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Cook County Connections: The Cook County Real Estate Market Entering 2024

Jan 26, 2024 09:12AM ● By Content Editor
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From Cook County, MN - January 26, 2024

By: Bob Thompson, Cook County MN Assessor

Another year of real estate transactions has been studied and another assessment is being finalized in Cook County. In short, the price of real estate on the North Shore is still increasing. This is no surprise to those who have followed the market or participated in a recent transaction as a buyer or seller. In the 2023 sales study, the median price of a home or cabin was $442,740. That’s up 14.56% over the 2022 study’s median price of $386,466.

Several data points and various methods of statistical analysis are used to determine the appropriate value adjustments in setting the assessments of properties. The process is referred to as the Sales Ratio Study, you will hear the Sales Ratio referred to often when communicating with the Assessor’s Office.

One of the first steps in the Sales Ratio Study, assessors perform a regression analysis of sales over a 21-month period to determine how much property values have changed during that period. This regression analysis compares assessed values from the prior year directly to the actual sale prices that have been occurring. The 2023 study of sales produced three different trends in Cook County that have enough statistical significance to rely on; residential sales that are non-lakeshore have a trend of 7.95%, Residential sales on-water 13.3%, and vacant land over 34.5 acres 11.8%. Using these figures, if you purchased a lakeshore property in January 2023 at fair market value, the data suggest the market value of that property has increased about 13% since it was purchased.

When a property has sold, the trend that was established in the regression analysis is applied to the sale price on a compounding monthly basis and the result is compared to the previous assessment, this determines the ‘adjusted sales ratio’. Once all sales are adjusted for increases in the market, the assessed value of the median ratio must be brought within 90%-105% of the adjusted sale price for the following assessment. The sales ratio study requires that certain property types be studied in groupings such as commercial, residential, and vacant land. Furthermore, residential properties are stratified into on-water and off-water categories.

It's not just the median sales ratio that matters, the ‘coefficient of dispersion’ (COD) measures variability and uniformity in the assessment data. Additionally, the ‘price-related differential’ (PRD) measures the relationship between the mean ratio and the aggregate mean ratio, it is an indicator of vertical equity in the assessment data. Lastly, the ‘price-related bias’ (PRB) is a statistical measure of vertical equity in the assessment and it will determine if the assessment is regressive or progressive (how lower-valued properties are compared to higher-valued properties in the sales ratio study data).

Many taxpayers believe that the assessor should only adjust the values of the properties that have sold. In the industry, adjusting the value of sold properties while not applying those same adjustments to the unsold properties is referred to as ‘sales chasing’ and doing this would be an act of malfeasance by the assessor, it’s illegal.

When the 2023 property valuation notices were sent out by Cook County last spring, the average residential property saw about a 13% valuation increase over 2022. Over the past three years, many property owners voiced concern to the assessor that recent transactions were unsustainable and reflective of artificially inflated sale prices. Property owners suggested that if the real estate market decreases, they will be stuck with their ‘perceived’ newly inflated valuation.

Contrary to many taxpayers’ belief that assessed values don’t go down in a declining market, Cook County’s aggregate assessed values declined for seven straight years, after peaking in 2010. In Minnesota, assessed values are based off sales that precede the assessment date and value adjustments made by the assessor can go up, or down.

Looking at real estate value trends through historical lenses, there are typically peaks and valleys. Periods of increasing value are usually followed by declining values. The question on everyone’s minds; have we reached the apex of the current cycle? That remains to be seen. One thing is evident, Cook County continues to attract buyers, even when other markets have been turning the corner and are starting to see leveling, or downward trends.

In certain segments of Cook County real estate, I have observed a slowdown in demand over the past year. However, the supply of available properties is still low and competition for certain property types remains. Lakeshore properties are still in high demand, especially Lake Superior shoreline. Vacant land has been selling at a premium as well, more noticeably in the county’s west end. Vacant land over 40 acres is also still seeing strong demand throughout Cook County.

So, what can taxpayers expect on their 2024 Valuation Notices that will be sent in March?

In Minnesota, the Assessor is tasked with valuing property at market value (Ad Valorem). This means your property should be valued consistently with the sale prices of comparable properties that have recently sold. The Assessor’s Office is currently finalizing our area sales studies. Some properties can expect to see changes that are made on a broad basis, others will see a change that resulted from an individual review of their property record that occurs at least once every five years.

It is very important to pay close attention to the 2024 Valuation Notice you receive in late March/early-April. Please review the value and classification information for accuracy and contact the Assessor’s Office at 218-387-3650 as soon as possible if you feel something is incorrect. We are happy to review the property record and will consider any information you provide to us related to the property’s valuation.

If you and the Assessor cannot come to an agreement on the proposed valuation of your property, you may appeal at either the Local Town Board Meetings that occur in May (Lutsen, Tofte, Schroeder), and/or the County Board of Appeals and Equalization Meeting that occurs in June.

·        The details of the meetings are included on the valuation notice you will receive along with your tax statement.

·        Meeting details will be posted on the County and/or township websites.

·        After the meetings have adjourned, the 2024 valuation cannot be appealed at the county level.

Several options may exist for Cook County residents who see increases to their tax bill, the Minnesota property tax refund programs, and the senior citizen property tax deferral, to name a few. These programs are for owner-occupied properties with a homestead classification, and individuals that pay rent. One refund is based off income, the other ‘special refund’ is based off the amount of tax increase over the previous year. Talk to your tax professional or visit the Minnesota Department of Revenue’s website for more information on the M1PR form. This form is due August 15, but you may be able to file up to one year after the due date.

County Connections is a column on timely topics and service information from your Cook County government. Cook County – Supporting Community Through Quality Public Service.

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