SIOUX FALLS, S.D. (KELO) — Minnehaha County’s strong real estate market has been noticed by the Equalization Office. 

The Minnehaha County Equalization Office, which determines the taxable value of all property, announced it recorded an 18% market increase compared to last year’s sales. The number came from the 4,109 “arms-length transfers” recorded in the county from Nov. 1, 2020 to Oct. 31, 2021. An “arm’s-length transfer” is when a buyer and a seller each act in their own self-interest to try to get the best deal they can independently. 

Minnehaha County Director of Equalization Chris Lilla told KELOLAND News he wanted to stress to people the property value increases and decreases don’t directly correlate to property tax increases and decreases. Lilla pointed out city, county, township and school board budgets are also included when property taxes are calculated. Taxable property value is determined by the Department of Revenue.

Lilla added amounts of new property add to the taxable market, which can help result in lower or steady property taxes. He noted Sioux Falls’ record more than $1 billion in building permit valuations in 2021.

The Equalization Office says low interest rates and high demand for housing led to record-breaking increase in home prices and investment properties. Lilla said his report involves data from November 2020 to October 2021 and realtor data from January 2021 to January 2022 showed a 20% market increase. He said the real estate market is “still climbing.”

KELOLAND News has reported on home buyers skipping home inspections to make their offers stand out as well as home prices selling over 100% of asking prices. 

Lilla said Minnehaha County had more than 9,000 property transfers this year (Nov. 1, 2020 to Oct. 31, 2021) and the 4,109 “arms-length transfers” require advertised property sales.

“Their can’t be any relationship between the buyer and the seller,” Lilla said. “You would sell your home cheaper to your son rather than me.”

The Equalization Office, which only sets value and does not calculate or collect property taxes, said not all properties saw the same market change. Lilla said “location, location, location” mattered when it came to what properties and neighborhoods saw big increases in value. He also pointed out state law requires median level of assessment represents at least 85% of market value as determined by the Department of Revenue.

Lilla said once all neighborhoods have been analyzed, modeled, revalued and re-analyzed, all sales are brought back to the county-wide level. A new county-wide level of assessment is calculated. For 2022, the county-wide level of assessment is 90.0%, compared to 90.5% in 2021.

Lilla said he likes that number to be around 92-94%.

The Equalization Office wants property owners to ask themselves “If I were to sell my property today would I list it for the assessed value or more?” If that answer is yes, then the assessment value is supported. 

Lilla said he often hears arguments about people saying they are not selling their home, but he points out the people around them often do.

“You are like them, therefore, you should be valued like them,” Lilla said.

To review sales of like properties, you can view the MinnEmap online tool.

If there is a discrepancy on the property assessment, contact the Equlization Office at (605) 367-4228.