Appraisal District Slammed Due to Skyrocketing Home Values

 

SAN ANGELO, TX — A visit to the Tom Green County Appraisal District office at 2302 Pulliam St. on Friday revealed a different feel that in prior years once inside. A constable was stationed as a security guard next to the counter in case there was a disturbance. The doors leading back to where the appraisal district staff that are normally open were closed.

Notices of appraised values of area real estate started appearing in residents’ mailboxes and popping up on the appraisal district website’s property listings this month. Many owners of middle class homes are seeing appraised values increase about 30 percent from last year and many are angry.

How much property tax one pays depends on two ingredients: The appraised value and the tax rate. With tax rates remaining relatively the same over the years, politicians brag about not enacting tax increases while the other component determining how much cash one pays in property taxes each year, the appraised value, increases. Increasing appraisal values also increases the amount of money flowing into the accounts of local governments. The mysterious appraisal district with its small staff of real estate appraisers who are not public personas usually receive the brunt of the criticism.

Tom Green County’s new Chief Appraiser is Tyler Johnson who has been in his position since July 2021. In an interview, Johnson said the job of his staff is to appraise property according to the State statutes, and the methods of interpreting the State statutes rule how he leads the district. Johnson and his staff are employees hired by the Appraisal District Board of Directors. Members of the board are appointed by elected officials in the County, City and school districts the appraisal district serves.

“All we do is determine the valuations and collect the taxes. We don’t enact laws or determine tax rates,” Johnson said. They are employees hired to appraise property as accurately as possible. Yet, the Texas Association of Appraisal Districts notes that many legislators have made it part of their campaign to introduce legislation to make chief appraisers, members of the appraisal district board of directors, and appraisal review board members elected positions. 

The TAAD opposes this legislation calling it the politicalization of the appraisal process.

Johnson said TAAD sent a letter to all Texas legislators this year warning that appraisal districts across the state — about 100 of them voluntarily reporting to a survey of members — will see property values increase over 25 percent prior to the FY 2023 local government budget cycle.

“Higher real estate valuations are not just a Tom Green County issue,” Johnson said.

The Texas A&M Real Estate Center tracks residential real estate sales in the San Angelo Local Market Area. In January 2020, the average price paid for a home sold in the San Angelo local market was $184,483 and the median price was $181,000. In March 2022, the average price increased 32 percent to $244,432 and the median price increased 22 percent to $220,000. The TREC data is a separate data set than appraisal districts use and it backs up the phenomena seen in this year’s appraisals. Real estate values are skyrocketing. (See data in table below).

San Angelo Local Market Area

Residential Single Family Home Sales History, 2020-2022

Date Sales Dollar Volume Average Price Median Price Total Listings Months Inventory
Jan 2020 84 15,496,532 184,483 181,000 206 1.7
Feb 2020 99 18,736,775 189,260 168,000 187 1.6
Mar 2020 126 24,051,263 190,883 180,000 227 1.9
Apr 2020 120 21,973,510 183,113 166,450 204 1.7
May 2020 114 21,187,096 185,852 170,950 176 1.5
Jun 2020 141 31,571,555 223,912 187,500 157 1.3
Jul 2020 160 35,343,719 220,898 210,500 156 1.3
Aug 2020 136 28,264,906 207,830 189,450 127 1.1
Sep 2020 133 29,166,141 219,294 200,000 138 1.2
Oct 2020 137 31,017,419 226,405 206,000 136 1.1
Nov 2020 106 21,729,630 204,997 187,000 148 1.2
Dec 2020 129 26,801,346 207,762 196,000 131 1.1
Jan 2021 86 18,790,900 218,499 195,950 122 1.0
Feb 2021 96 21,757,744 226,643 201,000 115 0.9
Mar 2021 118 25,982,049 220,187 184,950 105 0.9
Apr 2021 128 28,450,662 222,271 208,700 90 0.7
May 2021 128 30,858,797 241,084 221,000 96 0.8
Jun 2021 182 45,880,775 252,092 209,000 127 1.0
Jul 2021 159 39,062,736 245,678 211,000 171 1.3
Aug 2021 166 40,964,778 246,776 215,000 174 1.3
Sep 2021 147 33,870,216 230,410 222,000 171 1.3
Oct 2021 135 34,837,276 258,054 225,000 159 1.2
Nov 2021 128 30,175,461 235,746 215,000 163 1.2
Dec 2021 128 28,409,003 221,945 204,500 152 1.1
Jan 2022 86 20,680,166 240,467 219,900 145 1.1
Feb 2022 91 20,162,510 221,566 197,500 123 0.9
Mar 2022 145 35,442,593 244,432 220,000 98 0.7

Source: Texas A&M Real Estate Center, data pulled May 17, 2022

While real estate has experienced a rapid and large increase over the past two years, the appraisal district has been slow to catch up with it — appraisal districts are required to revisit each property’s appraisal every three years. This cycle was not fast enough to catch the ongoing red hot real estate market statewide. Johnson said his staff knew this going into 2022. The Texas State Comptroller’s office audits appraisal districts every two years in what is called a biennial study. The latest audit by the Comptroller, as Johnson expected, revealed the hot real estate market caused county appraisals to be lower than the State study required. Appraisal districts must maintain property valuations within +/-5 percent of the State’s numbers. The results forced the Tom Green County Appraisal District to re-appraise much of the county’s residential properties this year outside the regular three-year rotation.

