Property taxes in Texas nearly quadrupled between 1986 and 2006. You may think population growth and inflation had something to do with that, and you’d be right. But inflation and people moving to Texas account for only about half of that increase.

The steep rise did not go unnoticed by Texans or our elected officials. The Texas Legislature passed school property-tax relief that was phased in over the last two years. Though that reduction was much-needed, homeowners are still paying hefty property tax bills. With increased appraisals and continued rate hikes, many people are already paying higher tax bills than before the rate reduction went into effect.

Knowing that the property-tax burden still weighs heavily on property owners in our state, Texas Realtors created a task force to study property taxes and appraisals. This group met many times over the past year. They heard from numerous experts, including a handful of chief appraisers, a former state comptroller and four current senior staffers in the comptroller’s office, several state senators and representatives, and tax analysts.

After serious study and lengthy discussion, that task force has issued a report with a list of recommendations. Texas Realtors will continue to discuss these suggestions as they formulate their positions going into the 81st Texas Legislature. Here’s a peak at some of those ideas:

Separate the appeals process from the appraisal process to ensure that appeals are handled fairly and uniformly;

Support creation of a new state agency to oversee central appraisal districts;

Put measures in place so that taxing authorities don’t realize more revenue simply because property values increased;

Create a system with automatic rollback elections for cities and counties when they impose a certain tax rate, like what school districts must currently follow; and

Support an enhanced process for binding arbitration for homeowners who disagree with the results of their appeal.

The task force came up with other recommendations as well, including reviewing all possible solutions for replacing the current maintenance and operations school property tax with some other funding mechanism. The task force also proposed that a comprehensive review of state spending should accompany the discussion about tax structure.

For updates on the progress of the Texas Association of Realtors in pursuing these tax-relief measures, contact your local Realtor, or visit www.TexasRealEstate.com.

Source: Texas Association of Realtors.

Real estate is the third most important private industry in Texas, according to the latest data from the U.S. Bureau of Economic Analysis.

The real estate industry accounted for 7.8 percent of Texas' total gross domestic product (GDP) in 2006, ranking behind manufacturing (13.4 percent) and mining (9.8 percent).

"The GDP is the broadest measure of economic importance when looking at the overall economy," said Dr. Ali Anari, a research economist with the Real Estate Center at Texas A&M University.

Anari studied the real estate industry’s role in the state's economy and compiled his findings in the Center’s report, Texas Real Estate Industry Review, 2008.

Other highlights from the Center's report:

• Every $1 million of revenue in the Texas real estate industry generates just over half a million dollars of revenue in other parts of the state economy.

• Every $1 million of revenue in the Texas real estate industry generates 5.16 jobs in the state real estate industry and five jobs in other industries.

• $1 million of sales tax in the state's real estate industry leads to a total of $1.26 million of sales tax in the Texas economy.

• The real estate industry has the largest proportion of self-employed persons of all industries.

• Nearly 552,000 persons, including self-employed individuals, were working in the Texas real estate industry in 2007, representing 3.9 percent of statewide employment.

• Texas commercial real estate in Texas was valued at more than $251 billion in 2007. Texas industrial real estate was valued at more than $85 billion.

• Taxes paid by the state's real estate industry accounted for 18.7 percent of total Texas business taxes in 2007.

• Real estate owners paid an estimated $24 billion in school tax in 2007.

Source: Real Estate Center at Texas A&M University

Back to the top

The Houston housing market continued to feel the effects of the troubled national economy in October and residual business interruptions caused by Hurricane Ike. Monthly data released mid-month by the Houston Association of Realtors (HAR) reflects improvement from market performance in September, when Ike derailed thousands of real estate transactions. However, the number of property sales across the greater Houston area declined last month when compared to October 2007, with sales of single-family homes down 20.1 percent.

The average price of a single-family home dipped 1.6 percent last month to $194,607 from $197,751 in October 2007. That still marks the second highest average price for an October in Houston. At $142,000, the median price of a single-family home in October fell 2.7 percent. Year-to-date home prices are still up compared to 2007 and national figures show Houston continues to fare better than many other U.S. markets, some of which have experienced depreciations of as much as 40 percent.

Sales of all property types for October 2008 totaled 4,962, down 21.6 percent compared to October 2007. Total dollar volume for properties sold during the month was $943 million versus $1.2 billion one year earlier, a 22.9 percent decline.

"Houston remains the envy of real estate professionals around the country, who discussed their sales and pricing concerns with us at this month's National Association of Realtor conference in Orlando," said Michael Levitin, HAR chairman. "Month's inventory in Houston is about half the national average, and on a year-to-date basis, prices here are up about three percent from 2007. Nonetheless, we must watch closely to see what further action the federal government may take to stimulate the economy, particularly on behalf of homeowners."

Source: Houston Association of Realtors

Back to the top

Everyone knows that in most cases you'll need at least a small down payment to purchase a home -- but that's not all. You'll also need to come to the transaction with money for closing costs, which can be significant.

Your lender is required by the Real Estate Settlement Procedures Act (RESPA) to provide a good faith estimate of your closing costs. This estimate is an itemized list of fees you'll pay to get a loan.

Mortgage closing costs cover things like appraisals, attorney fees, title insurance, taxes, and other expenses associated with getting a loan.

A property appraisal is generally required by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property. An appraiser is needed to make this determination.

A survey of the property is usually required to verify that boundary lines for your property, easements, and fences are where they’re supposed to be.

You're about to buy the home -- after that, you'll own it, right? Well, in some cases, there may be a lien on the property, or some historical dispute to your right of possession. A title search fee is paid to the title company for doing detailed research on the property records for your home. The title company will look at prior deeds, court records, property and name indexes, and many other documents. This is to ensure that there are no liens or problems associated with your ownership of the property.

You'll need homeowner's insurance, which covers the costs of rebuilding should an insured event occur. In some cases, your first year's insurance may be paid at closing.

Other fees that you may see include attorney fees, courier fees, pest inspection, plat drawing, underwriting, flood-zone certification, document preparation, and others.

If there are any fees you do not understand, ask your Realtor to explain, and if necessary, investigate. Also, be sure to compare fees, not just interest rates, when comparing offers from lenders.

Source: Texas Association of Realtors

Back to the top