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There is no lack of speculation on how the local real estate market will perform post-pandemic. Nationally, inflation and interest rates have been increasing and as a result, some residential markets are experiencing longer marketing times than the past few years. Lately, in parts of the country sellers are finding they must make price reductions to entice prospective buyers, something that was almost unheard of in 2021.
When the 2022 property valuation notices were sent out by Cook County last spring, the average residential property saw a 32% valuation increase over 2021. As a result, many property owners voiced concern to the assessor that recent transactions were unsustainable and reflective of artificially inflated sale prices. Property owners suggested that if the real estate market decreases, they will be stuck with their ‘perceived’ newly inflated valuation.
Contrary to many taxpayers’ belief that assessed values don’t go down in a declining market, Cook County’s aggregate assessed values declined for seven straight years, after peaking in 2010. In Minnesota, assessed values are based off sales that precede the assessment date and value adjustments made by the assessor can go up or down.
Regardless of what may happen in the future, there is no doubt that demand for real estate in cook county remains strong. This fact is evident through the number of properties currently available for purchase. Near the end of January 2023, there were 15 homes listed for sale in Cook County, with several of those listings under contract for purchase. The remaining available listings (nine), range from $399,900 to $1,500,000 and the median asking price is $689,900.
The lowest priced home currently available in Cook County sold back in May 2021, for $250,000. In short, the seller is now asking nearly 60 percent more than their purchase price just 20 months earlier.
Rest assured, asking prices don’t directly influence assessed values, only closed transactions are included in the assessor’s sales study. Actual market trends are calculated several different ways by the assessor, including looking at properties that have sold multiple times in a relatively short period. A ‘linear regression analysis’ is one of the primary methods for determining real estate trends by the assessor and the Minnesota Department of Revenue.
A few other notable trends happening in Cook County:
The average sale price is up 59.87 percent from transactions affecting the 2023 assessment, compared to the 2021 assessment;
The median sale price is up 25.33 percent from transactions affecting the 2023 assessment, compared to the 2021 assessment;
There is a dwindling supply of available properties, back in early 2020, there were over 160 available properties (both improved and vacant land, not under contract), today that number is just 48;
The number of residential transactions over a million dollars is exponentially higher, there were 14 transactions over a million dollars in 2021, 2022 and the early part of 2023, there were only eight in the ten years prior.
Lastly, an interesting statistic that most Cook County residents may not be aware of, only two Minnesota counties had a lower effective tax rate on homesteaded properties in 2022, according to the Department of Revenue’s publicly available ‘Interactive Property Tax Data’ webpage. The effective tax rate is a common way of measuring local government efficiency, it’s calculated by dividing the tax amount by the property value. When I discuss the effective tax rate with taxpayers, they often suggest they can get more home for their money in places like Silver Bay or Duluth. This is typically true in terms of the structure, but most of us agree we get more out of Cook County in terms of location and the desire to be here. This is ultimately driving the price of modest homes upward.
So, what can taxpayers expect on their 2023 Valuation Notices that will be sent in March?
In Minnesota, the Assessor is tasked with valuing property at market value (Ad Valorem). This means your property should be valued consistent with the sale prices of comparable properties that have recently sold. The Assessor’s Office is currently finalizing our area sales studies. Some properties can expect to see changes that are made on a broad basis, others will see a change that resulted from an individual review of their property record that occurs at least once every five years.
It is very important to pay close attention to the 2023 Valuation Notice you receive in late-March/ early-April. Please review the value and classification information for accuracy and contact the Assessor’s Office at 218-387-3650 as soon as possible if you feel something is incorrect. We are happy to review the property record and will consider any information you provide to us related to the property’s valuation.
If you and the Assessor cannot come to an agreement on the proposed valuation of your property, you may appeal at either the Local Town Board Meetings that occur in May (Lutsen, Tofte, Schroeder), and/or the County Board of Appeals and Equalization Meeting that occurs in June.
The details of the meetings are included on the valuation notice you will receive along with your tax statement.
Meeting details will be posted on the county and/ or township websites.
After the meetings have adjourned, the 2023 valuation cannot be appealed at the county level.
Several options may exist for Cook County residents who see increases to their tax bill: the Minnesota property tax refund programs and the senior citizen property tax deferral to name a few. These programs are for owner-occupied properties with a homestead classification, and individuals who pay rent. One refund is based off income, the other ‘special refund’ is based off the amount of tax increase over the previous year. Talk to your tax professional or visit the Minnesota Department of Revenue’s website for more information on the M1PR form. This form is due by August 15, but you may be able to file up to one year after the due date.
County Connections is a column on timely topics and service information from your Cook County government. Cook County – Supporting Community Through Quality Public Service.
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