Unprecedented Growth: Arkansas Property Values Skyrocket in 2023 Reappraisal

Property values surged in 12 more Arkansas counties this summer as part of the annual reappraisal process.

Montgomery, Crawford and Washington counties led the way with annualized increases averaging more than 12.8%.

In all, 10 of the 12 counties that completed reappraisals this year tallied annual growth of more than 5%. That compares with 15 of the 17 counties reappraised in 2022.

Between 2018 and 2023, the total assessed value of residential, commercial and industrial property grew by a whopping 72.5% in Montgomery County, home to the self-proclaimed Quartz Capital of the World: Mount Ida.

“I didn’t think I would ever see, in my lifetime, the changes that we have seen,” said Tammy McCarter, Montgomery County assessor.

The five-year increase totaled 64.2% a hundred miles north in Crawford County, where Van Buren is the county seat. But the star of this year’s reappraisal class is Washington County, which reported a three-year increase of 66.5%.

“Unprecedented, in value and growth,” said Russell Hill, Washington County assessor.

Escalating home prices in and around Fayetteville and Springdale drove a 22% average annualized growth rate during 2021-23. But the sizable jumps in real estate valuation weren’t confined to Washington County’s expanding population centers.

“My home went up $107,000, and I live in Winslow, which saw very little growth,” Hill said.

The recent hefty increase in Washington County property values followed 49% growth during 2015-20. That resulted in a monumental leap in the total appraised value of property in the county.

“We jumped $5 billion in one year, and that was historical,” Hill said of the dollar total added to the county books in 2020. “To put that in perspective, it took us 21 years, from 1974-95, to generate that same growth. This year is looking close to $13 billion.”

The staff at the Arkansas Assessment Coordination Division is becoming desensitized to such numbers in high-growth counties such as Washington and surprise locations such as Montgomery County.

“Five years ago, it would’ve been shocking, but nothing is shocking anymore,” ACD Director Sandra Cawyer said.

Part of the Arkansas Department of Finance & Administration, ACD oversees the cyclical reappraisal process to maintain equitable and uniform property tax treatment statewide.

Cawyer said counties with sizable man-made bodies of water (Garland, Carroll, Pike, Cleburne and Baxter) accounted for some of the biggest changes in last year’s reappraisals.

In Montgomery County, the largest lake in Arkansas comes into play: Lake Ouachita. Out-of-staters — mostly from Texas and Louisiana, some from California — are driving the sparsely populated market, McCarter said.

A price of $2,500 an acre was considered top dollar not so long ago for property that now brings anywhere from $4,000 to $7,000 an acre. Land with frontage on the Caddo or Ouachita rivers that went for $50,000 an acre in 2018 is drawing $150,000 an acre.

“I would’ve never thought that,” McCarter said. “They’re paying crazy prices is what they’re doing.”

McCarter said the climbing property taxes accompanying the escalating property values in Montgomery County haven’t generated many appeals to the board of equalization. “Most of the people know,” she said of property owners in the county, home to an estimated 8,100 residents. “I’ve been talking with people for a year telling them to get ready, get ready.”

In Crawford County, local owners of multiple residential properties are dominating appeals of increased property values. “We’ve had a lot of feedback, and a lot of people have been coming before the board of equalization,” said Sandra Heiner, Crawford County assessor. “And we have a lot more still to come. We work with them.

“We hadn’t reappraised since 2018, so we expected some of it to go up. And it did. It changed more in residential than in commercial.”

Incremental Increases

The resulting changes in property values will boost property tax revenue, benefiting school districts, municipalities and county governments. But annual increases are capped, so a huge boom year of property tax collection won’t happen. 

By law, property taxes on a homeowner’s primary residence can increase only by 5% in one year, regardless of the change in appraisal. That sets the stage for a series of annual 5% increases for homeowners whose property values rose substantially.

The exceptions are homeowners who are disabled or 65 years or older. Their property taxes are frozen provided they have filed the exemption paperwork with the county assessor’s office. The annual cap for increases in property taxes is set at 10% for commercial and industrial property.

Rising Property Values

*Washington and Sharp counties’ previous reappraisals were in 2020. Source: Arkansas Assessment Coordination Division

The homestead tax credit for a property owner’s primary residence rises from $375 to $425 next year. Initiated in 2000 at $300, the real-dollar tax break increased to $350 in 2007 and to $375 in 2019.

Legislators and assessors are discussing ways to lessen the sting for homeowners who bought property during the residential price surge. One possibility: to spread the property tax increase over four years if the change is 50% or more after a sale. As it stands, property taxes climb to align with the appraised value in one fell swoop following a change of ownership.

For non-homestead property, property taxes could be raised incrementally over four years if the increase is 40% or more after a change in ownership.

“We’ve been kicking around some ideas,” Washington County’s Hill said of brainstorming talk with legislators. “It would only kick in for crazy situations like we’re experiencing right now. We’re still crunching numbers to see how it would work.” 

He noted that last year’s new construction record — $910 million in Washington County — was broken by this year’s total of nearly $1.3 billion.

Hill believes the steep trajectory of his county’s property values will soon be surpassed by a neighbor to the north scheduled for reappraisal. “Benton County is next year, and their numbers will be more drastic than ours,” he said.