As of July 1, residential property values in Denton County were projected to increase by an average of 15.5 percent this year compared with last year, according to the Denton Central Appraisal District. In Collin County, property values are expected to increase anywhere from 8-11 percent this year compared with 2015, according to the Collin Central Appraisal District.

Property values for all counties are supposed to be certified by July 25.

This trend, which has been taking place during the past decade, has reached state legislators, who are trying to determine if state intervention is needed to curb the financial burden on property owners.

DCAD received about 65,000 protests this year, which is about 15,000 more than last year, DCAD Chief Appraiser Rudy Durham said. About $33 billion in market value was protested last June in Collin County, according to CCAD. CCAD Chief Appraiser Bo Daffin said he expects approximately $36 billion— 27 percent of Collin County’s total market value—to be protested this year.

“Historically speaking [and] based on human nature, when the value goes up, protests go up,” Daffin said.

Protesting property values

An appraisal cap, which helps keep values on homesteaded properties from going up no more than 10 percent annually, is probably one of the most misunderstood pieces of legislation that exists, Daffin said. The cap does not protect against market value.

“Market value does whatever the market tells it to do,” Daffin said. “What is capped is the appraised value that goes into the actual tax calculation. If a property owner had a homestead [exemption] last year, the cap is in play for this year at 10 percent for the purpose of calculating a tax, unless they … added onto the structure.”

Residents have 30 days from the day the county mails out appraisals to protest their values, Durham said. Since DCAD mailed out appraisals at the end of April, most residents can no longer protest their appraisals except in a few isolated incidents, he said.

Durham said DCAD only considers the value of the property in appraisal protests.

“Some people are protesting and come in and say, ‘The percentage changed from last year,’” he said. “We’re not concerned with the percent of change. Our concern is what is the value of the property.”

Supply and demand

Cities throughout Texas are feeling the pinch from increasing property values and home prices due to the influx of people relocating to the state, said Steve Haid, chief operating officer for the Collin County Association of Realtors.

“There were times when you could take your time buying a house and think about it for a week or whatever. Now, you need to be prepared to write a contract if you’re going out looking at homes,” he said. “You can’t say, ‘Let me think about it, and I’ll get back to you next week,’ because there’s a real good chance it won’t be there next week.”

Despite the effect demand has had on real estate, the market is still susceptible to predictability. Home prices fluctuate depending on the month, as sales typically tend to spike in June and are the lowest in January, regardless of the market, Haid said.

Haid said real estate market experts and economists seem to agree that this upward trend is showing little signs of stopping. It is harder as a buyer right now, more so due to availability than pricing, he said. The market is expected to balance out—meaning prices will ease up as more builders add to the area’s housing stock, Haid said.

“There’s a lot of economists who are saying within the next year and half or two years, we’re going to start to see the real estate market go down again,” he said. “It typically balances out. Unless you’re not going to buy a house, you’ve got to turn around and pay somebody else a lot of money for the next house you buy.”

State reform efforts

To gauge and address property tax increases across the state, Texas Lt. Gov. Dan Patrick last November announced the appointment of seven Senate members to the Select Committee on Property Tax Reform and Relief. State Sen. Van Taylor, R-Plano—whose district covers Frisco—was selected as one of the members. The committee has held several public hearings across the state and is expected to report its recommendations to the Finance Committee prior to the 85th Legislative Session, which starts in January.

According to data from the Texas Comptroller, between 2014 and 2015 property taxes statewide grew approximately 2.5 times faster than the median household income.

In November, voters approved Senate Joint Resolution 1, which raised the homestead exemption from $15,000 to $25,000 for school district property taxes. Taylor said he supported the Senate’s proposal to take this tax relief a step further by making a homeowner’s exemption 25 percent of the state’s median home value. Taylor said his district, which includes Collin County and the city of Richardson, is home to more than 60,000 businesses, the taxes from which help offset the growing demand for city services.

“Just because home values go up, that doesn’t mean it costs [city] government any more to provide the same services to those same homes,” he said. “Rapid growth of property tax rolls come not as the result of local officials campaigning on higher taxes and voters rallying behind their plea, rather it is fueled by an appraisal system that offers a backdoor means to increase taxes and government spending.”