While thousands of Harris County residents faced property tax spikes due to rising home values in 2022, relief was found in the 2023 real estate market, backed by increasing home inventories, sales prices holding up and continued low unemployment.
Despite the key stability metrics, officials with the Harris Central Appraisal District said uncertainty has not gone away as inflation, borrowing rates and a looming recession can still affect the markets.
The gist
HCAD Chief Appraiser Roland Altinger said in a news release the Harris County housing market took a “breather this year” after several years in a row of rapid appreciation. Sales slowed in 2023, and prices rose slightly because of higher interest rates and mortgage rates, which then allowed home inventory to inch upward.
“This year we are seeing a return to the usual increases and decreases in property values instead of the extraordinary growth of the past two years. We are seeing a large number of residential and commercial properties in Harris County decreasing in value this year,” Altinger said.
Residential properties are still in high demand and have gone up an average of about 2.5% in value, Altinger said.
According to the district’s 2024 market trends report that was released on May 1, the median price for a home decreased from $338,000 to $330,000 in 2023, which represented a 2.5% decline. Yet, historically low interest rates are one of the major contributing factors in the rapid rise in home values over the last 5-10 years, according to the report, with a 7% average for a 30-year mortgage.
The number of single-family homes sold in 2023 decreased by 12%, according to the Houston Association of Realtors, with a total of 83,854 home sold, compared to 95,302 homes sold in 2022.
Explained
Harris County has hovered below a three-month supply of homes for the past six years, indicating a seller’s market, which is below the six-month supply that is considered a balanced market. Months of inventory is an estimation of how long it will take for all the homes on the market at a certain point in time in a given area to be sold, according to HAR.
Despite home inventory increasing, the amount is still low while adding higher interest rates to the equation, which will ultimately impact housing prices and affordability, according to HCAD officials.
Altinger said homes in the lower price ranges saw minimal value increases and, in some cases, even small decreases. Homes above $450,000 increased in value by roughly 4%-8%. However, 47% of homes in the county decreased in value, while only 40% of all homes increases in value.
Residence homestead exemptions are the most common type of exemption, and HCAD officials encouraged property owners to check their account to make sure all exemptions are in place.
“One of the easiest ways a homeowner can lower their property tax bill is to file a homestead exemption and apply for any other exemption they might be eligible for. The state tax code mandates certain exemptions, and many jurisdictions offer optional or additional percentage exemptions,” Altinger said.
According to HCAD, available homestead exemptions include:
- School taxes: All homeowners may receive a $100,000 homestead exemption for school taxes.
- Age and disability exemptions for individuals 65 years old or older, or those who are disabled may also qualify for a $100,000 exemption.
- Local option exemption: This is based on a percentage of a home's appraised value, with a property tax exemption up to 20% of the value of each qualified homestead.
- Partial exemption for disabled veterans: Property tax exemptions are determined according to the percentage of service-connected disability.
- A 100% residence homestead exemption is available for disabled veterans.
- Surviving spouses or members of the U.S. Armed Services killed in the line of duty: Property tax exemptions up to 100% are available if the surviving spouse has not remarried since the death of the armed services member.
- Surviving spouses of first responders killed in the line of duty: Property tax exemptions up to 100% are available if the surviving spouse has not remarried since the death of the first responder.
Digging deeper
In terms of the national commercial real estate market, the report states the industry is still facing sluggish economic development due to the COVID-19 pandemic. Higher interest rates and hybrid work schedules have cast broad repercussions on office markets and central business districts throughout the country.
On the other side, experts find there will be a strong demand for industrial warehouse properties and multifamily properties that are tailored to the growing digital economy. In Central Texas, Samsung Electronics signed a preliminary memorandum agreement with the U.S. Department of Commerce on April 15 that resulted in an estimated $45 billion total investment in the region to build a manufacturing plant.
The proposed investment will support over 20,000 jobs over the next five years with:
- Nearly 4,500 manufacturing jobs
- 17,000 construction jobs
In Harris County, commercial property values also began to stabilize after several years of increases and continues to be strong, according to HCAD. Approximately 52% of commercial properties increased in value, and 20% decreased in value. Commercial property values increased by an average of 8%, Altinger said.
Multifamily units are in oversupply but are still doing well, according to HCAD. With an oversupply of apartment units, along with apartment complex values increasing by 2%, occupancy and rental rates remained flat.
What residents should know
Several upcoming property tax dates are being highlighted by the Harris County Tax Assessor-Collector and Voter Registrar office.
- July 1: Collections and attorney fees are added to unpaid taxes
- August-October: Local jurisdictions adopt tax rates
- October/November: Tax bills are mailed
- Dec. 31: Last day to pay to use a deduction for the same year's federal income tax
Also of note
During an April virtual property tax panel, Altinger said the district did see a large number of homeowners filing property tax protests this year.
“When I was the taxpayer liaison officer, I had property owners come in, and they protest year in and year out because they said, ‘It’s my right, and I’m going to do it,’ and we welcome them when they show up,” he said.
Danica Lloyd and Haley McLeod contributed to this report.
