Why are Texas Property rates extremely High, highest in nation (Houston: foreclosure, rental)

[doctorjef]

How I'd love to see the entire Republican political regime of Texas be totally discredited for their failures to deal with the state's economy and tax structure!

[FlyDrive100b]

Originally Posted by orbius

In the last tough economy in the 80's. Your above average new house in Texas was 75k. I believe the homestead exemption back then was 15k though I'm open to being corrected if that wasnt the case.
Back then Texas truly was a tax bargain. Most people were paying property tax on 60k assessed value.

Contrast that today where the average house assesed value is around 150k in Texas. Thats close to 3 times as much assesed home value as people were paying on just 25 years ago. Also the tax rate itself has increased quite a bit over those years. I wouldnt be shocked if people are paying 4 times as much property tax as they were 25 years ago in a pure dollar value.

If this recession deepens is the Texas property tax rate tenable or is it going to cause a total collapse of Texas housing? Will the ever growing numbers of people forced to rely on unemployment have the money to pay their exceptionally high property tax at the end of the year?

Given this scenario I think 'Property taxes are so high because: Texas hasnt experienced a deep recession in recent years'. Could be added to your choices.

No one knows if the current tax structure is tenable in a deep recession. We'll find out more information at the end of year, beginning of next year. If theres a massive spike in foreclosures next year, and it starts to devastate real estate values. Something that will cause even more waves of foreclosures as people go underwater. Then I think Texas will be forced to recognize its current tax burden on homeowners is untenable. The state, if its realistic, will have to recognize that a state income tax is necessary at this point.

Interesting, that is why I pointed an option to either lower home values or higher homes in metro areas where the economy is booming.

Did you choose a few answers in the poll, take a couple minutes and you'll see that 5 or so reasons could be the factor.

[Canine*Castle]

I didn't know Texas property taxes were the highest in the nation. I'm not so sure about that albeit they are way too high. Homeowner's insurance is without a doubt higher in Texas than any other state.

[texasdiver]

Some additional reasons that haven't been mentioned and that weren't options in your poll.

1. Unlike many west coast states like CA, OR, and WA, Texas has no initiative and referendum process in its state constitution. So it is impossible for Texas voters to pass a property tax initiative such as the famous Prop 13 in California or similar measures in Oregon. In Oregon, for example, voters long ago passed an initiative that requires a 60% supermajority for school levies to pass. A whole lot of school levies in Oregon go down to defeat despite winning 58 or 59 percent of the vote, which would be considered a resounding approval in Texas.

2. School districts in Texas have generally not been centralized like in many other states. For example, here in the Waco area there are at least 10 separate school districts that serve the greater Waco area. And some of the school district boundary lines look suspiciously gerrymandered around racial and class lines. A similar sized city on the west coast would likely only have one or two school districts covering the entire metro area. What this means is that Texans tend to identify much more closely with their local schools and school districts than residents in other states. The obsession with HS football also plays a part. So I think it is much easier to pass a school levy when the school district is local rather than a sprawling metro district and when community identity with the local football team is so strong.

3. Affluent Texans tend to send their kids to public schools to a much greater extent than affluent parents on the east coast. Pick any affluent community or suburb in Texas and you will find an extraordinary degree of connection to the local school district. Highland Park & Southlake in the Dallas area, Lake Travis and Westlake in the Austin area. Katy and the Woodlands in the Houston area. If you picked any area with similar demographics in say suburban NYC you'd see a much greater percentage of kids being sent to private prep schools and a great deal less interest and support for the local public schools. Since most wealthy communities in Texas are so centered on their schools it is much easier to pass property tax levies.

4. School quality is one of the few distinguishing differences between neighborhoods in Texas which makes it a MUCH more important factor in real estate values than might be the case in other states. Texas is mostly flat. The cities are sprawling and cover enormous amounts of land. And there are few distinguishing geographical features that provide natural exclusivity. In a typical west coast city like Seattle, San Francisco, or Portland there are all sorts of geographic features that lend exclusivity to upscale neighborhoods. Hills, views, shorelines, forests, etc. In Seattle, for example, houses with views of the mountains or Puget Sound command extraordinary premiums over identical houses with no views. And shoreline neighborhoods are especially pricey. In Texas there is rarely much geographical difference between wealthy and poor neighborhoods. So factors such as the school district a neighborhood is in become much more important factors in determining real estate values. For example, in Dallas I would expect a house in Highland Park ISD to command a considerable premium over an identical house a block away in the Dallas ISD, simply on the basis of being in a more desired school district. Because most residents of these upscale areas of Texas that have good schools are acutely aware that their property values are closely tied to school quality they tend to support school levies to a greater extent than might residents in other states in which the geographical features of the landscape create much more permanent and obvious boundaries between rich and poor. If you don't believe me go look at the endless debates about Katy vs Sugar Land in the Houston forum which almost always come down to school rankings.

[WillysB]

Why are Texas Property rates extremely High, highest in nation

Last year my county tax valuation was twice what it was in 1999. This year the county dropped the valuation 10%. Private appraisal came in at 10% higher.

[Eric S]

Originally Posted by doctorjef

I don't understand this. I've paid property taxes in Austin and still pay property taxes on natural gas wells I own in Denton Co. I can tell you that property taxes in TX are a lot lower than they are in my neighboring state of New Jersey.

Thank You ! The absence of a state income tax in TX is the great equalizer here. I'm happily recently transplanted from NJ and let me tell you, Texans don't know how good they've got it.

-Eric

[TexasHorseLady]

Higher property taxes are one reason that Texas does not have the problems that California and Florida (and some other areas) are experiencing now, because those same property taxes act as a control on housing prices, helping keep them from appreciating astronomically as they did in areas without that brake, keeping them to slow, steady growth. So, not going so high, we don't have as far to fall.

Yes, appraisals are higher than they were some years ago. So is everything else (I'm paying considerably more for diesel now than I did in 1999, and for a lot of other things, so expecting my house appraisal to remain the same would be silly).

[texdav]

It also assures that inductry pasys a good portion of the property taxes in many areas. I'd rather the property taxes than a income tax as it hyas resutlted in a better economy with more reasonable COL while a booming economy.

[desertsun41]

Originally Posted by doctorjef

I don't understand this. I've paid property taxes in Austin and still pay property taxes on natural gas wells I own in Denton Co. I can tell you that property taxes in TX are a lot lower than they are in my neighboring state of New Jersey. OTOH, I do pay lower residential property tax in New Castle County, Delaware than I did in Travis County, TX.

I agree with you. Texans love to complain about property taxes. They should try paying $15,000 a year on a 2500SF ranch on a 50 X 100 lot like we all did in NJ.

[Austin97]

Originally Posted by doctorjef

That doesn't make sense to me. Would you really choose to buy a tiny, too-small house in order to avoid property taxes? And would you say you'd rather pay sales tax because you can choose not to buy stuff, as opposed to being taxed on your income? State income taxes are deductible on your federal income tax. Wise up! And in Delaware, at least, the state income tax isn't much of a burden (nor was it in Colorado when I lived there).

1) yes I would rather have sales tax and property tax than income tax
2) Sales tax is also tax deductible at the federal level