Most homeowners in Williamson and Travis counties will find their property value increased as of Jan. 1, 2014, according to data released by the central appraisal districts in April.
Low home inventory and high demand caused Williamson County residential market values to rise an average of 10 percent during the past year, said Alvin Lankford, chief appraiser with the Williamson Central Appraisal District. Preliminary numbers from Williamson County show the average market value for a home in the city of Cedar Park rose from $205,999 in 2013 to $233,030 in 2014. In the portion of Leander located in Williamson County, the average home market value rose from $158,843 to $184,114 during the same time.
In Travis County, average residential property market values rose 13 percent and taxable values rose 8 percent. Marya Crigler, chief appraiser with the Travis Central Appraisal District, said the trend was prompted by construction, growth in the apartments sector and a strong residential market.
Property owners in both counties have until June 2—or 30 days after they receive their appraisal notice, whichever is later—to protest the CAD's findings. By the end of July, a majority of the protests will be resolved, and values will be certified, Lankford said.
Once the values are certified, taxing entities such as the city of Cedar Park can begin to build their fiscal year 2015 budgets with a specific property tax rate in mind.
"At this point those values are too preliminary to be used to build the budget" said Josh Selleck, Cedar Park assistant city manager.
The governing boards of taxing entities can adjust their tax rates annually based on the amount of money needed to fund the next year's budget. When property values increase, applying the prior year's tax rate would levy more money for the taxing entity. However, entities can opt to lower the tax rate to offset the increase in home value, which the Cedar Park and Leander city councils voted to do in 2013 following value increases.
"It's a balancing act of how much we go down [with the tax rate] versus all the needs that are out there," Leander City Manager Kent Cagle said. "I think the direction from the council was, knowing we are going to have big appraisal increases [in 2014], there would be some sort of rate decrease. We haven't come up with a number yet, but the total tax base will probably be up about
16 percent when we get the final roll, and about half of that will be new growth."
In Leander, Cagle said the city would like to fund a few major items with increased property tax revenue, including paying off existing debt, improvements to Old FM 2243 and the addition of two fire stations.
"Those are three very expensive issues right there in addition to all of the normal operational expenses and demands for service," he said. "We have a lot on our plates."
Cause for increases
The number of Austin-area homes sold in 2013 increased 19 percent compared with 2012, and the median selling price for single-family homes increased 9 percent, according to the Austin Board of Realtors. The total value of single-family properties sold in the area rose 28 percent in 2013 compared with 2012 to more than $7.9 billion, according to ABoR data.
"In a balanced market, there's typically six months of [housing] inventory. We are at two months of inventory, which makes it a seller's market," Lankford said. "So with a high demand of people coming in wanting to buy homes and a very low inventory of homes, you are seeing large increases in value associated with that. [The CAD's values] are a direct reflection of what happens in the marketplace. We are monitoring the sales transactions that occur within the county and moving our values in accordance with those sales."
Steady population and job growth in the Austin area led to an increased need for housing, appraisers said. In 2013 the area's unemployment rate held at about 5 percent as Austin added 27,200 jobs, Crigler said.
In addition to single-family residential property value gains, the apartment sector remained exceptionally strong with vacancy at 4.4 percent, she said. According to TCAD, the total value of existing apartment properties increased 15 percent, or by about $2.1 billion, from Jan. 1, 2013 to Jan. 1, 2014.
"The residential and the apartment markets are the two strongest that we see, but all [real estate] areas have strong growth," Crigler said.
Regulation and protests
Appraisal districts use a mass appraisal system that adjusts neighborhood values based on sales, depreciation, land value and other factors to calculate two figures for each property in its jurisdiction. A market value is the price at which a property would sell under prevailing market conditions on Jan. 1, when values are tabulated. The taxable value is the total market value minus any exemptions, such as those offered for homeowners, property owners age 65 and older, and disabled persons.
For properties with a homestead exemption, or those that are filed as the owner's primary residence, the taxable value generally cannot increase more than 10 percent each year, TCAD Deputy Chief Appraiser Paul Snyder said.
"If it's a homestead, then the assessed value or taxable value is capped at a 10 percent increase unless there was a new value [added] like a pool or an addition to the house," Snyder said.
TCAD received 78,000 property appraisal protests in 2013 and expects a comparable number this year, Snyder said. Protesters are scheduled for an informal and a formal hearing to explain why their property's value should be readjusted, Snyder said.
"We encourage everybody to come to their informal [hearing] to talk about whatever issues they may have with our appraisal. The vast majority of protests are solved informally," he said. "If we are unable to resolve the issues ... [property owners] will be scheduled for a formal hearing to come in and talk to three independent taxpayers from Travis County who will make a decision based on the evidence from both sides."