Hopeful home buyers and sellers may see some property value effects in the future due to COVID-19 – but maybe not for a while, according to local property assessors.
Kendall County Assessor Andy Nicoletti said property tax assessments as of the beginning of this year are based on a three year sales average, meaning current assessments are being made using 2017, 2018 and 2019 data. He said the 2020 sales won’t be included in the sales ratio study until next year and assessors would still be looking at 2018 and 2019 data then.
"We may not know the effects until 2023 or 2024," Nicoletti said.
Just like when the economy took a turn for the worse in 2008, Nicoletti said, the decrease in assessments wasn't as apparent until the 2011 tax year. Even then, he said, it wasn’t a one-size-fits-all decrease.
Nicoletti said the main factor that could cause assessments to drop is people being unemployed.
“But there’s no way to know if and when any of this will happen,” Nicoletti said.
DeKalb Township Assessor Rich Dyer said he still has some unanswered questions of his own and is looking for guidance from county and state officials about certain assessment-related answers going forward in light of the COVID-19 crisis. He said his biggest burning question is due to the financial hardships with commercial properties especially, since some businesses aren't generating a lot of income, if at all.
Take hotels, for example, Dyer said.
“There’s no one staying in hotels right now," Dyer said. "So if we're using the income approach to value the property, the hotel is worth nothing currently.”
Dyer said he's had two commercial property owners reach out to him currently with those types of questions. He said there have been no questions for his office from homeowners so far.
Dyer reiterated that property assessments happen as of Jan. 1. With that in mind, he said, any economic effects felt thus far due to the pandemic technically don't affect assessments currently because those economic effects occurred after Jan. 1.
“But that doesn’t help all of the property owners currently and even for the following year,” Dyer said.
Dyer said he understands lawmakers are busy with addressing everything else that has felt effects due to COVID-19 and property taxes might not be at the forefront of their mind. Regardless, he said the pandemic's effect on property values is going to be an issue when tax bills go out and, as of now, there is no change in the tax bill process in DeKalb County and those bills still are due by the usual deadlines.
Dyer said he worries that may have a long lasting impact on property owners. He said he saw a lot of people who couldn't afford the mortgages they got themselves into during the 2008 recession and couldn't afford property taxes.
“Because if they can’t pay property taxes, it’s going to have long lasting effect on real estate values in general,” Dyer said.
Dyer said the pandemic could have the potential to cause another housing market crash. But then again, he said, the federal government is stepping in by providing unemployment financial assistance to laid off or furloughed workers this time around. He said he remains leery as he waits for whatever is going to happen – as he's sure a lot of other people are.
“So my hope is they still would be able to pay their rent and mortgage and property taxes and we won’t see the long lasting effect," Dyer said. "But I don’t know that for sure.”
Oswego Township Assessor Brian Hauser said his office hasn't been getting a lot of questions from homeowners yet about what may happen to their assessments due to COVID-19. In fact, he said, he's still getting calls from people who are buying houses in the area.
“It seems like there’s still an active market out there,” Hauser said.
Hauser said one of the biggest challenges assessors have is bringing in new assessments, like new construction. He said that typically involves knocking on the door of the homeowner and taking a look in person.
“That could be unsettling for people because of the social distancing,” Hauser said.
Hauser said there are no new procedures addressing that challenge in place as of yet. He said the plan is to keep doing what's required of the assessor and to also try to reach out to homeowners and call them ahead to warn them they’re coming at a certain time and to let them know what’s going on overall.