Tarrant Disconnect – Home Values Up 2 to 4%; Tax Assessments Up 23.6%

Tarrant County property owners are stunned by the 2023 notices of assessed value. The greater Dallas metro area sale prices increased by 3.9% and Tarrant County median home sale prices fell 1.5% in Tarrant County from January 2022 to January 2023, but 2023 property tax assessment are up 23.6%. The typical Tarrant County home has a tax assessment 7.1% higher than market value. Because the typical Tarrant County home is assessed 7.1% higher than market value, homeowners face property taxes $671 higher than if their home was assessed at market value. This is before considering property tax protests, exemptions and tax rate compression. Property tax assessments for owners of homes and commercial properties are generated by Tarrant Appraisal District (TAD).

Home Price / Assessment Summary

Tarrant County Single Family Median

The Tarrant County median home price fell from $325,000 in January 2022 to $320,000 in January 2023, a 1.5% decline based on a study of 24,141 Tarrant County homes conducted by O’Connor. The median time adjusted sales price was $320,000 but the median 2023 property tax assessment from Tarrant Appraisal District is $344,845. Based on an assessment of $24,845 ($344,845 – $320,000) in excess of market value and a 2.7% tax rate, homeowners will pay an extra $671 in 2023 property taxes. This estimate of an additional $671 in property taxes is before property tax protests, homestead exemptions, and tax rate compression.

Why Are Tax Assessments Off by 7.1%?

Tarrant County home sale price trends in 2023 included a 15.4% rise during January 2022 to June followed by a 14.7% decline from June to January 2023. The median sales prices for key months are summarized below:

Month Median Sales Price
January 2022 $325,000
June 2022 $375,000 – up 15.4% from January 2022
January 2023 $320,000 – down 14.7% from June 2022

Effective Date of Tax Assessment is January 1 of Each Year

The effective date for 2023 property taxes is January 1, 2023. Taxes are paid in arrears in Texas, so this assessment is for taxes due in January 2024. There is no ambiguity regarding the effective date. Texas Tax Code 23.01: Except as otherwise provided by this chapter, all taxable property is appraised at its market value as of January 1.

2022 Sales Price Trends Atypical and Do Not Fit Appraisal District Modeling Tools

2023 Texas property tax assessments are the most egregiously overvalued ever in the 178 years Texas has been a state. Before 1980, tax entities in Texas performed their own assessments and were typically well below market value. In 1980, county appraisal districts (CADs) were created, and they have historically valued residential property at around 93 to 99% of market value. This tax year, excess property assessments are setting record highs. O’Connor has studied data released by multiple county appraisal districts and the results are not good for Texas property owners. Flawed methodology has led to assessments that are through the roof, which results in record extra taxes.

County Median Level of Assessment Median Sales Price (1) Median 2023 Tax Assessment Extra Taxes Due to Over Assessment (2)
Brazoria 111.8% $280,000 $333,830 $1,453
Bexar 104.6% $282,073 $297,325 $412
Collin 101.9% $490,000 $498,759 $236
Fort Bend 108.1% $370,040 $402,442 $875
Galveston 112.5% $298,900 $338,290 $1,064
Harris 116.2% $275,008 $322,400 $1,280
Hidalgo 107.4% $200,000 $210,346 $279
Lubbock 97.7% $235,000 $229,814 ($140)
Montgomery 103.5% $321,250 $335,680 $390
Nueces 122.7% $229,500 $282,915 $1,442
Tarrant 107.1% $320,000 $344,845 $671
Travis 111.8% $500,000 $563,156 $1,705
Williamson 96.7% $428,595 $417,498 ($300)
(1) Time adjusted sale price as of January 2023
(2) Extra taxes based on 2.7% tax rate and before homestead exemption and tax rate compression,

Tarrant County House Value

Every homeowner in Tarrant County should protest in 2023. Based on O’Connor’s analysis, 76% or more than three quarters of Tarrant County residential property is assessed above market value. Fortunately for homeowners, the appeal process offers a legitimate means to achieve relief and we anticipate record number of property owners will take full advantage of this mechanism to counter these excessive assessments. The protest deadline is May 15th. Homeowners who file a protest can obtain a free hearing evidence package upon request; simply send a note to your appraisal district asking that it be mailed to you.

