If you just got your property tax appraisal, news that Dallas-area home prices are growing at the slowest rate in six years may not add up.
My tax appraisal landed in my mailbox like a bomb, notifying me that the taxman has added another $38,000 to the assumed value of my almost century-old shack in East Dallas.
In the last five years, the tax appraisal on my house has gone up almost 70 percent — an even bigger jump than the North Texas area average sales price increase of about 55 percent since 2013.
Those huge home price gains in North Texas may be waning.
This week, one of the country’s benchmark home price reports said that Dallas-area home values have risen only about 6.4 percent in the last year.
That’s the lowest local home price growth in six years. And it’s certainly less than the 12 percent appreciation the taxman says my house saw during the last year.
Of course, anyone who’s been around real estate as long as I have knows that appraisals are a rear-view indicator of property values. That’s especially the case when home values are rising or decelerating.
A home value appraisal is always yesterday’s news — what something sold for months ago, not what the value is today. The only way to really figure out what your house is worth is to sell it, and I don’t feel like packing up 30 years worth of stuff just to prove my point with the tax appraiser.
If Dallas-area home value growth slows this year and next year like many economists forecast, the tax man will have a harder time getting ever-increasing value estimates to stick.
This week’s report of the Case-Shiller Home Price Index showed that Dallas-area home prices are just barely ahead of the nationwide annual increase of 6.3 percent.
And the Dallas-area price hikes aren’t anywhere close to the double-digit percentage annual gains we saw a few years ago.
Mortgage rates are rising and the inventory of homes on the market is higher in some Dallas-area neighborhoods, so sellers are having a tougher time cranking up the prices on their properties.
In higher-priced home districts, buyers are especially reluctant to keep forking over more money for homes.
That’s one reason home sales were down in the first quarter in more than half of Dallas-area residential areas.
"The pace has slowed down a bit," said Dallas home appraiser Bryan Hagen. "The increases aren’t the same as they were 24 months ago. We couldn’t keep going double-digit price increases year over year."
Hagen said homebuyers are also pickier about condition, often not willing to pay high dollar for a property with too many dents and dings they’ll have to fix.
The decline in home sales in the first quarter is the best indicator I’ve seen that Dallas’ super-heated housing market may have peaked.
While there is no evidence of a home price bust on the horizon, I wouldn’t bet that prices will continue to rise every year like they have since the worst of the recession.
Long-term average home price gains in North Texas are around 4 percent or 5 percent.
The taxman will eventually get the memo that the huge run-up in Dallas-area home prices is slowing. But don’t expect much relief this year.
Dallas-area home prices in February saw the smallest annual percentage increase in six years, according to Case-Shiller.
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