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Market Conditions/Time Trending Explanation Jefferson County Assessor's Office 2013 Reappraisal: July 1, 2010 - June 30, 2012
Colorado statutes [39-1-104 (10.2) (a) C.R.S.] require all county assessors to analyze sales data to see what differences, if any, exist between the market conditions at the time of a comparable sale and the market conditions at the valuation date for the subject property.
Commonly referred to as time trending, sales must be adjusted to the end of the data collection period (July 1, 2010 through June 30, 2012). Time trending of sales is the usual practice in all types of appraisal work to account for the principle of supply and demand, along with the principle of change.
There are several methods used to determine the presence of a time trend. The one most frequently used within Colorado is called a sales ratio trend analysis. It is the same method used by the auditing firm that will be conducting the 2013 property assessment study used to determine county compliance. In general, this method uses the assessor’s appraised actual values from the last reappraisal, which reflects a market value of June 30, 2012. This prior value is compared against recent sales data that has occurred during the newer period of July 1, 2010 through June 30, 2012. This comparison is done based on a sales ratio, the relationship between appraised values and sales prices. For example, a house that had a June 2010 appraised value of $230,000 and sold two years later, June 2012, for $225,000, would have a ratio of .98 ($225,000/$230,000). This one ratio indicates that the property decreased approximately 2 percent from June 2010 to June 2012. This type of ratio comparison is done to the thousands of sales that have occurred throughout the county. Ratios are graphed by month of sale, starting with the earliest date. After graphing all ratios, a statistical procedure called “regression” is used. Regression is able to place a line of “best fit” between all the plotted ratios. In effect, it is the slope, or angle, of this line that is used to determine the presence of any significant inflationary or deflationary trends. An upward line indicates appreciation, a downward line indicates depreciation and a level line indicates no change.
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