Turns out it’s both.
Five years ago, DeMack bought her home for just under $190,388. She did so with help from the city’s affordable housing program in the form of a subsidy she’ll have to pay back if she ever sells the house. For the two years following the purchase, her home’s value didn’t change.
But in April 2009—with the Santa Fe real estate market in precipitous decline—DeMack received a notice from the Santa Fe County Assessor’s office. In the space of a year, the value of her home had shot up to $290,536. DeMack was alarmed.
“I thought, ‘This is crazy!’” DeMack tells SFR. “It just doesn’t make sense to me.”
DeMack talked to neighbors to determine if they had experienced the same increase in valuation. That’s when she first spotted the trend: Market-rate homes in her neighborhood hadn’t appreciated much. But for homeowners who claim an affordable housing tax break, property values were through the roof.
Credits: Alexa Schirtzinger
DeMack says she considered protesting but, after a discouraging conversation with an employee at the County Assessor’s office, she changed her mind. “I kind of just let it slide,” she tells SFR.
At $290,536, DeMack’s home value was already high above the average for Kachina Ridge, the neighborhood where she lives.
But this April, the value shot up again—this time to $314,090. Again, DeMack’s neighbors with affordable homes saw similar increases, while those in non-affordable homes didn’t. One neighbor, who lives in an affordable unit smaller than DeMack’s, clocked in at a whopping $321,100.
Kachina Ridge developer Arch Sproul is among those who see something fishy about DeMack’s tax assessment. Property tax assessments are supposed to be based on recent sales in the area, but Sproul says he doubts anyone in Kachina Ridge could sell an affordable unit for $314,090. Sales have been slow, he says, but he just sold one—for $210,000.
“The reality of the market today, for those units, is around $210,000 [or] $215,000,” Sproul tells SFR. “They’re basing [assessments] on the market at its peak, and things are not moving today,” he says. “Nothing is.”
According to New Mexico’s Property Tax Code, taxable property values cannot increase more than 3 percent each year (unless the property changes hands or the owner performs significant improvements). And DeMack’s taxable value did increase the full 3 percent both this year and last.
But the full market value of DeMack’s house has increased 65 percent in two years. Because of her affordable housing tax break, which has also appreciated, she isn’t paying a 3 percent increase on the full $314,090. But if it weren’t for the 3 percent limit along with the city’s affordable housing requirements, she’d be underwater.
She’s not alone.
Credits: Alexa Schirtzinger
SFR reviewed hundreds of county and city property tax records from the County Assessor’s files and databases. All show a similar trend: Across Santa Fe County, homeowners claiming an affordable housing tax credit have seen skyrocketing home values.
For people watching this unexplained trend—home-owners and affordable housing experts—the potential consequences are troubling.
“How can these people who asked for the affordable housing reduction have a home that’s worth more than their neighbor who didn’t ask for a reduction?” Melisa Dailey, a senior housing planner at the City of Santa Fe and manager of the Santa Fe Homes Program, wonders.
A 3 percent increase isn’t much, Michael Loftin, the executive director of the affordable housing provider Homewise, concedes. But, again, why are the increases only affecting affordable housing participants?
“It may not be affecting people negatively,” Loftin says. “But it just doesn’t make sense.”