Property values declining
I have three things to say about this.
The housing slump that has battered much of the country for two years finally has trickled down to Harris County, where residential property values have declined or stagnated for the first time since the oil bust of the 1980s, the county's top appraiser said Friday.
Nearly half of homeowners saw their property values decline this year, while a third saw no movement, Harris County Appraisal District chief appraiser Jim Robinson said. Just under 20 percent of properties increased in value, mostly in neighborhoods featuring homes worth more than $500,000.
HCAD has finished appraising 860,000 of the county's approximately 1 million homes, and homeowners' value notices should begin arriving in mailboxes in the next few days, Robinson said. The district will spend the next two weeks appraising the remaining homes, mostly new construction and properties damaged by Hurricane Ike.
The total value of the 860,000 homes that have been assessed has declined by about 2.5 percent from last year, Robinson said.
It will be difficult to determine how the sputtering real estate market will affect local governments, which rely heavily on property taxes to fund operations, until all residential and commercial appraisals are completed. Robinson said his office is reporting declining values for many commercial properties after years of soaring appraisals.
"I think there will be some jurisdictions, perhaps a significant number, that will see their tax base less than it was in 2008," Robinson said.
A decline could force budget cuts or tax rate hikes by some local government entities that have watched their tax revenue grow steadily in recent years.
But local leaders said they have assumed a slowdown was imminent and budgeted accordingly.
1. In a sane world, this would move the biennial crusade for appraisal caps to the back burner. In the world we live in, where there are Republican primaries to be won, I'm not so sure. I must admit, between voter ID and the stimulus, most other agenda items have gotten drowned out to some extent. I haven't heard much at all about appraisal caps lately. I just think that's temporary, and not indicative of anything.
2. By the same token, this will probably make it even more difficult to pass sales price disclosure legislation, which is intended to ensure that commercial and high-end residential properties are appraised fairly and accurately. Not that such legislation was likely to pass anyway,
3. This is another reason why federal stimulus money is so important. It can and will help local governments bridge their budget deficits in ways that will let them avoid making the kinds of cuts that would greatly exacerbate the effects of the downturn; specifically, it will help them not have to lay people off. The fewer people that lose their jobs, and the more that feel confident they won't lose their jobs, the better for the economy.
Posted by Charles Kuffner on March 22, 2009 to Budget ballyhoo
An appraisal cap is useless without a tax-rate cap as everyone in Harris County no doubt will soon discover as taxes increase as property values decrease.
As for the 2.5% decrease, I suspect it may decrease even more as more and more protest with "MLS figures" in hand.
The members of HAR of course are not supposed to give the "sold" figures from MLS out but they can give the "for sale" figures out and in fact everyone can get them on their own via the HAR website.
You don't have to be a rocket scientist to figure out that if your home is appraised for $250,000 but three of the homes comparable to yours on your block are for sale for $150,000 your home is not worth $250,000.
Maybe this will be the year when lawsuits are filed against HCAD.
California is the best example of how appraisal caps and tax-rate caps go hand-in-hand. If appraisals were based on market values and tax districts were allowed to solve their budget problems by raising property taxes, most Californians would have lost their homes by now to tax foreclosures. Including those who found themselves living in $25 million homes that they couldn't have afforded had they been worth $25 million when they bought them.
But this is Texas and of course budget problems are solved by raising property taxes.
Maybe this will be the year that people finally get fed up with those who promise to represent the public interest if they are returned to office and instead again represent the private interest.
Maybe this will be the year that people get tired of being used as an ATM.
The real solution to budget problems is getting rid of those who believe raising taxes and cutting programs and services and using the additional revenue from the increased taxes to pay their "buddies" to conduct studies justifying cutting the programs and services is in the public interest. It is not even in the private interest in many cases but merely the self-interest.
Many tax districts knew the bubble would burst. And kept increasing the appraisals. And our elected officials of course kept spending the additional revenue also knowing the bubble would burst. And knowing that when it did they could just raise property taxes to make up for the shortfall in the budgets even after they cut programs and services. Waving the studies justifying cutting the programs and services.
As for those who claim they cut taxes, well, proportionately speaking they didn't. Not when you consider the amouhnt of additional tax revenue coming in as a result of the annual increase in valuations.
What started the first American Revolution was unfair taxation.
More than likely unfair taxation will be what starts the second American Revolution.