Market trends show the appraised value of residential properties in Fort Bend County increasing rapidly, despite record lows in property inventory and interest rates, according to Jordan Weiss, chief appraiser for the Fort Bend Central Appraisal District.
On April 6, Weiss gave a presentation on 2022 market trends for appraisal values on land, and commercial and residential properties in Fort Bend County to the commissioners court.
According to its website, the FBCAD is a political subdivision of the state of Texas that discovers and appraises property for each local taxing unit within the boundaries of the district.
Weiss said Fort Bend County is unique in that the overall property base, in looking at both value and number of accounts, skews heavily toward residential properties.
“About 76% of all value across the county is in the residential base; about 20% is in commercial and the remaining is in land and other areas,” Weiss said.
Data collected by the FBCAD showed in 2021, Fort Bend County had a $76.5 billion market value in residential properties. That has increased by 31%—or about $25 billion—in 2022, to $100.5 billion.
Weiss called the market value increase from 2021 to 2022 “irrational” compared to previous years.
“Historically, the data that we have looked at regarding homesteads is that in any given year, about 23,000-25,000 homes end up hitting their homestead cap, meaning their market value has increased by more than $10,000," he said. "Countywide, that data this year is 169,000 [homes], meaning that the market has gone, quite frankly, irrational.”
Weiss identified several factors that are driving the residential market values, including:
- Low interest rates that are now increasing;
- Inflated construction costs;
- Economic stimulus from the federal government;
- Continued demand for better work-from-home amenities;
- Historically low supplies;
- Out of area relocations; and
- Corporate buying.
“Prior to 2020, the rolling average for residential new construction was about 7,600 new homes per year,” Weiss said. “That spiked in 2020 to about 8,800 and increased to just under 9,400 [in 2021]. What we're seeing now for 2022 is a new record of new residential properties going in.”
He also pointed out that the price of starter homes has increased significantly.
“The idea of the $150,000 or $175,000 starter home continues to evaporate,” he said. “What we're seeing now from builders is that a starter home is now $250,000, if you're lucky, but in many cases it's closer to $300,000.”
As market values continue to increase, Weiss said, so will the tax burden on homeowners—who on average will see those values go up 28%.
According to Weiss, there are two ways homeowners can save money in a market that is becoming increasingly more expensive.
“Exemptions are the easiest way a property owner can lower their tax burden,” Weiss said. “Property owners can go back as far as two years and end up getting an exemption that often helps them reduce their taxes by as much as 20%. The second best way is by appealing their value. [The FBCAD has tried to make [the process for] both of those as easy and streamlined as possible. ”
The FBCAD has seen almost 9,000 exemption applications in the first quarter of 2022, which is about what they receive in an average year.
Two initiatives on the May 7 ballot are in regards to homestead tax exemptions, Weiss said.
In one, residents of Fort Bend County can vote to increase the exemption amount from a minimum of $25,000 to a minimum of $40,000. In the other, the amount of compression for residents who are over the age of 65 would increase, further providing them with property tax relief, said Weiss.