A report from the Waco Association of Realtors prompts Joe Don Bobbitt to predict disgruntled taxpayers will swarm his office in a few months.
Bobbitt, the McLennan County Appraisal District’s chief appraiser, said the association reported the median price of homes sold countywide hit $282,700 in December, 31% more than in December 2020.
Sales prices, referred to as “comparables” in the real estate business, may affect property values in an entire neighborhood, or throughout a city or county. When property values rise, so typically do property tax bills. That is why Bobbitt believes homeowners will hit the roof when appraisals hit the mail. Many will then file a formal challenge to their appraisal.
“We had 15,000 protests last year. I expect we’ll have closer to 17,000 this year,” Bobbitt said. “That’s what most people don’t get. They say, ‘I haven’t done anything to my house.’ It’s not what you did. It’s what the market is doing. If you sold your house today, you’d probably get 17% more for it. But if you can come in and show that something is wrong in that house, something appraisers may not be aware of, they can make allowances.
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“Robinson, for example, has a lot of foundation problems.”
Bobbitt used the Marshall & Swift Residential Cost Handbook to suggest local home prices increased 17% throughout 2021. He said the revelation that median sales prices in December jumped more than 30% year-over-year countywide came as a surprise. The reported countywide increase was higher than in the city of Waco alone, though the city also saw a major jump. The Waco Association of Realtors reported that the median price of a home sold in Waco in December reached $252,500, a 23% year-over-year increase.
Possibly a reflection of declining inventory, active listings in December in Waco dropped 19% from December the previous year, according to the association.
“What we look at is what one house sold for versus what we had it appraised for,” Bobbitt said of the appraisal process. “There is less stuff for sale right now. Inventory is very low. Things are selling a lot quicker than they have in the past. The trend is pretty common, not just a Waco thing.”
He said his office will conduct a market review in March, at which time it should arrive at figures it can confidently apply.
Low inventory combined with high demand can create higher sales prices and increased property values, Bobbitt said. When the kind of price increases of recent years will ease is anyone’s guess, he said.
Illustrating the tightness of the market is the Texas A&M Real Estate Center’s determination that Waco’s housing inventory stood at one month in December. That means every house on the market would have a new owner within one month if the sales pace continued as it had been.
Even one month’s inventory is an improvement. In May last year, Waco’s inventory had slipped to the point every house on the market would sell in slightly more than half-a-month. An inventory of six months reflects a balanced market, one in which neither buyer nor seller has the advantage. Waco, like many areas, has become a big sellers’ market.
“We are seeing incredible growth in real estate. Do I see it flatlining or going the other direction, the answer is no,” said Trammell Kelly, a residential specialist with Kelly Realtors. “The indicators that I kind of rely on … if you just look around, see the houses and apartments being built, I don’t see the people coming into town doing those things saying, ‘Whoops, we overbuilt.’ That is the result of demand, and I don’t see it slowing anytime soon.”
He said grumbling about rising property values is a “good complaint.”
“We’re having real nice growth, not an explosion like you’re seeing in some cities, where things are getting out of hand,” Kelly said. “As for tax statements, we see the protests every single year. I have helped many clients, past clients, who say, ‘Here’s what the statement says, what should I do? Can you help me with some valuations?’”
Kelly said property values are appreciating across the board, though some areas are experiencing a surge more pronounced than others.
“Hewitt, Woodway, Lorena, China Spring and pockets within those areas, you might say, ‘Whoa, this is really going up,’” Kelly said.
One drawback is first-time homebuyers priced out of the market.
“Say a few years back you’re considering a home with a price point of X-amount of dollars,” Kelly said. “For some reason, you didn’t buy. Fast forward to now, and that home is considerably higher, beyond what you have to spend. We’re seeing that quite often in Waco, and all over Texas.”
He said price jumps of $100,000 or more on more expensive homes is not unusual. The Waco Association of Realtors reported 22% of homes sold countywide in December were priced between $300,000 and $399,999, nearly 12% were between $400,000 and $499,999, and 7.4% were between $500,000 and $749,999.
It has become commonplace for area residents to see property values jump.
The average home appraisal countywide increased by about 8% last year. The increase was even more for homeowners in McGregor Independent School District, where the state determined property values previously had been lagging well below market values.
Property tax relief, or pressure, comes not from the appraisal district, but from local taxing entities such as cities, counties and school districts. They set tax rates to generate revenue using values provided by Bobbitt’s office.
Bobbitt said he will do what he can with the resources provided.
“We have 17 Appraisal Review Board members appointed by the district judge. Last year we had 12 or 13,” Bobbitt said. “We also have staffing issues like every other business. We’re short on personnel.”