Hamilton County posted a record jump in assessed residential property values of just under 30% in 2021 over the last reappraisal four years ago, figures show.
Commercial properties also soared, up about 20% versus four years ago, says Marty Haynes, the county assessor of property.
"We had a lot of phone calls this time," he says about people who had questions about the increases. Appeals were nearly 600, up from fewer than 200 four years ago, Haynes says.
But, he adds, 200 of the appeals this year were from five property owners who are investors in the rental market.
Henry Glascock, who heads the real estate appraisal company Henry B. Glascock Co. in Chattanooga, says there was "a perfect storm" of factors that contributed to the increases in property values.
Low interest rates, a surge in home buying, government stimulus funds, a scarce inventory of houses, and much higher prices for residences all played a part, he says.
Glascock adds that real estate is "very cyclical," though such swings can take two to three years to play out.
"Right now, houses are in high demand and it's a sellers market," he says. "It, too, shall pass."
Haynes says Hamilton County is a desirable place to live, as is Tennessee.
"A lot of people within the state are moving here," he says. "And people from other states are moving here, as well."
The county's property assessor cites the limited inventory of homes available in the market. Haynes says there were 600 homes on the market in June, five times fewer than in a normal summer.
"It's a bidding war when you do put a home on the market," he says.
Still, Haynes says, Hamilton County wasn't alone when it came to high reappraisals. Other big metropolitan counties in the state such as Davidson, Williamson, and Sevier all were within 2% to 3% of local increases, he says.
But Haynes says the climb in assessed property values won't lead to a windfall in tax receipts for local government bodies. Under state law, as values rise, tax rates have to decrease, he says.
Also, Hamilton County's elected leaders have indicated they won't pass a tax hike, Haynes says. But many municipal governments approve continuation budgets and later will determine what their tax rates will look like, he says.
Glascock says some people might see a rise in their individual taxes due to the reappraisal this year. If a person's home was under-appraised earlier, the new reappraisal will change that, he says.
"Generally speaking, everybody should see taxes stay fairly the same," Glascock says. "There will be exceptions on either side."
Haynes says the reappraisal saw the value of homes in East Ridge and Red Bank rise the most in the county. Those municipalities had a high number of sales in the last four years and those started at a lower value, he says.
"There were record numbers of sales in Red Bank and East Ridge," Haynes says. "When you go to Lookout Mountain and Signal Mountain, homes started at a higher value. You don't have as many sales for higher-valued homes."
Concerning residential property sales countywide, Haynes says there were nearly 14,000 sold in 2019 and 2020. Typically in a four-year period, the average is 16,000 to 17,000 residential properties sales, he says.
Meanwhile, commercial property values were "really good" in 2017 through 2019, but 2020 and the pandemic hurt the hospitality industry, the official says.
"It was not a good year," he says. "That hampered the increase in value for some of those. A number of small businesses closed last year. Some haven't reopened."
Glascock says that's hard to accurately predict when property owners will see a more normal market.
"No one has a crystal ball," he says.
But Glascock believes there's a period of inflation facing the nation, and that will push up interest rates.
"They're the big gorilla in the room," he says. "When interest rates go up, you'll see how that affects a lot of people."
Glascock says that real estate is usually a guard against inflation.
"Typically, it's a pretty good investment. We're in a very unusual time," he says.