HELENA — As the Montana Department of Revenue completes a new statewide reappraisal of residential property for tax purposes, preliminary numbers show the median sales prices have changed very little on average over the past five-and-a-half years.
The department’s preliminary numbers show a change by plus-or-minus 5 percent to 10 percent over that period.
As a result, Montana homeowners may not see the large potential increases in their property values as they have in some previous revaluations, state Revenue Director Mike Kadas said. During the 2008 reappraisal cycle, the average market value on residential property rose by 55 percent statewide.
Every six years, the state reappraises property values, which are used to compute property taxes. However, a higher appraised value does not necessarily mean higher property taxes.
However, Kadas and other department officials warned that the plus-or-minus 5 percent to 10 percent statewide increase is preliminary at this point, as are those for individual counties.
To no one’s surprise, the changes in median residential property sales prices in Richland County soared by 212.5 percent from 2008-2013, because of booming oil-and-gas development in the Bakken formation along the North Dakota-Montana border.
The median is the exact middle amount in a series of residential property prices.
The increases can vary by neighborhood within cities and towns within a county, said Cynthia Monteau Moore, administrator of the department’s Property Assessment Division.
“Even if you take Richland County, for example, the Sidney area, where they’re really building and that is where you’ll see increased costs, but if you go to another part of the county, where they’re not building, you’re going to see numbers a lot different,” she said.
Flathead and Gallatin counties, which had some of the largest median increases in residential sales prices in the 2008 reappraisal, are now on the lower end of the spectrum this cycle among more populous counties, according to preliminary numbers.
The change in median residential sales prices in Flathead County has dropped by 3.32 percent over the current period, while those in Gallatin went up by only 7.53 percent over nearly six years.
“It was those areas that had the biggest increases that suffered the biggest decrease when the recession hit,” Kadas said. “We saw the same phenomenon around the country. Places like Arizona and Nevada were hit the hardest. But they also have the biggest recovery, too.”
Silver Bow County, at 38.22 percent, registered the largest median gain in residential sales prices among urban counties, preliminary numbers showed.
Officials warned not to make too much of the preliminary Silver Bow percentage because it is the least populous of the urban counties. They questioned the robustness of the data from property sales there.
“The median sales price increases when there are more higher-priced homes selling,” Moore said. “In other words, the sale of the higher-priced homes has driven up the median sales prices in Butte-Silver Bow.”
She said an analysis of sales trends of similar properties in Silver Bow County show that residential home values are about the same as they were in 2008.
Here are the changes in median sales prices for the other more populous counties over the five-and-a-half years of this reappraisal period, according to the Revenue Department:
Yellowstone, 19.97 percent.
Lewis and Clark, 13.56 percent.
Cascade, 11.6 percent.
Missoula, 5.6 percent.
Ravalli, minus 15.56 percent.
Kadas and Moore again cautioned that these numbers are preliminary and said the department will undertake more analysis before coming up with final numbers in November.
The statewide reappraisal of residential property is a massive project.
More than 900,000 parcels were reappraised for the 2008 process, with about 400,000 of them improvements, or homes or other structures on the land.
The department also is reappraising commercial property.
To cushion the blow of past reappraisals on homeowners, the Legislature has passed various phase-ins.
Kadas said the residential property appraisal in Montana is complicated largely “because there have been so many different mitigation schemes piled on top of each other over the years.”
For example, in the 2008 reappraisal cycle that’s still in place, the 2009 Legislature did the following, according to the Revenue Department:
Phased in the increases in market values of property over six years, while implementing decreases immediately.
Phased down the tax rate over six years from 2.93 percent to 2.47 percent.
Phased in a homestead exemption over six years from 36.8 percent to 47 percent, according to the Revenue Department.
“One of the big opportunities we see this time is we have the opportunity not to do a phase-in.” Kadas said. “We’ll see how that works out, and ultimately, that’s a decision by the Legislature. It would remove a layer of complexity.”
The department in 2013 asked the Legislature to shorten the reappraisal period to two years from the current six years, arguing it would make phase-ins unnecessary. That bill failed.