In July, a Missouri group bought a West Des Moines apartment complex for $16.5 million, nearly 21% more than its assessed valuation. In September, apartment property along Grand Avenue in Des Moines was sold to a group of local developers for $3 million, nearly 99% more than its assessed value. Three months later, a New York entity paid $33.2 million for an Ankeny apartment complex, 81% more than the property’s value.
With sales of multifamily properties exceeding their assessed values by double-digit percentages in 2020, it’s not surprising that assessments for the properties rose an average of 22% in 2021. Two years earlier, the average value of multifamily properties increased 18.1%.
“There’s a lot of out-of-state buyers coming in and driving the market up,” Randy Ripperger, Polk County assessor, said.
This week, more than 182,000 Polk County commercial, industrial, agricultural and residential property owners will receive notices in the mail of their property’s 2021 assessed value. State law requires counties to revalue properties every odd-numbered year.
Overall, the assessed valuation of Polk County property is $51.18 billion, 11.4% higher than 2019’s value of $45.9 billion, information provided by Ripperger shows. He emphasized that the 2021 value will likely change after appeals by property owners are heard and decided on by the county’s Board of Review.
Still, he said, even though the economy was upended by a pandemic, Polk County’s real estate market has remained mostly strong since 2019 when the last revaluation occurred. In the residential sector, demand for houses – fueled by historically low mortgage interest rates – has outpaced the supply. Out-of-state investors are looking to the Midwest and Iowa as places in which to get good returns on investments. In addition, new development projects that had started before the pandemic are being completed, increasing the value of previously vacant or distressed properties.
“All of these things have caused the strong increase we’re seeing in the market,” Ripperger said.
The commercial sector had the largest swings in the assessed valuations of properties, data provided by Ripperger shows. Overall, the value of the 9,329 commercial properties in the county rose an average of 9.2%.
However, within the sector, the value of warehouse property rose an average of 35% while the value of properties that include hotels, theaters, restaurants and bars, and health and recreation fell an average of 30%. In addition, the valuation of office, retail, banks, fast food and grocery properties grew an average of 3%.
“We knew that the warehouse sector was strong, but 35% is a pretty strong number,” Ripperger said. “We have an adequate number of sales to support that.”
For example, in spring 2020, Hubbell Realty Co. sold four Grimes warehouse properties to out-of-state entities for $28.5, nearly 23% more than the parcels’ assessed values. In December, DRA Properties sold warehouse property in northeast Des Moines to a Wisconsin group for $7.6 million, nearly 17% more than the assessed value of the property.
Service-industry properties – hotels, restaurants, theaters and the like – have been “hammered by the pandemic,” Ripperger said. “It’s going to take a while for them to recover.”
The sale price of properties is one of the key pieces of data looked at when determining a property’s value, Ripperger said. In Polk County, there weren’t an adequate number of hotel sales to help determine the assessed valuation of hotel properties. Nationally, the value of hotel properties dropped between 20% and 40%, he said.
“We know that our market is different than other markets across the United States,” Ripperger said. “We think the effect from the pandemic was pretty universal across the country.”
The assessed valuations of industrial properties, which includes 644 parcels, rose an average of 19.6%. The value of vacant ground grew an average of 9%.
In the residential sector, which includes 165,562 properties, or 91% of parcels in the county, assessed valuation rose an average of 7.5%, according to Ripperger.
The residential assessed values are based on sale prices, appraisals, home improvements and the market, which in Central Iowa set records. In 2020, a record 16,640 houses were sold in the Greater Des Moines area, according to Des Moines Area Association of Realtors data. In addition, the median sale price of a house was $226,000, 5% higher than 2019’s median sale price of $215,000.
The increase in home values could mean residents will pay more on their September 2022 and March 2023 property tax bills. While property tax rates set by cities, school districts, the county and other taxing entities could remain the same or decline, property owners may pay more in property taxes because of the increase in value.
Ripperger said he expects a large number of property owners to protest the reassessments of their properties. In a typical reassessment year, the county gets between 7,000 and 9,000 protests, he said. He expects at least that many this year. In 2019, 7,893 assessment protests were filed; 48%, or 3,828, of the appeals were denied.
Photo above: A New York investment firm bought the Lake Shore apartment complex in Ankeny in December for $33.2 million. The sale price was 81% more than the assessed value of the complex, which includes 239 units spread over three four-story buildings. The buildings are located at 902 E. First St., 305 N.E. Hayes Drive and 458 N.E. Delaware Ave. in Ankeny. Photo by Duane Tinkey
How to file protest of 2021 property valuation
Polk County on Tuesday will mail 2021 property valuation assessment notices to property owners. If an owner believes the assessment is unfair or inaccurate, they can file a protest with the Board of Review between April 2 and 30. Appeals can be mailed, emailed or faxed. The assessor’s office is not open to the public due to COVID-19 restrictions. Also, between April 2 and 25, property owners can request an informal review of their assessment. If an agreement is reached, the parties will enter into a written agreement authorizing the assessor to adjust the assessment. For questions, call the assessor at 515-286-3014 or email [email protected].