Camden, Rockport record substantial increase in residential property values

Mon, 04/11/2022 - 2:30pm

    CAMDEN/ROCKPORT — Late last fall, Camden and Rockport agreed to update assessments placed on residential and commercial real estate in their towns, citing a sharp increase in the sales price of residential homes, and the need to update valuations to remain compliant with the Maine Constitution.

    By March the results were in, first for Camden, then Rockport. And the increase in assessment values were significant for both.

    According to Kerry Leichtman, assessor for Rockport and Camden, residential properties, including condominiums, increased 25% in Camden and 24% in Rockport.

    Commercial properties increased 17% in Camden and 5% in Rockport.

    That translated into the following total real estate valuations (as of April 6, 2022):

    Rockport: $1,139,925,129.

    Camden: $1,663,183,156.

    A pandemic and accompanying rush on Maine real estate, in general, resulted in pricier real estate sales. And as the available housing and parcel stocks shrunk, competition increased and prices rose even higher.

    Currently, there are 18 new housing starts in Rockport, despite the steep climb on building material costs.

    What happened in Camden and Rockport is no anomaly. According to Maine Real Estate and Development Association (Mereda), the selling season in Maine expanded, prices went sky-high, and there were more realtors at work.

    “In the last 10 years home prices rose 76 percent; he previous decade there was still a solid increase but at 22 percent it paled in comparison to what we have seen in recent years,” wrote Dava Davin, Founder + CEO, Portside Real Estate Group, in Mereda’s most recent Maine Real Estate Insider.

    Camden and Rockport contracted with KRT Appraisal, the Haverill, Mass.-company that has been doing revaluations for the two towns since 2014, for the statistical update. Instead of a total revaluation, with individual visits to all properties in towns, the update consisted of in-office work using formulas that incorporated fair market value against market data collected from Oct. 1, 2020 through September 30, 2021.

    Last November, Leichtman said the goal was to equalize municipal valuations placed on properties, “so everyone is paying an equal share of their property’s value into property taxes.”

    The update found that assessments for mid-range properties increased the most, “because the prices paid for those properties have exceeded their assessed values the most,” said Leichtman.

    He posed a hypothetical example: “A ranch that we valued at $250,000 is selling for $450,000 to $550,000. That's a increase of 80-120%. The $1,700,000 property will sell for $2,500,000. And, while that is also a significant increase, percentage-wise at 47 percent, it's much lower than the modest property.”

    In Fall 2021, when both towns agreed to complete a statistical update, the real estate market segment experiencing the largest turnover consisted of homes assessed between $225,000 and $400,000.

    Leichtman said last autumn: “It's important that people realize we don't lead, we follow the market. Assessments reflect recent market activity, not a hypothetical future market.”

    Still, the market continues its push with even higher prices placed on residential homes.

    Since the statistical update period ended, every sale that has come since September 2021 has tested the ratio of market value to assessed value.

    “Even after raising all the values we did, we’re still not raising the values enough,” said Leichtman. “This market is just nuts.”

    A Camden property that was recently assessed at $228,000 just sold for $650,000, he said. Another ranch that had been assessed at $350,000 was placed on the market, but following an open house, the listing broker, “figured they were going to get $550,000.” he said.

    The goal of an equalization is not just to bring local assessments in line with sales values. Revaluations and statistical updates are completed in order to close the percentage difference between the fair market value of a home and the local assessed value to a comfortable ratio, ideally around 95 percent, which leaves room for a cooling of the real estate market.

    In September 2021, the ratio in Rockport was 79 percent in Rockport, said Leichtman.

    Getting in line with the state’s own valuation of a municipality keeps state revenue sharing flowing. If fair market/local assessment ratio falls to 76 percent, then municipalities are penalized and receive but 76 percent of their annual revenue sharing from the state.

    Leichtman cites the Maine Constitution, Article 9, Section 8, which requires that taxes be apportioned and assessed equally. In his letter to Camden and Rockport property owners, he said, the, “state Supreme Court has ruled that just value is synonymous with market value.”

    How the new assessments affect individual property taxes depends, as always, on the budgets that the towns create each March, as well as the budgets of the two public school districts — School Administrative District 28 and the Five Town CSD – and the Knox County budget.

    According to Leichtman, the mil rate will go down. 

    “Do keep in mind that a property whose value increased by 30 percent will not see a 30 percent rise in the tax bill,” he wrote to Rockport taxpayers, with notice of their new assessments. “The mi rate will decrease. We won’t be able to determine the mil rate until mid-August so cannot provide a particular number, but it will go down.”

    A mil (millage) rate is the unit used to calculate how much to tax a piece of property to fund the municipal, public school and county budgets, all approved by voters at annual town meeting, which occurred in June in both municipalities.

    This current year, the mil rate in Rockport is 17.05, up .24 cents, or 1.43 percent, from the 16.81 mil rate of 2020. Rockport’s mil rate has fluctuated over the past decade, and reflects ever-changing factors; in 2006, it was 9.06; in 2003, it was 15.95.

    While the statistical update in both towns took longer than anticipated, this past month, property owners began receiving their new property assessments via letters sent from the assessing offices.

    In Camden, the roster of available meeting dates was full for three weeks with property owners contesting their new assessments.

    Currently, Rockport is accepting phone hearing appointments with a representative of KRT Appraisal. To make an appointment, call 855-228-4033.

    And while this equalization comes to a close, it won’t be long before a full revaluation for both towns is initiated. That is to be scheduled for 2025-2027, and both towns are now tucking away money for the lengthy and in-depth exercise.

    Camden’s last total revaluation was in 2004; in Rockport, 2005. The statistical update. said Leichtman, is an inexpensive way around revaluation, costing each town approximately $25,000.

    Quotes for the 2025-2027 revaluations have already been received by the two towns: $190,000 for Rockport and $200,000 for Camden. Rockport is including money now it is capital improvement plan budget for its revaluation; in Camden, the approach has been to create a reserve account for the project.

    Reach Editorial Director Lynda Clancy at Lynda; 207-706-6657