Residential property values in Harris and Fort Bend counties have seen dramatic hikes since the onset of the pandemic in 2020. When describing the state of Harris County’s property appraisals for this year, Roland Altinger, chief appraiser for the Harris Central Appraisal District, used one word: “unbelievable.”
In a video released earlier this year addressing residents about the state of the local real estate market, Altinger said 96% of all single-family homes in the county saw appraisal increases since 2022 and that they averaged 17%. These increases come on the heels of last year’s unprecedented numbers where 97% of residences saw increases from the previous year.
“We have seen two years of absolutely unprecedented increases in values,” HCAD Communications Administrator John Labus told Community Impact.
Similarly, an average home value in Fort Bend County with no homestead exemption could have seen a 60.3% increase in value since 2020, according to Fort Bend Central Appraisal District appraisal data.
Rising appraisals cause homes to have higher taxable value, causing residents’ property tax payments to increase. To address this problem, the state House and Senate proposed a bill in mid-July that would lower school district property taxes and raise the homestead exemption.
Houston Association of Realtors Chair Cathy Treviño said the current market and economic situation is causing pressure on homeowners, buyers and sellers alike.
“Prices [and] inflation and things like that ... are all going up, and salaries aren’t unfortunately going up as quickly,” she said.
Upward trends
Home values are rising due to an unprecedented combination of pressures on the economy, including federal officials’ move to raise interest rates, which has added upward pressure on mortgage payments, Treviño said.
In an unscientific web survey conducted from June 15-22 by Community Impact, Katy and Fulshear residents in the survey indicated having to make spending adjustments to account for rising home values. Residents reported spending less on medicine and food or putting less money into retirement savings accounts.
Fulshear resident and real estate agent Jerry Reeves said his property value has risen 30% since he purchased his home in 2018. Some of his clients have changed their minds about buying because of the high tax rates, he said.
Katy resident Ida Franklin, whose home value grew 292% from $250,000 in 2011 to $980,000 in 2022, said in the survey that she has had to sacrifice funding her nearing retirement to pay property taxes.
“I hope to retire in the next three or four years,” Franklin said. “But every year my taxes go up and up—and I mean every year.”
Franklin also owns an investment property in the northwest quadrant of the city—where demographers such as Population and Survey Analysts report most development is happening. But attempting to hold out until its value increases is becoming more difficult, she said.
“[Eventually] it’ll be on a four-lane divided road, like any other big street around here,” Franklin said. “If I can hold on to it that long, it’s going to be worth probably $2 million or $3 million, ... but I don’t want to pay [$500,000] in taxes on it.”
Legislative efforts
The state House and Senate each introduced bills in late June with different methods for reducing property tax bills. An agreement was reached July 10, according to a release.
Lawmakers initially filed House Bill 1 to cap appraisal increases at 5% annually and reduce school district taxes by 16 cents. Senate Bill 1 previously proposed a 10-cent reduction in school district taxes. Additionally, senators proposed increasing the homestead exemption for school districts from $40,000 to $100,000.
During a second special session, legislators announced a compromise.
Under the new plan, school district tax rates would be compressed by 10.7 cents, which is slightly higher than the Senate’s original plan and much lower than the 16.2-cent reduction the House originally proposed. However, the homestead exemption on school district taxes would increase from $40,000 to $100,000, as the Senate originally proposed.
Additionally, the compromise includes maintaining the annual appraisal increase cap on homesteads at 10% whereas the House proposed reducing it to 5%. However, the compromise also calls for allowing 20% appraisal caps on other properties besides homesteads during a three-year trial period. Today, no such cap exists.
Resources for residents
Residents seeking relief from increased property taxes from rising appraisals may be able to utilize a homestead exemption to set a cap on the amount their primary home increases in taxable value year over year.
Properties with a homestead exemption have a 10% cap on the increase in their taxable value year over year. Additionally, homestead exemptions withhold a certain amount of value from being taxed by certain entities. Homestead exemptions currently withhold $40,000 in value from being taxed by school districts.
“The homestead exemption remains the easiest way a homeowner can reduce their property taxes by as much as 20%,” Fort Bend County Chief Appraiser Jordan Wise said in the appraisal district’s 2023 notice of appraised values.
For example, a home valued at $100,000 without a homestead exemption could have increased in value to $115,000 this year, while one with the exemption would be limited to a maximum of $110,000.
Residents seeking relief can find more information on exemptions on the FBCAD online exemptions portal or the HCAD website, depending on where the property is located.
Dave Manning contributed to this report.
