of experience appraising residential real estate for the county, Steiner said he couldn't even begin to speculate if local market values would continue climbing. He thought it would stop escalating for years, but to date, there's no reprieve.

Another common misconception Kootenai County Assessor Bela Kovacs noted is that property values and property tax have a direct and proportional relationship.

"Everybody has this perception that we value the home based on what we think their taxes should be and that we're trying to drive the taxes," Kovacs told The Press. "It's not like we look at the $3 million home on the lake and say 'oh well, a million-dollar home on the lake, this is how much in property taxes you pay.' That's not the case."

Idaho operates under a levy-based tax system that's not influenced by property values but by taxing district budget increases. Taxing districts include but are not limited to: cities, counties, school districts, hospital districts, highway districts, water districts, sewer districts and library districts.

The total of all taxing district budgets is divided by the sum of every property value within a district to create the levy rate, Kovacs explained. The county commissioners then calculate and set a levy rate applied to each valuation dollar of taxable property.

If you're confused — and don't worry, this reporter was — here is the basic formula for property tax:

Levy rate x property value = property tax

For more helpful links, head to: www.kcgov.us/176/Assessor

Property owners have until the fourth Monday of June to contest their assessed value with the office.