Ratio Studies: The Math Behind Your Property Tax Assessment
- Logan Foster
- May 21
- 4 min read
Ratio Studies: The Math Behind Your Property Tax Assessment
By: Logan Foster
Date: 05/21/2025
Introduction
Property tax assessments are among the most misunderstood aspects of local government processes. Recently, my May 1st article titled: "Tax Increment Financing": The Reason Your Assessed Value Skyrocketed" explored how economic strategies like TIF could lead to surging property assessments. Today, I want to offer a deeper look into how these assessments are calculated, providing insight into the role of ratio studies and the important work being done by licensed professionals in the St. Joseph County Assessor's office.
What Are Ratio Studies?
At its heart, a ratio study evaluates the fairness and accuracy of property assessments. Local government assessors determine how close a property’s Assessed Value (AV) is to its Market Value-in-Use by comparing residential and commercial sales data. The formula is simple: Assessed Value ÷ Sale Price = Ratio
Ratio studies serve two major purposes:
Accuracy: Ensuring assessed values match actual market values, achieving a median ratio between 90% and 110%.
Equity: Confirming that assessments are distributed uniformly within neighborhoods or property classes. This is measured using a Coefficient of Dispersion (COD), which should be below 15% for residential properties.
Ratio studies are not exclusive to Indiana. They are utilized across 48 states as part of the International Association of Assessing Officers (IAAO) standards. However, Indiana distinguishes itself by now mandating ratio studies as part of its annual property assessment process, ensuring fair market practices across its counties.
A Data-Driven Process
For 2024, St. Joseph County conducted a comprehensive analysis of over 2,300 residential sales to determine its assessment ratios. Zooming in further, the Assessor's office reviewed 851 transactions in Portage Township alone, achieving an impressive median ratio of 96%. This score highlights the Assessor’s Office's ability to ensure assessments that closely align with actual sale prices in the county.
The work doesn’t stop there. Assessors are expected to analyze additional technical metrics like the Price-Related Differential (PRD) to uncover any disparities between high- and low-value properties. The state’s goal is simple -to have a system where all properties are assessed fairly and reflect their market value-in-use as accurately as possible.
**Based on available data, properties appeared to be closer to "under assessment" (0.90) than they were to being categorized as "over assessed" (1.10).
Inside the Assessor’s Office
Behind the scenes, ratio studies are managed by teams of highly trained professionals. The St. Joseph County Assessor’s Office exemplifies this expertise with 33 full-time staff members, 27 of whom are certified as Level 3 Assessor-Appraisers (the highest level of certification). These professionals are tasked not just with maintaining compliance but with ensuring that the assessments they produce are defensible, transparent, and equitable.
Under the leadership of St. Joseph County Assessor Mike Castellon, the County has implemented numerous reforms to enhance accountability and transparency, including the Engage Portal. This platform empowers taxpayers with the same data in real-time that assessors use during evaluation processes. You can visit the Engage Portal here.
The Role of Annual Adjustments
The state of Indiana transitioned to a market-based assessment system in 2002. Gone are the days of decade-long intervals between reassessments. Instead, under the current framework, annual adjustments are made by evaluating the prior year’s assessed values against recent sales in the area.
Your Assessment Went Up Dramatically?
You may be reading this and saying to yourself, "But my assessment doubled over the past year." My first question to you would be: "What did it double from?" The terms "double" and "increased by __% or $_ " are relative terms. For example, if your property was assessed at $30k and it is now assessed at $100k, it is true that your assessment has substantially increased. But the question that genuinely needs to be addressed is: why was your property assessed at only $30k initially?
In the example above, do you think it would be possible to buy your home (or any home) today for $30,000 on the open market? The reality is that many homeowners have been benefiting from significantly under-assessed values in the past, but now, recent assessments are aligning closer to true market value. According to 2024 reports from The Washington Post and other outlets, "US home prices have soared 47% since 2020." With property values increasing substantially over those four years (and even more since) and property tax assessments being directly tied to these values, it’s reasonable to expect that your property tax assessment may have increased by around 47% as well.
What Can You Do If You Do Not Agree With Your Assessment?
The first thing you can do is file an appeal if you believe your property's AV is too high. While DLGF's Property Tax Fact Sheet states: "If the value of the subject property has increased by more than 5% over the previous assessment date, the burden of proof rests with the local assessing official." Be advised that your property could still be under-assessed and through the appeal process (if evidence supports that the property is under-assessed), your property value could come back even higher in a future year (as the appeal process corrects data errors, such as finished basements, updated comps, recent upgrades, etc...)
So be honest, and ask yourself if you could sell your house for the AV on the open market. If you honestly believe the answer is no, file an appeal. You can find the appeal page here!
