The red-hot real estate market has sent home values soaring in Summit County, with some previously affordable areas like Dillon Valley seeing as much as a 46 percent spike in the past two years, according to the latest data from the assessor's office. Countywide, the average increase was just shy of 20 percent.
Since 2015, there have been a total of 3,898 residential transactions, and among those there has been a record-breaking number of sales above $1 million in every category of home. In all, 365 single-family homes, condos, townhomes and duplexes hit the seven-figure mark.
"That 3,800-plus sales is very active," said county assessor Beverly Breakstone. "It's probably not the most active we've ever seen, but this is a high number of sales for a two-year period."
Notices of valuation went out to homeowners this week, and many will likely be pleased with the appreciation — but not so much the estimated property tax bill marked on the notices.
Come tax day, however, most property owners can look forward to a slightly lower bill thanks to updated tax rates recently handed down by state officials.
That change, from 7.92 percent last year to 7.2 this year, means that homeowners whose property value didn't grow more than about 20 percent over the past two years will likely see their tax bill stay about the same — or possibly decrease.
The reason for this is complex, involving the booming Front Range real estate market, low oil and gas prices and two of Colorado's more unique constitutional amendments: Gallagher and the Taxpayer Bill of Rights.
The Gallagher amendment was added in the 1982 to insulate taxpayers from a surge in home values. To do that, it set the amount of total state property tax revenue to a fixed ratio between residential and commercial property.
But since growth in those sectors hasn't been balanced, the residential rate has been continually adjusted down, from around 21 percent in 1983 to just 7.2 today. The cut this year translates to a 10 percent drop in revenue statewide, according to the assessor.
"What's happened is so much residential keeps being built that it's just pushed this ratio down dramatically because there's not as much commercial value to offset," Breakstone explained.
Rock-bottom oil and gas prices in recent years have compounded this imbalance, as has the housing frenzy in the Denver metro area, where some counties have seen average home values leap up by 70 percent.
Since counties generally get most of their revenue from property taxes, places where the economy has been stagnant could take a big hit — especially in their schools.
In aggregate, that's what has happened across the state since Gallagher was introduced. In the 1980s, local property taxes paid 54 percent of the cost for public schools and the state spent $488 more per student than the national average, according to the Colorado Fiscal Institute.
By 2015, property taxes only covered 34 percent of the cost, and the state spent $2,024 less than the average per student, according to CFI.
What's more, every time the ratio has to be ratcheted down, it can't be brought up again to respond to changes in the market.
Why? Enter TABOR, which was passed in 1992 and requires voters to approve all tax increases. Since most Colorado voters are homeowners, it's unlikely they would vote to pay more, Breakstone said.
Luckily for Summit, strong growth and local support for public schools means the lost revenue won't create a budget crisis, Breakstone said. Still, the county stands to lose out on roughly $1.5 million because of the rate adjustment.
"If you had that additional revenue you could talk about replacing buses, repair and build additional infrastructure, and those kinds of things," Breakstone said.