Homes around the region sold at a healthy clip over the past year – strong enough that all homeowners are likely to notice.
“Probably the lowest sustained interest rate in recent history, that did a lot to drive the market,” said Steve Campbell, owner of Julian Campbell Realtors. “That turned 2020 into a very good year.”
“It was very counterintuitive,” said Appanoose County Assessor Michael Barth. “When COVID hit, we thought it was really going to hurt the market, but it just took off and they’ve been selling like hotcakes.”
Barth’s office recorded 190 residential sales last year, up from 150 in 2019. Wapello County saw 466 residential property sales, compared to 386 in 2019, according to County Assessor Gary Smith. The numbers for both counties don’t include homes included in farm sales.
Those strong sales will increase property assessments, used to calculate homeowners’ property tax. Smith said he expects Wapello County’s residential valuations to increase about 5.5 percent, while those in Appanoose will increase about 16.5 percent, according to Barth.
State law requires a county’s assessed values on residential property fall between 95 and 105 percent of market value — its “sales ratio,” figured by dividing a property’s assessment by its sale price.
As most properties don’t change hands often, the assessed value is “equalized” every odd-numbered year against comparable properties’ sale prices to assure assessed values accurately reflect the market.
The state Department of Revenue compares the year’s sales to assessors’ abstracts. If assessed values for a property class aren’t within five percent of the median sale for that type, they’re adjusted to bring them into compliance with state law.
In a strong real estate market, that means sales may push assessed values higher for similar properties. Counties mail new assessments to property owners April 1, setting the basis for property taxes payable fall of 2022 and spring of 2023.
A higher valuation doesn’t necessarily mean a homeowner’s property tax bill will increase – that’s up to county supervisors, school boards, and city councils who may adjust the year’s levy rate to offset increased property values.
COVID-19’s onset only slowed sales briefly, Campbell said.
“There was a serious lull in the spring for some time,” he said. “People didn’t come in the office and there weren’t any showings, but as soon as we got a little down the road that all changed.”
The market seemed to come back stronger, with fewer casual “lookie-loos,” as warmer weather gradually reopened the economy, Campbell said.
“The more serious customers remained in the market,” he said.
Continued strong sales leave fewer choices for prospective buyers. The Iowa Association of Realtors reported 46 homes for sale in Wapello County at the end of February, compared to 114 at the same time last year. There were 38 listings in Appanoose County, down from 71 in 2020.
“The inventory is lower, so properties seem to be in demand in all prices ranges,” Campbell said. “Anytime you shift from a buyers’ market to a sellers’ market there’s a lot of collateral changes. The time the house spent on the market to how close the sales price is to the list price - all of this works tighter to make a market that moves more quickly.”
And would-be buyers seem to be adjusting.
“We see a lot of people getting prequalified with lenders so that when they come to the bargaining table they’re prepared,” Campbell said. “Sellers are much more prepared to listen to their offer.”