Land values driving Carson home prices skyward: Land is a finite resource and the more scarce it is, the higher the price is going to be
November 20, 2005
CARSON CITY – The average price of a home in the capital city has more than doubled since 1999 and Assessor Dave Dawley says the price is still climbing.
“It’s crazy,” said Dawley. “But it’s what people are willing to pay.”
Taxation Director Chuck Chinnock said many people, including himself, are now living in homes they probably couldn’t afford to buy at current prices.
“It’s a desirable place to live and there’s a shortage of property so, yes, prices are going up,” he said.
Dawley said the price of land is driving the increases. He said sale prices of vacant lots – a baseline assessors use to calculate property values – have doubled or more in some areas. Just a couple of years ago, parcels were selling for $65,000-$75,000 in Silver Oak. Now a big yellow sign on College Parkway advertises lots for more than $200,000.
He said the area hit by the Waterfall fire will see major increases in assessed land values partly because they weren’t adjusted last year.
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“We didn’t know how the fire would affect values so we didn’t raise them,” he said.
He said, for example, a half-acre lot where the home was destroyed in the fire sold in August for $250,000.
The average sale price of a home was $162,052 in 1999. Over the next three years, it moved to $199,073. But in the three years since, the average has climbed to $338,363 this year – up 20 percent in just this past year.
Dawley said when homes on the west side of Carson City are reappraised this year, their land values will almost certainly double. In the rest of the capital city, he said, land values will be raised a standard 30 percent, with the value of improvements going up another 12 percent.
“Thankfully, the Legislature separated assessed value from taxable value,” he said. “Yes, the values are going up, but the tax rates are capped. The tax bill will be no more than 3 percent higher for owner-occupied homes.”
Dawley said to get taxable values to what the properties are selling for, “we would have to raise the values 88 to 95 percent,” he said. “We want to take our time trying to get to true value because we don’t want to have to cut everything if the market flattens out.”
He said his staff must also must beware they don’t end up setting taxable value higher than market value. That’s why the land value factor won’t be applied in the northeast part of town this year. He said that area went up 40 percent when it was reappraised last year, and another 30 percent could put the taxable value of some homes above market value.
Part of what has happened in Carson City, he said, is catch-up.
“Our values were so low for so long,” he said.
No longer. In part, he said, it’s because the number of vacant parcels in town is shrinking as the city approaches buildout.
Brian Kaiser, of the Nevada Small Business Development Center at the University of Nevada, Reno, also said the market is beginning to flatten. But he predicted land values will continue to increase.
“I don’t think I see any change in that. As it gets more scarce, it’s going to continue going up. It’s a finite resource and the more scarce it is, the higher the price is going to be.”
He said the other factor is interest rates are again rising.
“Everyone wants a piece of this pie before interest rates go up,” he said.