Office of the County Appraiser

Strong housing demands combined with a very low supply of homes in Johnson County is causing residential property values to climb again this year.

During the week of Feb. 26, the Johnson County Appraisers Office will send home owners in the county a notice of appraised value.

“Because of the high demand and short supply, most residents’ appraised values are expected to go up again this year,” County Appraiser Paul Welcome said. “We appraise homes based on the fair market value — the price it would bring on an open, competitive market, and because of the strong sales, appraised values are up between 2 and 18 percent on average across the county.”

Home buyers looking for a residence in the county are only finding a month and a half supply of homes available for sale. The normal supply of homes is six months. Homes selling at $350,000 and below have the highest demand which results in higher market values for that price range.

“This is the lowest housing supply I can ever recall seeing in all my years as the county appraiser,” Welcome said.

In August 2017, the appraiser’s office formed the Residential Reappraisal Advisory Committee, composed of realtors, lenders and fee appraisers to advise the county staff of current residential market trends.

In 2017, 95 percent of residential real estate values increased. The areas with the greatest increases were in De Soto, Fairway, Gardner, Lenexa, Merriam, Mission, Olathe, Overland Park, Prairie Village, Roeland Park, Shawnee and Spring Hill.

Strong JoCo economy

Across all indicators, Johnson County’s real estate market and general economy are strong and continue to grow.

According to the County Economic Research Institute (CERI) data, there is an increase in the number of Johnson County homes sold by realtors in 2017 from the previous year. The same report finds increases during 2017 in the number of single- and multi-family building permits issued.

Consumer confidence in Johnson County continues to climb. According to CERI’s October 2017 report, the county’s consumer confidence index was nearly 22 points above its level from 2016.

Johnson County’s unemployment rate in November 2017 was 2.8 percent — lower than Kansas City’s and Kansas’ 3.2 percent rates. The national unemployment rate for November 2017 was 3.9 percent.

Appeal deadline March 28

Property owners have until March 28 to file an appeal to provide additional information, ask questions and discuss concerns about the valuation.  Commercial property owners received their notice of appraised values in mid-February and have until March 14 to appeal. The data used to assess home values are available to the public online at jocogov.org/appraiser.

Market Study Analysis for the Assessment Year 2018 – Johnson County

Jan. 1, 2018

Pursuant to K.S.A. §79-1460a

A study of the residential real estate indicators reflects the market has continued to grow with over 93% of the residential properties increasing in value for 2018.  In our annual valuation process, we reviewed over nineteen thousand residential sales and used this data in a sales comparison analysis within ORION to develop Market values. In addition, the ORION Mass Appraisal system utilizes a national cost service, Marshall & Swift, which provides the Appraiser’s office with annual updates each July. No changes were implemented from the annual depreciation study performed for residential property. Land analysis indicates the supply is generally in balance with minor adjustments made to land values. Land values in the Northeast area of the County have seen continued upward pressure due to improved residential properties being purchased and subsequently torn down to facilitate construction of totally new residential dwellings.

Commercial real estate uses the Income, Cost, or Market approach to estimate value. Conditions for most of the commercial real market continue to be strong. The number of new construction permits as well as capitalization rate publications indicate a trend of expansion for major property types with multifamily and industrial still in the lead.

Multi Family construction numbers are; recently completed units of 577, this year’s new construction starts at 826 units, continued completion of prior year starts are 3,650 units, and proposed units for start of construction are currently 9,680. Of the proposed unit count, 3,200 have come about in the last twelve months and seek approval for initial plans, zoning changes, Tax Increment Financing and other dynamics. There is still upward pressure on rents and this is supported by survey responses indicating 45 of 165 complexes have achieved 100% occupancy and only 4 indicated occupancy less than 90%. Capitalization rates have compressed in almost every investment class while the highest quality multifamily sales dip to below 6%.

Industrial Property continues to be at the top of the expansion cycle as there has been nearly 4.5 million square feet constructed among warehouses that are greater than 200,000 square feet each. At least three distribution warehouses are larger than 750,000 square feet each. The Intermodal is responsible for much of the industrial building growth, but warehouse construction in Olathe and Lenexa cities is also well represented.

Office Properties have construction of more than 500,000 square feet albeit nearly half of this is located in the South East quadrant of I435 and Nall Avenue. This is a site where a high-rise was imploded for the construction of a new office structure. Additionally there is office space under construction on the North West quadrant representing part of expanding healthcare facilities. Office capitalization rates saw minor compression in the less than 20,000 square foot size and the middle investment class properties. Generally office properties have seen mild upward pressure in values.

Retail Construction trends during 2017 have been less robust than the previous year, but have seen multiple developments for convenience stores and fast food restaurants. In total there has been roughly 100,000 square feet of new construction starts in 2017. Capitalization rates for retail have remained relatively stable over the last twelve months.

Hotel/Motel property is saw some construction during 2017 and represents nearly 200 new hotel rooms. Some locations that opened new facilities are close proximity to I35 and 95th street, and I435 and Midland Avenue. Capitalization rates remained unchanged according to recent studies, and now include the category of “Select Service” facilities that have become more prominent in the industry over recent years. Additionally here is less emphasis on traditional Extended Stay facilities and those capitalization rates were not included in recent studies.

The annual depreciation study for commercial property found minimal evidence for adjusting the broad structure categories for depreciation, economic life, and other table variables. There are several categories where recent sales of a specific property type warranted an Economic Adjustment Factor (EAF) and was applied for those specific property land uses.

The land study for commercial property is updated annually and had results of slight upward pressure for land where retail construction would occur, but generally found stability in the current Computer Assisted Land Pricing (CALP) values in place.