Anchorage’s single-family house prices increased by 8.6% on average in the city’s 2022 property assessments, owing to high demand, limited availability, and escalating construction costs over the previous year.
City officials say it’s unclear how this will affect individual property tax bills.
Some communities in Anchorage witnessed higher average gains than others: According to data from the city assessor’s office, single family house values increased by 10% on average in Midtown, while they increased by 7.5 percent on average in Eagle River.
East Anchorage saw a 9.8% increase in single-family homes, while West Anchorage saw a 9% increase, downtown saw a 7.9% increase, and South Anchorage saw a 7.6% increase.
The average increase in property values for duplexes and triplexes was 7.9%.
Former municipal assessor Jack Gadamus told the Assembly during a work session last month that the overall taxable property in Anchorage witnessed a significant gain in value this year compared to the previous few years, which saw tiny increases or remained relatively steady.
According to him, the increase is related to the increased value of residential properties. Commercial property values, such as retail, office, and hotel buildings, have declined on average, however four-plexes and apartments have gained marginally in value.
“We were a little flat for a while, and then this enormous rise this year in 2022.” “It’s a residential jump,” Gadamus explained.
Gadamus resigned as the city assessor earlier this month. The mayor’s office did not reply to questions regarding his departure or successor, but the city assessor’s office stated that a new municipal assessor would be found soon.
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According to the assessor’s office, residential values are rising due to a lack of available homes for sale, increased demand for homes, and a rise in material and construction expenses – prices for lumber and other building supplies skyrocketed last year.
The fact that there are fewer locations to build in Anchorage, in addition to the limited amount of new homes being built, is exacerbating the problem, according to the assessor’s office.
In addition, just roughly 175 new dwellings were erected in 2021, according to the assessor’s office.
Interest rates, or the cost of borrowing money, were also at historically low levels.
According to the assessor’s office, lower mortgage rates give purchasers greater purchasing power, which leads to more “artificial demand.”
Because there are so many buyers in the market, there are so few new houses being built, and there are so few properties for sale, sale prices have risen, with some houses selling for significantly more than the asking price, according to the assessor’s office.
The assessor’s office uses data on property sale prices to determine the worth of Anchorage’s nearly 90,000 residential properties, according to the city.
lthough Alaska does not compel the reporting of sale data, the assessor’s office asks it from both purchasers and sellers of properties in the city. In general, it receives roughly 25% to 30% of all residential sales data each year. Real estate listing prices are also used as a benchmark by the assessor’s office.
The majority of communities saw an increase in home values of 8% to 10%. The assessor’s office stated that a rise of more than 20% or 25% is the most dramatic surge that a region or group of properties should have seen.
“As we witnessed last year with anyone wanting to buy a property, it was quite difficult, and prices are going up — and extremely high,” Assembly member John Weddleton said. “What they’re seeing is the market’s reflection over the last year and a half to two years.”
While some homeowners may be anxious that their property taxes will rise by the same percentage, this is not always the case, he added.
Weddleton stated, “Assessments are not taxes.”
According to him, the city has a limit on how much it may collect in property taxes. It’s around $318 million this year, or little under 60% of the city’s total budget.
Each property’s taxes contribute to reaching the tax cap, therefore increases and decreases in how all the other properties are taxed based on changing valuations effect each individual property’s taxes.
No one will know what their individual property tax bill will look like until the Anchorage Assembly establishes the property tax rate in April and completes modifications to the year’s city budget. The tax rate varies from year to year, depending on property values in Anchorage and the city’s budget.
Some property owners’ fees may go up, down, or stay the same as last year, depending on the value of their property, according to Weddleton.
It’s likely that the tax rate will go down if the city budget remains relatively steady and property values rise.
In Anchorage, home prices and property values have been rising for a long time, according to Gadamus.
Commercial property, on the other hand, has seen declining values this year, particularly for brick-and-mortar retail premises, which have been declining for years, according to the assessor’s office.
According to the assessor’s office, the existing supply of commercial office space greatly outnumbers market demand, driving down valuations.
According to the assessor’s office, the epidemic has exacerbated these concerns by encouraging individuals to spend more time at home, work from home, and buy more and more retail products online rather than at local businesses, as well as travel less.
According to the assessor’s office, this has hastened some changes in the retail, restaurant, and hotel sectors.