Reappraisals for property in Carroll County will go on the books in 2022, and a lot of property owners in Eureka Springs might by shocked by the appreciation in value. Carroll County Tax Assessor Jeannie Davidson estimates property values are going up faster in Eureka Springs than anywhere else in the county and admits to being shocked at some of the recent sales prices for properties in Eureka Springs.
“Prices have skyrocketed,” Davidson said. “Some of the houses in Eureka are just little shacks. There is nothing wrong with that. That’s the way it is. But they sell for more than newer, nicer homes on this [east] side of the county. Eureka Springs is such a charming town and often people who have visited want to buy a place and are willing to pay outrageous prices for something in the city. Holiday Island prices are going up slowly. A house in Holiday Island may sell, but not for an amount that will shock you.”
While increased property values in Eureka Springs are good news for sellers and real estate agents, it makes housing less affordable. Even locals with a full-time, year-around job aren’t going to be able to afford a house when small fixer uppers in town can cost $200,000 or more. There are also fewer homes for sale than in recent years.
The Tax Assessor’s records reflect market value. Because of high sales prices in Eureka Springs, Davidson said they are expecting a 20 percent increase in reappraisal values next year.
If you have a homestead exemption, meaning this is the home you live in, the value can only go up five percent a year until it gets to full market value. But if it is commercial property or an out-of-area property owner, the value can go up 10 percent per year.
“For anyone who is over 65 or disabled, the value won’t be affected if the freeze is applied,” Davidson said. “Keep in mind, we don’t know if you are over 65 or disabled, so you need to bring us the proper paper work.”
In order to qualify, you have to bring a copy of your driver’s license or birth certificate to the County Assessor’s office in Berryville. If you are disabled, bring your Social Security paperwork.
Property values for those 65 and over or disabled can still increase if you make improvements to your home.
For many years there has been some resentment that property owners on the west side of the Kings River are paying a higher percentage of county property taxes. That is related to lower property values on the other side of the river. If average appraisals in Eureka Springs continue to grow faster than other parts of the county, the gap in tax equity could widen. It is even possible that taxpayers east of the river will get a reduction in taxes because of higher taxes in Eureka—assuming millage rates remain the same.
Since the pandemic, there has been a flight to rural areas with more space and more affordable homes than in cities. There have also been people relocating because of frequent and devastating wildfires in California and Oregon.
“People are fleeing places with very high property values,” Davidson said. “If you live in a nice home in California and sell it for $500,000 to $600,000, you can buy something in Arkansas for far less, and bank the rest of the money. There is a lot of money coming into this county. Then these people make property values here go up, and that makes everyone else’s taxes go up. I don’t blame some people being upset with the newcomers who are making housing less affordable and increasing the tax rates.”
Sale prices before the pandemic occasionally surprised the Tax Assessor. She thought maybe it was an isolated case. But since the pandemic, it has become more the norm than the exception in Eureka Springs.
“The pandemic has brought all this out,” Davidson said. “It just astonishes me. Lake land is also high. Anything on the lake is selling high.”
Currently the county is doing a reappraisal every five years. People who don’t agree with their new appraisal have the opportunity to appeal to the Board of Equalization.
As property prices and tax rates increase, landlords usually have to increase what they charge for rent. That makes rentals less affordable for locals, many who work in the hospitality sector.
“It’s just kind of scary where we are going with this, I think,” Davidson said. “It is not good. We’re slowly inching towards housing prices that are not affordable, especially if your insurance keeps going up. Our way of life here is in danger.”
Another issue is that quite a few homes in Eureka Springs are owned by wealthy people from out-of-state who rarely visit. Not only are those largely empty homes not available to people who need housing, but the local economy suffers from the lack of full-time residents who purchase food and other supplies locally.
Davidson said there are a total of 13,808 parcels in the Western District and 3,972 of those are out-of-state owners. She said a lot of the lake homes are second homes, and there are people who buy houses in Eureka for rental purposes—particularly for short-term lodging. She said the Eastern District won’t see any decrease in values, but properties there aren’t going up as fast as the western district.
Sometimes people purchase a $500,000 home here and want to pay taxes like it was a $100,000 home. “That doesn’t work for us,” Davidson said.
With low wages and high costs for gasoline, vehicles and housing, Davidson has a lot of sympathy for people pursuing that American dream of owning their own home.
“It is hard to make it here if you don’t have a corporate job,” she said. “Twenty years ago, kids could buy a farm if they worked hard and watched their dollars. They could buy a house in the country with 40-50 acres. Today, you can’t find anyone willing to sell. If they were wanting to sell, the younger people couldn’t afford it because they are limited by the payments they could make per month.”