Chief appraiser says market will determine whether code rewrite changes property values
Wednesday, December 4, 2019 by Ryan Thornton
City Council got some clarity Tuesday on the issue of property valuations under the Land Development Code rewrite.
Chief Appraiser Marya Crigler of the Travis Central Appraisal District joined Council’s work session to offer context to a conversation Council members began last month. Addressing the main point of contention over the link between zoning entitlements and property taxes, Crigler told Council that the market will ultimately determine whether or not additional entitlements will lead to higher valuations for specific properties.
In theory, more entitlements could indirectly lead to higher valuations of nearby properties over time, but they could also lessen property values, Crigler explained. The key information for determining appraisal value, she said, is not a property’s zoning, but rather what buyers are generally willing to pay for a similar structure on a similar lot.
Crigler said it will take between three and five years for market data to show whether zoning changes in the proposed transition zones will positively or negatively affect nearby property values. While many are concerned that increased entitlements for things like density, height or land use would increase land values in their neighborhoods, she said the market could also determine that those elements have a negative impact on land or home value.
However, state law guarantees that home value is calculated based on the value of similar homes and not on zoning or other types of developments. The district would therefore need to determine and explain the other contributing factors in order to appraise a home above or below the norm.
“It could be that those areas or those properties on the transition zone have a better view,” Crigler said.
As a general rule, Crigler said a single-family home that is located within a transition zone and given higher entitlements will still be valued comparably to a single-family home not located within a transition zone. And if that home were sold at a higher than average price and redeveloped to a higher use, the sale price would no longer be part of the pool that is used to determine other single-family home values.
Crigler conceded, however, that there is no way to determine whether or not people will wish to pay more for single-family homes due to their location near or within a transition zone. The homestead exemption only protects homeowners from the potential impact of higher zoning entitlements and valuations based on a specific location; it doesn’t offer protection from a general increase in market prices.
If it becomes apparent over time that a substantial number of single-family homes in transition zones are selling for more than single-family homes without those entitlements, Crigler said the district would likely try to determine why that is the case and potentially incorporate those sale prices into valuations of other homes within transition zones. But due to the increasing difficulty of gathering adequate sales data, she said the district will “probably be much more conservative” with its adjustments going forward.
On the other hand, Crigler said, home prices are likely to continue increasing if nothing is done to enable more housing supply. For the last nine years, Austin/Travis County has been “well under what is considered to be a stabilized market,” she said.
In a stabilized market, it would take six months to sell every existing home with no added inventory. The Austin/Travis County housing market, Crigler said, has kept only between two and three months of inventory for years, skewing the market in favor of sellers. “There’s a lot of competition for the same houses and people are willing to pay more and more for the same houses.”
Crigler was not able to answer every question from Council or remedy every worry, returning repeatedly to the sovereignty of the market in determining how the code’s zoning changes play out. Mayor Steve Adler, however, was satisfied with the discussion. Listing off numerous nuances inherent to the appraisal process in rapid succession, Adler said both the issue and the discussion were “crystal-clear.”
Photo by Matthew Rutledge made available through a Creative Commons license.
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