Soaring home values seen across St. Croix Valley

In 27 years of owning houses in Washington County, Jesse Wilcox has never seen a tax notice like the one he got this year. His taxes will rise by more than $1,000, but even more shocking to Wilcox was the county's valuation of his Baytown Township house: It rose from $636,000 last year to $801,000, a 26% leap that he finds hard to believe.

"I would love to be able to sell my house for what the appraised value is," he said.

A confluence of market forces, including high demand, big-ticket sales and insufficient levels of new construction in Washington County, have helped drive double-digit valuation increases this year for homeowners in many cities and townships in and around the St. Croix River valley. Big jumps have been seen in Afton, Bayport, St. Mary's Point, Lake St. Croix Beach and the townships of Baytown, Denmark and West Lakeland, among others.

Local elected officials say they expect some homeowners to appeal, especially those who think their house can't sell at its appraised value. A local real estate agent said he still sees a seller's market with prices rising amid low inventories and strong demand.

The bump in median home values is biggest in Baytown Township, where Wilcox and his neighbors saw an 18.6% increase. He said the area is minutes away from amenities in Oak Park Heights but with its wide open spaces feels "quasi-country." After their youngest child graduates from Stillwater Senior High School, Wilcox and his wife hope to downsize — and it could be then that they learn if the assessor was right.

As Wilcox said, "My house is worth more money, but is it really?"

The county Assessor's Office said in a statement that valuations are determined by recent market activity, and Baytown Township had 33 sales last year.

"When these sales were measured against the assessed values, we were low and therefore needed to raise values to be in compliance with Department of Revenue requirements," the office said.

Richard McDonough, a Stillwater real estate agent, said that even with interest rates higher than they've been in years, home prices in the area are rising.

"My experience has been that some of the tax rolls are well behind what the actual valuation of a house is," he said.

Local listings have fallen considerably, he said. Houses for sale fell by 20% in 2023, and they're down another 4% this year, he said.

The rural spaces of Baytown Township and Afton have also drawn developments with million-dollar homes. The portion of Afton that overlaps with the Hastings school district has the highest median home value in the county: $1.8 million. The Afton Creek Preserve development has 18 homesites with houses starting at more than $1 million, according to the website of builder TJB Homes.

One option: Appealing

Some people don't realize that while home prices have risen, so too have the prices of vacant rural property, said Afton Mayor Bill Palmquist.

The value of commercial property hasn't risen as much and that's meant an unfavorable shift in the tax burden for homeowners, said Palmquist, who works for the property tax information team at the Minnesota Department of Revenue. The state applies a formula for property taxes that benefits homeowners over commercial property, he said, but that benefit is diminished if home values rise faster than commercial property.

"What I tell people," he said, "is, 'If you think it's being valued higher than what it would sell for, then appeal.'" Instructions for appeal are included on the valuation notice.

Palmquist said people often assume that a rising property valuation automatically means higher taxes, but that's not the case. If every Washington County house saw its value rise by 10%, then their tax burden wouldn't change. It's only when some houses rise by more than others within the same taxing district that property taxes can be affected.

The county as a whole saw median home values rise by about 8%. Since Afton's median home value rose by 13% to 19%, depending on the school district where the house sits, the city's homeowners will see a difference on their tax bill.

"It's a difficult thing to grasp," said Palmquist, "that valuation doesn't necessarily mean tax increase." Afton itself raised taxes by less than 4% this year, he said.

Afton business owner Lisa Baglio said she plans to talk to Palmquist about her tax bill this year. The owner of Baglio's of Afton, a longtime women's clothing retailer, said she is considering appealing her taxes for the first time. She said that in the past, "I've just kind of gone with it."

Baglio said she also owns a home in Washington County that's seeing a double-digit valuation increase, a rise that has put upward pressure on her taxes. "I'm a small operation and they tax like we're in the big city," she said.

Rick Weyrauch, a Baytown Township supervisor, said he'll learn in March how many homeowners plan to appeal their assessments. "If it's higher than normal, I won't be surprised," he said.

A 30-year homeowner in the area, Weyrauch said he's taken the long view on his own valuation increase. Since it's higher than the 8% seen across the county, his valuation jump will mean higher taxes. But it also means that when he sells the house to downsize for retirement, Weyrauch said, he expects to make a bigger profit.

"It's hard for me to say I'm mad," he said, "because really I'm benefiting from what happened. My value increase is going to more than cover my property taxes should I ever decide to retire."

Weyrauch said he thinks Baytown Township has seen home values rise in recent years without the county really noticing. New homeowners looking for a rural feel while staying close to the Twin Cities are driving high demand for homes in the township.

"You can ask whatever you want for [a house], and people are paying for it," he said. "When that happens, the county has no choice but to respond."

McDonough said he has encouraged people to check their home value with a real estate agent, rather than Zillow and other websites that purport to provide that information.

"Zillow is not a good valuation tool," he said. "And you should stay abreast of what your house is worth."