We've reported this year the big increase in property appraisals in Texas, followed that up with a look at how that's prompted local governments to closely look at lowering tax rates to correspond; now a look at the impact to you and me.
When something we own increases in value, we usually call it a benefit.... but when it involves our home, it gets more complicated.
"Am I glad the value of my home has increased so much lately? No, actually I'm not," said Central Texas Homeowner Martin Sierra.
He rightly points out, when the value of your home takes giant leaps, as it does in Central Texas these days, it can correspond with an increase in taxes, unless government leaders lowers tax rates and, in some cases, as Texas law requires.
Many... but not all.
The Brazos Valley has it much easier, with property values increasing at about 5 percent a year.
But in Central Texas, double digit increases in home values have become more common and, some even say, expected. Why?
"The real problem out there right now that folks are actually, you know, dealing with is the different market, you know, pulls," said Sierra.
And those market "pulls" keep pulling in more people to Texas, which believe it or not, many people consider, a cheap place to live. They say misery loves company so maybe it'll comfort you to know, we're not alone in this.
Go to Kingston, New York, a sprawling suburb about two hours outside New York City. It's home to the highest increases in home value, in the states, according to the National Association of Realtors. Hang onto your wallet... average home sale prices here have jumped more than 35 percent year-over-year.
Feel better now?
"it's a golden opportunity to cash out the inventory here has been low so it's been a seller's market for some time," said Edwin Maldonado, who sells real estate in Kingston, and cleans up in this seller's market.
"One of them, I think went on the market around Labor Day and there were offers -- multiple offers in five or six days," said property owner Mike Wood, recounting his recent sale.
Sound familiar? The pressure to sell, completely changed Wood's business plan.
"We had no plans to sell our properties, we were in this for the long haul but the nature of this industry is if you can, just like the stock market, you want to buy low and sell high," Wood said. "And you know, it's really hard to turn it down when you can wait 10 years to make as much as you may now in one transaction."
A dilemma for sure, but look around, and you're likely to see it around you. The signs of the real estate dilemma are right here our own backyard. There's more than one neighborhood in Central Texas where neighbors say a new for sale sign goes up every day.
Movement you'll see across the country to one extent or another, which hit a huge boost last year when interest rates were in historic lows.
“And consequently, home prices are getting elevated very, very fast," explained Dr. Lawrence Yun, with the National Association of Realtors.
And while economists normally cheer at such increases, some want to slow this horse down.
"If mortgage rates were to increase, it puts a little bit of a cool on demand. That wouldn't necessarily be the worst thing," said Daryl Fairweather, Chief Economist, for Redfin Real Estate.
Why? because most consider the current boom... unsustainable.
And like the mortgage crisis of 2007 and 2008, when many realized they'd overbought for their income, Sierra suspects that's happened again right in his own backyard.
"You see that just in this neighborhood alone. Houses are going for sale because folks can really afford the increase and long term it's just gonna keep on skyrocketing. So they rather just pocket whatever profits they can and then they move to a cheaper neighborhood," said Sierra.
But with cheaper neighborhoods getting harder to find every day, he fears we may have to ride this for a while, before we can get it to slow down. The huge increases in home values that hit Central Texas years ago, have now spread to many parts of the country.
From New York to Florida from East to West the number of sales went down in May but the prices increased. More than 23 and a half percent according to the National Association of Realtors. Remember those are national figures.
In hotter than a firecracker Texas, prices increased 26 percent; and with those increases comes a housing shortage, which pushes prices even higher.
Paul Journey knows the root of our problem.
"We have a shortage because of the people coming from outside of the area," said Journey, a Central Texas homeowner.
The 2021 Texas Relocation report, says half a million Americans became citizens of The Republic of Texas in 2019 and more than 200 thousand foreigners joined them.
Making Texas number 2 in growth for that year. This year things got better, as the Census ranked Texas Number 3, behind Utah and Idaho.
The relocation report reveals much of our growth comes from as far away as California, Florida and Illinois. Illinois and California tend to have more people with money looking for a better deal, creating what Journey calls the heart of the problem. Most new Texans have more money than those of us already here.
"But if the people could afford the types of housing that people are paying for that are coming from outside, there wouldn't be [a housing shortage]," said Journey.
What to do about it? Well, we could build more, but the high cost of building materials makes that a tough choice. But, what about buildings we already have?
"I have a client that's looking into the idea of converting a vacant office property." said Rick Kleiner, of Cushman and Wakefield/Picor.
It may not quite have the legs of the condo conversion craze that began in the late 1970's, but it's something to consider.
"It's a significant property over 100,000 square feet, a large campus environment. So they're looking actively at how that could convert, trying to make the numbers work, and it is completely because of the high spike demand in apartment leasing." said Kleiner, because rents too, have begun inching higher.
Texas caught onto this trend early. in both Central Texas and the Brazos Valley you'll find a lot of warehouses and retail space re-made as residential property. Take the old Woolworth, and S.H. Kress stores in Waco. Even the old ice plant has gone on the market as a possible residential building.
The idea's not new, years ago a developer turned the cavernous Goldsmith's department store in downtown Memphis, into high-class apartments. But Journey points out only New York can support the kind of rents to pay the note on an office building built to make its investors almost 8 percent a year; while residential properties, according to Jasper Insights, barely make 5.
And as for home prices, he calls charging what the traffic will bear, the American way.
"I have no problem was people paying more and more and more, I mean if people want to sell, I mean it's people's rights to sell it for whatever they could get for the problem ends up then being that the locals can't afford it and they'll have to sell in order they go because already housing prices are going up, I don't know the answer to that," Journey said.