Homestead exemptions will save most residents from the full effect of the large valuation increases. Homesteads have a 10 percent cap on the valuation increase and is noted as the “Total Accessed” value listed with each property on the appraisal district website. For many homestead owners, each will see 10 percent increases for the next two to three years. Although, Johnson said that should a housing recession hit and property values decrease, he and his staff will work hard to reappraise property values downward.

Those who rent may be most impacted. A popular San Angelo apartment complex is called College Hills West Apartments at 3426 Millbrook Dr., built in 1970. This property’s valuation increased to $14,656,050 from $4,239,070, a 346% increase. The Blvd Apartments, a newer and higher rent property just southwest of Sam’s Club on Sherwood Way, saw its valuation increase from $7,396,310 to $26,041,860, or 352%.

Higher rent usually follows higher expenses for landlords. What is more, rental properties are not eligible for the homestead exemption’s 10 percent annual cap on valuations. This could mean that those who don’t own their residence will be hardest hit by 2022’s valuation increases.

Johnson disagrees. He said the valuation of a rental property, as calculated by his office, is determined by the income that property produces, not by comparable properties or cost to build those properties less depreciation. According to Johnson, landlords are likely already charging rents to justify the newly appraised values. Therefore, Johnson believes, a majority of the current rental rates have the higher appraisals already baked in.

What is more, multifamily properties have generally enjoyed stagnant or relatively small valuation increases during the previous three to four years, Johnson noted. A glance at appraisals backs up Johnson. On most apartments, valuations have remained relatively stagnant since 2018 while anecdotally we know from following the local real estate market weekly at San Angelo LIVE!, rents have risen. Statewide, rents increased 21.94 percent from 2020 to 2021 according to rent.com. Appraisal district data also notes that rental properties in the county are 96 percent occupied.

Local government entities like the City of San Angelo, Tom Green County, and area school districts set tax rates for the following fiscal year that starts October 1. Generally, tax rates from all entities have remained the same for years. The City of San Angelo’s 0.776 rate was nearly reduced this year. The council instead decided to keep the tax rate the same to generate extra revenue for road repairs — an estimated $300,000 to $350,000 more revenue was generated by this decision.

The county’s tax rate fluctuates year-over-year to remain clear of the 3.5-percent rollback rate. Under State Law, if the newly set tax rate generates more than a 3.5 percent increase of total revenue over last year’s revenue, a special election must be held to approve the new tax rate. No politician desires an election to increase taxes so tax rates are driven down to avoid the rollback election. The 3.5 percent rule also applies to cities and school districts.

Texas Senate Bill 2, or SB 2, passed during the 2019 legislative session, redefined terms in the property tax code. For example, the “no-new-revenue tax rate” is the term now used to define the tax rate that matches the taxing entity’s prior year’s gross revenue. A rate approved by voters in a rollback election is now called, “voter-approval tax rate.” Prior to SB 2, the law allowed revenues to increase up to 8 percent before a special election was required; SB 2 set that threshold at 3.5 percent.

How local governments tackle the increase in valuations of residential and multifamily properties is yet to be determined. For example, Mayor Brenda Gunter was reluctant to commit to what her reaction will be until she receives the FY 2023 revenue estimates from the appraisal district in 6-7 weeks. Even still, she knows we’re headed for tough times.

“A lot of tough decisions need to be made in the 2023 budget cycle — we’re flying into a storm. The decisions facing every citizen right now are tough decisions in all of our personal lives. At the same time, the City will need to make tough decisions based on the tough economic factors hitting us right now,” she said.

For now, the Johnson said he welcomes property owners to come to his office and challenge their new appraised value. He said he wants voters to understand how the valuation process works. The valuation challenges also help his staff refine their methods and verify the data sets they are required to use.

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j j, Tue, 05/17/2022 - 14:54

For now, Johnson said he welcomes property owners to come to his office and challenge their new appraised value. He said he wants voters to understand how the valuation process works. 

OK Joe, hold their feet to the fire, they should have a few public meetings to explain the process to the voters. Make it happen.

I understand all this tax jump but what I do not get is that our taxes are going up to the point that people will start falling back on affording the taxes and will get their homes taken away. I know my house value is not like my neighbor home  and my taxes are almost like theirs. My house is 686 sq ft and was built out of a Military barrack in 1958 and their house is 1500sq ft built in 2012. That is what doesn't make sense. I know the law is the law but some things don't quite make sense.

The scam of property taxes is not the values, which have undoubtedly gone up. It's the fact that the taxing entities brag about not increasing the rates, when they should be decreasing the rates in the face of so much new valuation.  What are the city, county and SAISD going to do with all the additional millions in revenue? I'd like to see a budget before the increase, not afterwards in an attempt to spend it all.  We have streets that are like the third world, yet the budgets are enormous and about to increase exponentially. I honestly think we would be better off with a state income tax or sales tax over what property taxes have become.

I heard they had a Co. out of California come in and do appraisals coz they couldnt get to them. We dont need California doing our appraisals.

The taxes are getting insane. My house value went up $200K and there have been no upgrades. I shudder to think what my 90 year old neighbor's taxes are now. Her house was built in the 50s and except for new appliances when needed, it is entirely original! Why should my taxes go up....no kids in the schools, etc. 

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