Most Dallas County home values to decrease, stay same

Most Dallas County home values to decrease, stay same




07:32 AM CDT on Friday, April 23, 2010

By KEVIN KRAUSE / The Dallas Morning News

kkrause@dallasnews.com



For the second year in a row, most Dallas County residents will either see no change or a decrease in their home values.



When appraisal notices are mailed in about two weeks, only 20 percent of the roughly 360,000 residential properties reappraised this year will increase in value, according to the Dallas Central Appraisal District.



Sixty percent will lose value, while 20 percent will see no change. The roughly 280,000 residential properties that were not reappraised this year also will not change.



Last year, 55 percent of residential properties that were reappraised decreased in value.



"The market is not as bad as last year. But we're still seeing the lingering effects of foreclosures," said Cheryl Jordan, spokeswoman for the appraisal district.



While this is good news for most homeowners because it could mean lower tax bills, it's putting pressure on the budgets of local governments that rely on property tax revenue. Dallas County is expecting a $56 million shortfall, while the city of Dallas is anticipating nearly twice that.



Dallas County officials have planned for an overall drop in property values this year of 8 percent to 9 percent when the tax roll is certified in July. Last year, property values fell by a little more than 3 percent – the largest drop since 1992.



If the county is unable to close the budget gap, commissioners might consider a tax rate increase. That would mean higher property taxes for some homeowners even if their values don't change this year.



Jordan said state law requires the district to reappraise all properties in the county at least once every three years.



The appraisal district, she said, relies on an annual study of sales figures by the University of Texas at Dallas to target certain areas of the county where values appear to be too high or low.



Appraisal notices are being sent only to homes that were reappraised this year, regardless of whether there was a value change, she said.





Foreclosures' effect



In his presentation to Dallas County commissioners Tuesday, Chief Appraiser Ken Nolan said the southern part of the county still hasn't recovered from the wave of home foreclosures that hit last year.



Nolan also said affluent communities like Highland Park and University Park are now starting to see foreclosures for the first time, which he predicted will continue through 2011. Home values in those areas are expected to drop for the first time in 20 years, he told commissioners.



The Park Cities are littered with for-sale signs and vacant lots where houses were torn down to make way for mansions that were never built, he said. Those teardowns, which were rampant a few years ago, have come to a halt, Nolan said.



Holland Brown, a tax consultant with North Texas Property Tax Services in Dallas, said affluent homes didn't see many value reductions last year because there weren't as many sales; homes sat on the market longer.



Since the appraisal district relies on sales to set values, the true value of the homes is only now becoming known, as more sales occur, Brown said.



Chris Bawcom, another partner in the firm, said the majority of the 60 percent of homes that will decrease in value this year most likely hadn't been reappraised in a while. He said he thinks that as market conditions improve, most homes next year will see no value change.



"I think it will start to flatten out after this year," Bawcom said. "We won't see as many decreases."



Coppell, an affluent suburb in the northwest part of the county, is generally the only place where new homes are being built, Nolan told commissioners this week. He said residents there should expect value increases this year.



But overall, home building in the county has slowed substantially. Residential building permits are down 46 percent this year, Nolan said.





Relief to some



For homeowners who have endured years of value increases, the news of falling appraisals again this year is a relief. In 2008, preliminary values rose about 13 percent. In 2007, the increase was 20 percent.



But for property owners trying to sell their property, the static or falling values aren't good news.



The decreased values don't mean there will be fewer protests this year. Many people are expected to protest, arguing their home value should have decreased or didn't decrease enough.



"We decreased a lot of values last year. But people still came in and said it's not enough," Jordan said.



The ability of homeowners to protest online for the first time this year is expected to drive that increase in value challenges, officials said.



While the worst may be over soon for the residential market, damage to commercial properties has yet to be seen, officials said.



Nolan told commissioners that commercial property values will decrease between 5 percent and 15 percent. He said he won't know for sure until owners present evidence during the summer protest season.



And the market could worsen if the expected wave of commercial foreclosures materializes, Nolan said.



BY THE NUMBERS: REAPPRAISALS

The Dallas Central Appraisal District is required to reappraise properties at least once every three years. Of the residential properties looked at this year, most will decrease in value or see no change, similar to last year.



RESIDENTIAL



Total accounts: 640,000



Reappraisal notices to be mailed this year: 360,000



Value decrease: 60 percent



No change: 20 percent



Value increase: 20 percent



COMMERCIAL



Total accounts: 73,000



Reappraisal notices to be mailed this year: 42,000



Value decrease: 10 percent



No change: 80 percent



Value increase: 10 percent



NOTE: Numbers are approximate.



SOURCE: Dallas Central Appraisal District


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