Property sale fliers sit posted in the window at Hosler Realty in downtown Kendallville on Friday. Assessed values in the four-county area jumped by more than 10% for 2023 in all four counties, with the increase driving primarily by rising sale prices for homes and land. Steve Garbacz
If you want to talk inflation, here’s a good place to start — property values.
Consumer prices are up around 8% year-over-year. But that’s measly in comparison to what’s happened in local assessed values.
How about 11-17% increases? And, it’s not the first year the region has seen big jumps, either.
Assessed values, the taxable value of your property, are set to shoot up by double-digit amounts across the entire four-county area in 2023. Driven by Indiana’s market-value assessing, rapidly spiraling home prices and land sales have pumped up the values of Noble, DeKalb, LaGrange and Steuben counties well beyond what would be considered normal by historical measures.
For residents living here, that rapid inflation in property values is a double-edged sword. For people who own property and are looking to sell, you’re likely to command a higher asking price than even five years ago (although the real estate market may now be showing signs of rapid cooling lately). That, and tax rates are likely to continue to drop.
But if you’re someone looking to buy property, you better hope you’ve got a lucrative job and fat bank account. And, for certain homeowners, your rapidly increasing home value may mean you actually end up paying more in taxes next year, even if your tax rate goes down.
Indiana has certified its 2023 assessed values, figures which are the the first step for needed for crunching out tax rates and tax bills for next year. And those numbers show double-digit increases for all four counties as values have exploded.
LaGrange County saw the biggest jump year-over-year, with a 17.33% increase to $3.04 billion in total value for 2023 compared to $2.59 billion in 2022.
To illustrate how crazy of a spike that is, it took LaGrange County from 2017 to 2021 to see a 14.6% increase in its overall value, while the county has now surpassed that in a single year.
Steuben County was second in line with a 14.56% increase to $4.35 billion in total value, up from $3.79 billion a year back.
Noble County posted back-to-back double-digit increases. After adding 11.07% in values in 2022, the county surpassed that huge jump with another 13.01% increase for 2023. While the other local counties saw larger-than-usual increases last year, Noble County was the only one to top 10% a year back.
Noble County’s total assessed value is up by almost half over the past decade, rising 47.2% since 2017.
Lastly, DeKalb County’s total values are up 11.23% to $3.13 billion total, up from $2.82 billion a year ago.
Historically, counties would typically see a 2-4% growth in values in an average year, less during times of recession like in the aftermath of 2008 when home values plummeted and communities were losing value as owners struggled to offload property even at big discounts.
So what’s driving these huge increases?
Rapidly rising sales prices, Noble County Assessor Ben Castle said.
“With assessed values, it’s all sales driven. The sales have just been incredible, especially the first half this year, there are still high sales coming in,” said Castle, who sold real estate before being elected as county assessor. “We’re pulling sales all the time and ‘My god, that thing sold for that? I’m surprised half the times.”
Indiana uses market-based assessed, meaning the value the county assigns your property is supposed to reflect its value if you were to put the property up for sale. Therefore, if you house is assessed at $200,000, you should be able to sell it for $200,000.
But in recent years the housing market has been so hot — overheated by high demand but a short supply of available inventory — that sales prices have shot up. In recent years, it’s not been uncommon for sellers to receive multiple offers within 24 hours of listing and then accept one that is $10,000 or $20,000 or more over the asking price.
When a house sells at a price over its assessed value, that obviously leads to a change in that property’s value for the next year. But the effect isn’t isolated, Castle explained.
Assessors also do “trending,” meaning that when multiple properties in a neighborhood sell, if they’re all notably out of line with the neighborhood values, the assessor’s office will adjust the values of all of the nearby properties.
That’s the main driving force between huge countywide jumps in values, Castle said. High sales increase values and trending spreads those higher values over a wider area. Assessors are required by the state to do that trending, so they can’t simply ignore the value gap between new sales and those existing, unsold properties.
“I really do want people know we have to follow the sales and that’s what’s pushing that AV jump,” Castle said.
Homes have obviously been a huge component of those value increases, but Castle said land sales too have been coming in much higher, especially in pockets.
In Noble County, land sales in Perry, Elkhart and Orange townships on the northern border have been rising fast, driven by Amish migration from LaGrange County. Likewise, land values in Green, Swan and Allen townships in southeast Noble County area also shooting up, as buyers continue migrating north from Fort Wayne and Huntertown, Castle said.
All that said, the spike in assessed values may be hitting a peak, Castle said, as action being taken by the Federal Reserve appears to be dampening the real estate market.
In an effort to wrangle inflation, the Fed has been more aggressively hiking interest rates, which tightens the monetary supply by making borrowing more expensive. And, since most real estate is being purchased via financing, those interest rate hikes are having an immediate cooling effect on the market.
Double-digit value growth year-to-year is not sustainable, Castle said, and by 2024 local counties may see increases drop more toward typical numbers.
“I don’t think it can keep up like this forever,” Castle said.
When asked if properties could actually start losing value over time, Castle said that’s not outside the realm of possibility, either. If the economy weakens and if demand further shrivels, home values and property values could start coming down from their overheated highs.
Like the rapid upshot, assessed values could also suffer a widespread downturn. While trending has helped pull counties up quickly, trending can also pull neighborhoods down if that’s what that market is showing.
“It’s foreseeable, because I think things are overinflated. The values are overinflated in the market,” Castle said. “If you start losing value, that’s a trend. That’s a downward trend. The trend will always move, whether it’s up, flat or down.”
Rising assessed values have had a positive impact on tax rates, since rates are figured by taking the levy, the amount local governments need to raise in taxes, and dividing by the total assessed value. So when that denominator grows quickly, it helps push down tax rates.
Decreased tax rates from that method don’t necessarily translate into lower tax bills for resident. If the value of your property increased by a larger percentage than your tax rate decreased, you can actually end up paying more than the year before.
But if counties enter a situation where values start falling, it’s much more likely going to result in tax rate increases across the region.
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