How Apartment Renters Could Be Costing Home Owners

Denver (Colorado) County assessors have completed their property 
valuations which are used to help determine property taxes charged 
for 2014 and 2015. Colorado’s Property Tax Administrator, JoAnn 
Groff, said at a news conference to announce the findings that 
“Property owners are still getting the advantages of the downturn 
in the economy”.

The latest figures show that residential property valuations for 
Colorado were down approximately 2.5% compared with the 2010 
study. In Denver County alone, the value of single family homes 
(including condos) declined by .9%, although condo values actually 
dropped more than 7%.

On the surface, this appears to be good news from home owners 
who in many instances will see a slight drop in the amount of property 
taxes which will come due. Estimates are that better than 60% will 
pay less in Denver County.

However, this actually should be “better” news than it really is. 
The report goes on to state that, based on higher occupancy and an 
increase in rents, apartment buildings in the County combined to show 
a 22.6% increase in value. The majority of those come from the “high 
rise” apartment buildings, which results in big bucks value  increases.

What does the increased value of large apartment buildings have to do 
with property taxes for a single family home development on the other 
side of the County? More than you might think.

The County Assessor considers these high rise apartment buildings 
to be “residential property” just the same as one single family home 
on a single piece of property. As a result, the 22.6% increase in 
apartment building values has served to collectively raise residential 
property values in Denver County.

This means that a condo owner, whose property may have lost upwards 
of 10% of its value within the past two years (given that the average for 
the County is 7%), does not see a 10% decrease in their property taxes 
going  forward. Instead, that owner may see only a 2.5% decrease, 
likely a difference of hundreds (or more) dollars.

Although you cannot take the percentages in the above paragraph 
literally, as specific properties are assessed based on several factors,
the point is that the “overall” findings do impact the property taxes 
going forward. 

What this does show is that owners are being impacted by renters. 
I’m sure that many of the owners of those apartment buildings are doing 
cartwheels about these findings. The “increased rents” help to increase 
the value of their properties, which translates to increased cash flow (if 
not profit) for them. Yet, the lost value of single family homes serves to 
reduce the amount of property taxes those owners will pay for at least 
the next couple of years.

Going forward, it will be interesting to see if the investment groups which 
 have been focused on picking up bargain foreclosures and short sales 
(and driving down the single family home prices) over the past couple of 
years would now turn their attention to large apartment buildings instead.

Obviously, this situation in Colorado might be very much different from 
what is going on in this regard in your area. If you are not certain, it might 
be worth looking into!

If you are a home owner, keep this in mind even if you see a decrease. Be 
 sure you are aware of any options to  appeal your next or next year 
property tax assessment.