Previous appraisal rounds:
► 2024
► 2023
► 2022
Real property in 17 Arkansas counties was reappraised this year for the first time since 2020, when the COVID-19 pandemic spread across the nation, making building more difficult and sending property values skyward.
Sebastian County saw the biggest increase this year at 60.23%, followed by Johnson County at 55.46%, Independence County at 55.1% and Crittenden County at 54.75%. Calhoun, Logan and Sevier counties also saw increases of more than 50%. All but two of the counties on this year’s reappraisal cycle saw an increase of at least 34%.
Two other counties — Carroll and Cleburne — also reappraised their properties this year, but those counties were on a three-year cycle and had already reappraised their property once since the pandemic. Still, Cleburne County was up 35.86% and Carroll County was up 34.21% since 2022.
Among the counties reappraising for the first time since COVID, Sebastian County also had the biggest increase by dollar amount with an increase of $2.7 billion.
Sebastian County Assessor Zach Johnson, who was elected to the role in 2020, has spent more than 20 years in the assessment business, working in the Sebastian County and Crawford County assessors’ offices. Johnson said he’s never seen “the explosive appreciation that we have seen with those real estate investments and assets.”
“The last five years was such a strange time in real estate,” Johnson said.
Sebastian County had slightly fewer than 57,000 taxable parcels of land during the recent reappraisal cycle, and Johnson said about 90% of their property owners got a notice about a change in the value of the property. Between his office and a contractor who carried out the county’s reappraisal process, they fielded 1,000 to 2,000 phone calls about the reappraisals. In the end, 15 to 20 people brought cases to the county’s Board of Equalization, which hears appeals of property assessments, he said.
Johnson said local real estate prices are still “creeping up,” but the market is generally cooler, so some residents have been a little surprised to see their assessments going up.
“Once you explain it, most people understand,” he said. “But it was a little bit of a sticker shock when they got those notices, for sure.”
Supply and Demand
During the COVID pandemic, several factors combined to raise Arkansas real estate prices, according to Sandra Cawyer, director of the Assessment Coordination Division of the Arkansas Department of Finance & Administration. The shortage of housing and building materials, combined with people moving into Arkansas from out of state, contributed to an increase in property values, she said.
“All of these counties, even the little ones that never had tremendous growth, were exploding,” she said. “When these people come in and buy this stuff, that sets the market.”
Cawyer, who was previously the assessor in Columbia County for nearly 10 years, has been in the business for about 27 years and said she’s seen dramatic changes in property values since the pandemic. And some of those changes are still being reflected in the new assessments.
“The last five years have been amazing to watch,” Cawyer said.
Johnson County saw a 55.46% increase across the county’s approximately 17,000 taxable parcels. Johnson County Assessor Rusty Hardgrave, a former real estate broker in the area for seven years, said the county uses a contractor to do reappraisal work and that the property values are “all based on comparable sales in the area.” That’s easier with residential properties, since there are about 20 sales of residential property a day in Johnson County, he said. It’s harder for unique properties like a salvage yard.
Hardgrave said people moving into Arkansas from out of state and a lack of housing have pushed real estate prices higher. Hardgrave said he’s seen sale prices of some Johnson County properties double in four years.
“If there are very few to pick from, that kind of runs the price up,” he said. “If there’s an abundance of houses, it kind of runs it down. It’s kind of like the law of supply and demand, and our availability was so thin, that it ran the prices up, but a lot of it was based on people moving into this area.”
Hardgrave said that before COVID, selling a house in the area usually took six months to a year, and now it takes one to 10 days. “I’ve seen lots of houses sell the first day they were on the market,” he said.
Reappraisal Process
By state law, counties must reappraise real property at the market rate, but legislation has changed the reappraisal intervals so that all counties will be on a four-year cycle beginning in 2028. Previously, some counties had been on a three-year cycle and others had been on a five-year cycle, depending on various triggers related to the growth rate in the previous reappraisal cycle.
Cawyer said four years is the preferred timeline. Three-year cycles are too short, meaning that as soon as taxpayers were educated on the issue, it was time to start again. Five-year cycles, like the one that just concluded, are too long, since those lead to bigger increases on the reassessments.
The reappraisal process allows counties to record the market rate for all real property. Arkansas properties are taxed on their assessed value, which is 20% of their total value. Millage rates are applied to the assessed value to determine how much a property owes in property taxes. Depending on the county, property taxes could be applied to schools, cities, counties, libraries or hospitals.
The reappraisals mean entities that receive property tax revenue — primarily public schools — will receive funding based on the current market value of property and not lower, outdated values. But the increased values will also generate higher tax bills for homeowners and put more pressure on the affordability of housing.
The reappraisals also reflect economic growth. Last month, an economic analysis from the University of Arkansas at Little Rock found that Arkansas’ real gross domestic product had increased 17.5% since the fourth quarter of 2019, which was greater than the country’s 12% growth overall.
Freezes and Caps
While property values are up, tax revenue won’t rise at the same rate, since the state allows for a few exceptions for property tax increases.
Arkansas law allows taxpayers who are 65 years old or older and those who are 100% disabled to freeze the taxable assessed value of their primary residence, also known as their “homesteaded property.”
The freeze will change whenever the property is sold or a change is made to the property, such as the addition of a pool or accessory building.
The state also caps annual property tax increases at 5% on homestead property that does not qualify for the freeze. Other non-homestead property is capped at a 10% annual increase.
To carry out the reassessment process, county assessors can either appraise the properties with in-house staff or hire an outside contractor. During the process, the team checks on properties across the county, checking measurements, entering data into software programs, and analyzing sales of similar properties in the area.
In some areas, the assessor or the contractor might check on every property, but in other areas like a subdivision where all the properties are similar, the assessor might determine that spot-checking on every fifth property is sufficient.
The assessor sends a notice to all taxpayers whose property taxes will increase with information on how and when to appeal the change.
Hardgrave said he hopes those who receive the notices understand assessors are just doing their job.
“We’re not out to get anybody or anything like that,” Hardgrave said. “We have to report what the market is doing.”
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