It’s hard to be too surprised about rising tax appraisals when the superlatives about Waco real estate keep piling up.
Waco-area ZIP codes last year topped the list for most popular searches on Realtor.com, thanks in part to a certain television show. In the first quarter of 2017, the city of Waco saw a record 151 housing permits issued.
And local real estate agents are seeing things they’ve never seen in Waco, such as bidding wars over coveted homes.
“In 37 years, this is the strongest seller’s market I’ve seen,” said Kathy Schroeder, vice president of residential property at Coldwell Banker Jim Stewart Realtors. “I don’t remember ever being this low on inventory.”
As the annual appraisal protest process starts Monday, an analysis of the numbers shows tax values countywide have risen with the tide, which shows no sign of ebbing.
For the city of Waco, preliminary values from the McLennan County Appraisal District show a 6.6 percent increase over last year’s certified values, to a $9 billion tax base.
That’s not spectacular compared to past years. The increase was more than 9 percent last year, in line with the previous two years’ worth of increases, based on past certified values.
Meanwhile, the county’s preliminary tax base of $14.8 billion is an increase of only 3.3 percent this year, compared to 8.5 percent last year.
The county increase would exceed 5 percent were it not for a court-ordered reduction last year in the value of Sandy Creek Power Plant, a devaluation that also caused Riesel Independent School District’s tax base to lose 41.5 percent of its value.
But looking strictly at single-family residential homes, the increases are more significant: 8 percent for McLennan County, 8.3 percent for Waco, 9.3 percent for Midway ISD and more than 10 percent for China Spring ISD and Waco ISD.
Property owners have until the end of this month to file a formal protest with the McLennan County Appraisal District, and the Appraisal Review Board will hold hearings Monday through mid-July. Chief Appraiser Andrew J. Hahn said 1,439 people have filed for hearings so far, about the same number as last year.
Dr. Brad Holland, who lives in the Twin Rivers subdivision off Highway 84 West, said the 7.5 percent jump in appraisals he saw this year is the biggest he has seen since he moved in six years ago.
“That’s a pretty big jump,” Holland said. “I don’t consider the market value of the house to have gone up that much.”
He said he has decided not to protest his value, and he said he blames the continual increase in local tax burden more on state than local officials.
“Until the state government steps up and does something about property taxes and values, I don’t see that our local board has many options,” Holland said.
Schroeder, the Coldwell Banker agent, said she has been “getting calls like crazy” from clients concerned about increases of more than 10 percent. She said she helps them with support data to fight their appraisal.
“But there’s probably a lot of support data for the appraisal district,” she said.
Schroeder said some increase in taxable housing values is inevitable in a boom market like Waco’s.
“I would just hope that taxing entities would adjust their tax rates,” she said. “I could see myself getting gray-headed and not being able to afford to live in my house because of the taxes.”
Schroeder said Waco was long viewed as a conservative, modest-growth housing market, but that has changed in the past few years.
Between 2011 and 2016, the median home sale price in the Waco Metropolitan Statistical Area has risen from $125,000 to $157,000, a 25 percent increase, according to the Texas A&M Real Estate Center.
The most obvious change has been the phenomenal success of the HGTV show “Fixer Upper,” which has driven national attention to the bargain home prices here.
“It’s definitely very positive that we have such wonderful media coverage because of ‘Fixer Upper,’ and Chip and Joanna are super people,” Schroeder said.
She said the media coverage has brought in out-of-town investors who are willing to put far more money into older homes than was once thought prudent.
But she said there’s more at play here than a TV show. Job growth and the end of the recession have brought more people into the market, while housing supply hasn’t caught up with demand, she said.
‘Diversity of buyers’
“We’ve had a good diversity of buyers,” Schroeder said. “We’ve seen some investor-speculators, some Baylor-related, but also a lot of people who have been renting property who can now qualify for a loan.”
New housing is also booming in areas including China Spring, the West Highway 84 corridor and the Ritchie Road-Panther Way area. The 151 housing permits issued in the first quarter of this year represent a jump of 72 percent over the first quarter of last year.
The McLennan County Appraisal District’s preliminary reports show that the county had $163 million worth of newly constructed single-family homes added this year, plus $58.2 million in new multifamily and $77.5 million in new commercial value.
Ellen Derrick, an agent with Kelly Realtors and a partner in Shamrock Property Management, said Waco’s real estate market has been experiencing a “bull run,” and she said the appraisal district is still catching up.
“Everybody is frustrated when it goes up,” Derrick said. “No one wants to see their taxes go up, but would they sell their house to the appraisal district for the amount they appraised it for? It’s hard to say it’s a raw deal when the appraisal is less than the market.
“We’ve seen some pretty big increases, but it’s the same trend we’re seeing in the rest of Texas. We’ve gotten away with a pretty good deal for a while. Now that tax values are catching up to what market values are, a lot of our property owners have called and said, ‘Should we protest this?’ But a lot of times there’s nothing you can protest.”
Derrick said she’s adjusting to the new market reality in which buyers are competing with each other.
“We’re starting to see situations where people are bidding up prices on houses,” she said. “It’s not uncommon to list a house on Friday afternoon and by Sunday to have six offers, four above the asking price.”
She said four of the last five houses she has sold have been to people moving in from outside Waco, including Houston and out of state. Some of the action is the result of “Fixer Upper,” but some has to do with the economy and new jobs at places such as SpaceX.
“I wonder if this is a long-term phenomenon or just something we should take advantage of,” she said. “For right now, I think housing prices are a little inflated because there’s so much demand. But compared to housing prices around the state, we’re still pretty reasonable.”