Door County real estate values increased more than $2.2 billion in 2022, topping the previous year’s unprecedented growth of more than $1.5 billion.
The numbers are contained in the state’s annual Equalized Values Report, which the Wisconsin Department of Revenue (DOR) released Aug. 15.
The report shows Door County’s equalized values between Jan. 1 and Dec. 31, 2022 rose 21% over 2021, up from the 18% increase that 2021 gained over 2020. All real estate and property values in Door County are now worth $12,318,310,300 – an increase of $2,238,946,700 over 2022. The residential and commercial real estate categories had the highest gains, at 24% and 18% respectively.
“This is just crazy,” said Holly Hansen, who heads up Real Property Listing in the county’s Land Use Services department, about the double-digit increases two years running.
Crazy because the numbers are unprecedented. Hansen’s records show the last time growth in equalized values came close to this year and last year was in 2000, which recorded a 15% increase over 1999, followed by a 12% increase in 2001 over 2000.
Before then and after 2001, according to Hansen’s data, single-digit increases were the norm. During the years of the Great Recession, decreases in equalized values were most common.
But Hansen said it’s also crazy because equalized value reflects the market value of a property, or what properties sold for.
“I’m looking at a little [lakeshore] lot, with a teeny little cottage in [the town of] Union,” Hansen said. “It sold a couple years ago for $200,000 and now? $600,000.”
What is Equalized Value?
Equalized value is the DOR’s estimate of the total value of all taxable real estate and personal property by taxation district (such as a municipality or county) from Jan. 1 to Dec. 31. The numbers include all real estate values by class – residential, commercial, manufacturing, agricultural, undeveloped, ag forest, forest and “other” – and all taxable personal property items (watercraft, machinery and furniture fixtures).
Given that Wisconsin will no longer tax personal property effective Jan. 1, 2024, Hansen confirmed that DOR’s 2023 Equalized Values report is the last time those personal property figures will be recorded. While those personal property values are included within Door County’s total equalized values, personal property is worth $48,633,500, versus $12,269,676,800 for all the real estate classes combined.
The purpose of equalized values is to ensure a uniform distribution of shared taxes across municipalities for school taxes, county taxes and major state aid. If a municipality has 10% of the total value in any given county, for example, that municipality’s taxpayers are expected to pay 10% of the taxes to be collected.
Wisconsin’s total statewide equalized property value was $842 billion, a 13% increase over the prior year. This is the second consecutive year showing a double-digit statewide increase.
Menominee and Taylor Counties saw the largest increase at 25% and 24%, respectively.
Top Five Municipalities by Equalized Value
Equalized Versus Assessed Values
Equalized values reflect the market value of a property, or what properties sold for, versus the assessed value of a property, which is the assessor’s estimate of market value and what individual municipalities use to determine taxes for real estate within their town, village or city.
State law requires municipalities to have revaluations done if assessments aren’t current with prevailing market conditions. If the average ratio of total assessed value to total actual sales price becomes too far off – more than 10% – the state requires municipalities to revalue all properties within a given municipality.
The goal of revaluations is to assure property owners receive fair assessments to pay their fair share of property taxes. But Hansen worries that the rapid rise in equalized values will create a disparity between assessed and market values too far askew for too many Door County municipalities.
“I’m really scared,” Hansen said. “In all the years I’ve been here, it was very common for a municipality with their assessed values to fall below 90%. Last year, the ratios of real estate assessed versus what it sold for, almost all the municipalities were in the 70s.”
There are a handful of Door County municipalities currently going through a revaluation – which is not common and not cheap for the municipality. When the Town of Sevastopol decided in late 2022 to do a revaluation, it had been 16 years since their previous one, and quotes ranged between $126,000 and $143,000.
With the new equalized values, current revaluations could automatically dip below 90% again, Hansen said. Worse, some municipalities may learn they are assessing properties for tax purposes at a rate that’s only 50% of what the properties are selling for.
“Which would be totally insane,” she said.
As an example, she said a property in southern Door County sold for $582,000 – three times its assessed value of $196,000.
“We know what’s on these properties,” she said. “How can they be selling for that price?”
Why Net New Construction Numbers are Important
The Wisconsin Department of Revenue (DOR) released net new construction numbers earlier this month in conjunction with its Equalized Values report. The net new construction percentages are important for municipalities and property owners because they represent the maximum amount a town, village, city and county may increase the property tax levy for the following year.
The DOR calculates net new construction from changes to equalized value due to new building construction and land improvements, minus changes to equalized value to the demolition/destruction of buildings and removal of land improvements.
Since 2005, Wisconsin has used the net new construction percentages as a levy cap. Advocates say the state’s cap strategy helps keep a lid on property taxes. Opponents say low-growth municipalities are unfairly penalized.
The penalty for exceeding the levy limit is a loss of shared revenue from the state. Yet the cap isn’t straightforward; adjustments and exclusions apply, such as to service debt. In addition, cities, villages and counties can override the cap by referendum; towns can ask its electors for permission to exceed the cap during the annual town meeting.