Rocketing property values rattle Crow Wing County residents
County officials sought to clarify the relationship between valuation and taxes while also presenting statistics to show Crow Wing County is not alone in its steep increases — even though it appears to be experiencing some of the biggest climbs in the state.
BRAINERD — If the county’s phone lines are any indication, a significant number of Crow Wing County property owners experienced sticker shock when their valuation notices arrived by mail late last month.
“It has been a busy spring with the amount of increase in valuation that this county has experienced,” said Gary Griffin, land services director, during the Tuesday, April 12, County Board meeting. “ … We’re getting numerous phone calls and we’re just trying to get the word out that, you know, while your property valuation may go up 30, 40, 50, and in some cases even over 60%, depending exactly where you’re located, that doesn’t necessarily mean your taxes are going to go up 30, 40, 50, 60%. That’s a lot of the scare out there that we’ve heard.”
Griffin sought to clarify the relationship between valuation and taxes while also presenting statistics to show Crow Wing County is not alone in its steep increases — even though it appears to be experiencing some of the biggest climbs in the state. Residential and seasonal/recreational property values in Crow Wing rose at an average rate of 35%, just topping Cass at 31% and Aitkin at 29%, based on data Griffin said was gathered from other county assessor’s offices.
The estimated market value as a whole in Crow Wing — including all types of properties — was $17.1 billion, more than 66% higher than the value in 2016.
Why are values ballooning?
The rise in values is a direct reflection of the state of the housing market, which continues to indicate people are willing to pay higher prices for a tight inventory of housing stock. And real estate changed hands last year in Crow Wing County at levels not seen since before the Great Recession, Griffin said. A total of 3,409 certificates of real estate value — which documents a property sale — were processed by county assessing services in 2021, according to land services’ annual report. This is a 27% increase over those processed in 2019.
“All I kept hearing was, ‘House was on the market for two days, sold.’ ‘House was on the market for three days, sold.’ I just kept hearing that over and over and over,” Griffin said during a phone interview Thursday. “And those are part of the reasons why people are … very competitive if they want to get a house. And I think the low interest rates help contribute to real estate being very valuable.”
Sales of comparable properties are the basis of the property valuation process, which is conducted by county government officials but is driven by rules set by the state Legislature.
The values must fall within a statistical range established by the state, and if they stray from that range, rules require the county to raise or lower all property values accordingly. And there’s a lag built into the system: property values as of January 2022 are based on sales between October 2020 and September 2021.
County Commissioner Bill Brekken, who is a RE/MAX real estate agent when he’s not serving as a public official, said his new mantra is “wonder and awe” when it comes to the housing market during the pandemic.
“It is hard to believe that it’s sustained this long,” Brekken said Friday. “But I do think it goes back to low inventories. … Ever since the crash back in 2008, we’ve never caught up in our building supply, so that’s always kept that pressure on there. And then when we have become a destination, that is what then puts pressure on that pricing, so that gets to be kind of that challenge.”
Brekken said an increasing number of employees able to work from home translates to people living wherever they choose — and a lot of people want to live in the Brainerd lakes area. This includes residents moving from the Twin Cities metropolitan area, but also people from all over the country.
“We see the prices high here, but relatively, they’re inexpensive compared to areas on the coast, in Colorado, those kinds of things,” Brekken said. “ … And we’ve got water, which I think makes somewhat of a difference.”
Griffin said despite the uncertainty at the outset of the pandemic, opening the doors to a “work from anywhere” mentality is drawing people to an area known for its natural beauty and outdoor recreational opportunities.
“If we truly are Minnesota’s favorite place, why not move here? And I think we are experiencing some of that,” Griffin said. “For sure on these lake homes, people are moving into them more and it’s making them even more valuable.”
Higher interest rates and dwindling inventory may be slowing things down, however. Brekken shared a local market update prepared by Minnesota Realtors for Region Five, which includes Crow Wing, Cass, Morrison and Todd counties. Statistics for the year to date compared to figures from the same time period in 2021 show new listings, pending sales and closed sales are all down. In 2021, 609 new listings occurred during the first three months of the year, compared to 390 in 2022.
Drops in these numbers appear to be driving the prices up further still while shrinking the number of days homes last on the market. Last year’s median price was $205,500 with an average 60 days on the market. This year, it’s $230,000 for 48 days.
“It’s a phenomenon that’s running across the country,” Brekken said. “So we’re just having to ride this out and see where it’s going to lead us. It’s going to be interesting. Wonder and awe.”
