Spreadsheet shows big changes in tax burden

By Jayson Jacoby May 30, 2014 12:25 pm

Baker County Assessor Kerry Savage has created a spreadsheet that makes you wish you had owned a home here since 1970.

Although it’s quite likely, I’ll concede, that you already felt this way and need no spreadsheet to confirm your feelings.

Measured as a long-term investment, this theoretical house reminds me of those intriguing stories — some of which have the not minor advantage of being true — of people who had the foresight, or the dumb luck, to pick up a few thousand shares of stock in, say, IBM back when most people thought a microprocessor was a very small person who helped you apply for a bank loan.

Savage’s spreadsheet shows the market values of the various categories of real estate in the county — residential, farm, forest, etc. — for each year dating to 1970.

Like all such documents, it seemed to me at first glance indecipherable.

Also at the second glance, after which I had to plead to Savage for help.

Too many rows of numbers.

Too many numbers in general for my mind, which feels comfortable with words but, like a horse that senses a badger hole ahead, gets nervous when it detects in the distance the possibility of plunging into a morass of equations.

Savage, though, deals in numbers every day and with his expertise — and admirable patience — he was able to explain the salient points even to a decimal dullard like me.

It is a fascinating piece of work, this spreadsheet.

And the most fascinating columns are two dealing with residential properties — not residentially zoned, but basically anything that’s not a farm or a forest.

Over 44 years the total value of the county’s residential properties has neither doubled nor trebled.

It has increased 15-fold.

Slightly more than that, actually.

In 1970 residential properties were worth a cumulative $61.5 million.

Today that figure is $945.8 million.

Inflation, of course, is a factor.

But not as big a factor as you might expect.

Inflation amounts to about 483 percent since 1970. Put another way, a $100 item then would cost $583 now.

Residential property values in Baker County, meanwhile, rose almost three times as much.

A $15,000 home in 1970 — and that sum would have bought you a nice three-bedroom ranch style in Baker City, and probably a late-model sedan to park in its garage, based on the classified ads I looked at from that year — might go today for $225,000.

The story isn’t quite so simple as that, of course, a point Savage emphasized (my deficiency in mathematics being immediately apparent, he recognized that without repetition I would quickly be hopelessly lost).

The skyrocketing value of residential properties since 1970 takes into account not just the appreciation of homes and lots from that year, but also includes the hundreds of homes and other structures that have been built in the ensuing 44 years.

Although Baker County’s population has been famously steady, rarely fluctuating more than 5 percent per decade for the past century or so, families are smaller than they used to be. We’ve also had an influx of retirees, particularly in the past 20 years or so. It’s hardly surprising, then, that the county has added a lot more homes but has no more people. 

All of which is to say that an individual home that was standing in 1970 isn’t necessarily worth 15 times more now.

Still and all, Savage’s spreadsheet lends considerable credence to that old saw about how real estate is the best investment because they’re not making any more of it.

The second column that caught my eye was one showing how much of the county’s total taxable value is from residential properties.

In 1970, residential properties accounted for slightly less than 31 percent of the county’s total taxable value.

In 2013 those properties accounted for slightly more than 74 percent of the value.

This doesn’t mean, Savage points out, that residential property owners bear 74 percent of the county’s property tax burden.

A variety of factors, chief among them the voter-approved tax-limiting initiatives Measure 5 (1990), Measure 47 (1996) and Measure 50 (1997), reduce the tax burden so residential property owners don’t pay 74 percent of the county’s total tax bill.

Nonetheless, Savage’s figures show in dramatic fashion that the value of residential property has skyrocketed since 1970 compared with the two other main categories of property:

• utilities — which include railroads, power lines and petroleum pipelines

• specially assessed properties, primarily farm and forest land

Those types of properties are worth more today than in 1970, as well, but the increases are puny compared with the escalating trend in residential property values.

Farm land, for instance, had a cumulative value of $46.8 million in 1970. The current value is $68.4 million.

Utilities have risen in value from $90.4 million in 1970 to $258 million today.

Savage said one reason residential values have increased so much more than the two other categories is that they tend to sell more frequently.

Over the past 44 years most homes probably have changed hands at least once; some, no doubt, have had five or more owners in that span.

Homes tend to gain value with each transaction, often at a rate exceeding the inflationary effects exerted on, say, groceries or lawn furniture.

Power lines, by contrast, are quite stable (we hope so, anyway, especially when the Super Bowl is on).

And railroads don’t often go on the open market, with multiple bidders pushing the price higher than it might normally go.

Jayson Jacoby is editor 
of the Baker City Herald.