What about taxes?
County Administrator Tim Houle said he expects to see more people than usual attending their local boards of appeal and equalization meetings to raise concerns about their values.
“It is because these are shocking increases,” Houle said. “It is a reflection of what’s happening in the larger market for real estate. We’re more popular than everywhere else, but everywhere else is also popular.”
But, as Griffin and others emphasized, what residents pay in property taxes is determined by an entirely different set of factors — most importantly, how much money local governments decide to collect as part of their property tax levies to cover their spending. The recent valuation notices apply to the 2023 tax year, for which county commissioners and other jurisdictions will not set levy amounts until December.
When they do set the levy, it will be in an environment where most taxpayers saw their values rise and more than $212 million worth of new construction — the vast majority of which is residential — will spread the property tax burden further. Crow Wing County Land Services and other local governments in the county issued 474 permits for new dwellings in 2021, a 42% increase over 2019. Another 817 permits were issued for property improvements — including sheds or garages, additions, decks or porches and remodels — compared to 717 two years earlier.
A frequent metaphor employed by Houle and other county officials is to envision the property tax levy as a pie. Each county taxpayer is responsible for a slice of the pie, and the size of that slice is determined by one’s property classification and value. No matter what happens to values overall, however, the size of the pie itself does not change once the County Board sets the dollar amount of its final levy. The same pie metaphor applies to school districts, cities, townships and other special taxing districts, the levies for which combine to impact one’s overall tax bill.
Five main reasons exist for why a property owner might see a higher tax bill one year to the next, a land services news release explained. These include increases in government spending, a property’s market value decreasing less than other properties or increasing more than other properties, a change in property classification, or changes to state rules. This happened in 2011, for instance, when the state converted the homestead credit to a homestead exclusion.
Still have questions?
Taxpayers are encouraged to contact the land services department with any questions they may have about their property’s valuation, classification or property taxes. Taxpayers may contact land services at 218-824-1010, by email at firstname.lastname@example.org , or by visiting crowwing.us .
If taxpayers disagree with the classification or estimated market value for their properties, the county asks them to first contact their assessor and/or property valuation and classification office to discuss concerns. If those concerns are not resolved after such a meeting, people have two formal appeal options: attending a local board of appeal and equalization meeting or to file an appeal in Minnesota Tax Court.
The following are upcoming boards of appeal and equalization meetings across the county:
- Monday, April 18 — 10 a.m., Ross Lake Town Hall, and 1 p.m., Lake Edward Town Hall.
- Tuesday, April 19 — 10 a.m., Timothy Town Hall, and 1 p.m., Gail Lake Town Hall.
- Wednesday, April 20 — 10 a.m., Breezy Point City Hall.
- Thursday, April 21 — 1 p.m., Wolford Town Hall.
- Friday, April 22 — 10 a.m., Jenkins Town Hall, and 1 p.m., Nisswa City Hall.
- April 25 — 10 a.m., Mission Town Hall.
- April 26 — 10 a.m., Maple Grove Town Hall, and 1 p.m., Long Lake Town Hall.
- April 27 — 1 p.m., St. Mathias Community Center.
- April 28 — 10 a.m., Crow Wing Town Hall, and 1 p.m., Irondale Town Hall.
- April 29 — 1 p.m., Daggett Brook Town Hall, and 1 p.m., Fort Ripley Town Hall.
- May 2-3 — Open book meetings, 9 a.m.-3 p.m. at the Crow Wing County Land Services counter. This time period is for the townships of Center, Little Pine and Platte Lake, and the cities of Crosby, Crosslake, Cuyuna, Deerwood, Emily, Fifty Lakes, Ironton and Riverton.
- May 4-5 — Open book meetings, 9 a.m.-3 p.m. at the land services counter. This time period is for the townships of Fairfield, Nokay Lake, Oak Lawn, Perry Lake, Rabbit Lake, Roosevelt and Second Assessment District, and the cities of Baxter, Pequot Lakes and Trommald.
- May 9-10 — Open book meetings, 9 a.m.-3 p.m. at the land services counter. This time period is for the townships of Bay Lake, Deerwood, Garrison, Pelican and First Assessment District, and the cities of Brainerd, Garrison, Jenkins and Manhattan Beach.
If the local Board of Appeal and Equalization did not resolve concerns, people may bring their case to the County Board of Appeal and Equalization, set for 2 p.m. June 13 in the county board room. Taxpayers must call in advance to get on the agenda. Contact the county assessor's office to get on the agenda or for more information.