Tarrant County - House Market Value

Tarrant County homeowners across all property value ranges are feeling the sting, but the most considerable escalations in value are for properties in the $1M to $1.5M range and those over $1.5M. Increases in assessments are up unbelievably by 30.5% and 39.6% respectively. Historically, property owners of high-valued properties are more likely to protest and 2023 stands to be no exception, with record numbers of protests expected.

Tarrant County - Assessment Living Area

Residential property owners in Tarrant County are seeing a rise in value assessments in direct proportion to the increase in living area by square footage. That is to say, the greater the size of the home, the higher the spike in assessed value percentage, with homes over 8,000 sq. ft. receiving 2023 values up a mammoth 34.8%!

Tarrant County Single Family Year Built Range

Both ends of the spectrum are winning if the contest is to achieve the highest percent value increase for 2023. Single-family homes in Tarrant County built before 1960 show assessments up 23.5% and homes constructed in 2001 and since have an even greater surge with 2023 values up 26.6%.

Tarrant County Commercial Property Values are Up as Commercial Sales Lag

Tarrant Appraisal District has proposed commercial assessed value increases that average over 39% for apartments, office, warehouse, retail, and hotel properties. This is above the average increase when comparing Tarrant County to Brazoria, Bexar, Collin, Dallas, Denton, Fort Bend, Hidalgo, Lubbock, Nueces, and Harris counties. O’Connor is currently evaluating data from additional counties and will release more findings as they become available.

Commercial Property 2023 Assessment % Increase by Property Type by County

Property Type
County Apartment Office Retail Warehouse Hotel Total
Brazoria 68.80% 43.70% 75.10% 83.70% 42.70% 65.50%
Bexar 22.50% 13.90% 26.20% 22.90% 16.90% 21.90%
Collin 45.50% 15.10% 25.20% 28.00% 49.60% 31.70%
Dallas 35.42% 19.22% 14.06% 11.97% 53.61% 27.79%
Denton 63.01% 28.65% 33.31% 103.37% 63.61% 49.22%
Fort Bend 47.00% 33.20% 35.70% 23.80% 19.30% 31.10%
Hidalgo 58.30% 9.60% 18.40% 31.20% 70.60% 25.10%
Lubbock 28.90% 13.70% 28.70% 40.40% 26.30% 23.30%
Nueces 20.10% 15.40% 14.50% 18.90% 26.90% 18.70%
Tarrant 39.70% 10.55% 22.73% 20.91% 79.03% 39.09%
Harris 24.50% 12.60% 16.10% 23.80% 18.30% 19.50%
Average 41.25% 19.60% 28.18% 37.18% 42.44% 32.08%

Tarrant County is higher than eight of the other counties evaluated with an average commercial assessment increase of 39.09%. When compared to other counties within the Dallas metropolitan area, Tarrant County is behind Denton County, where commercial assessed value is up an average of 49.22%. However, Tarrant County has higher average increases in commercial value assessments than Collin County and Dallas County who are up 31.70% and 27.79%, respectively. Hotel property owners in Tarrant County are likely the most appalled at the 2023 assessments. Tarrant County hotel properties are up in assessed value by over 80%!

Tarrant County - commercial Property

There is a gap of almost 50% between the estimated commercial values reported in the Green Street Commercial Price Index (April 6, 2023) and Tarrant County commercial assessment increases for 2023. Green Street shows values down while TAD shows values up 39%.

Tarrant County - Commercial Property Value Trends

While the Tarrant Appraisal District assessment increases for commercial properties are enormous, they are inconsistent with the trends for commercial property values both in Tarrant County, Texas, and the U.S. Commercial real estate values plummeted in 2022 due primarily to large increases is capitalization rates. (Capitalization or cap rate move inversely with value. The higher the cap rate, the lower the value. The rates for 10-year treasuries rose from 1.76% to 3.55%. Cap rates increase when 10-year-treasuries increase.)

There is gulf between the top price commercial property buyers are willing to pay and the amount the sellers can accept, and this is creating a slump in the commercial real estate market. Sales are off between 70 to 80%. Commercial owners are only selling when forced, with most choosing to wait out the market for more favorable conditions.

Inflation, higher insurance costs which have hit coastal areas the most, and higher property taxes are the primary factors influencing this sluggish commercial real estate market. Given these trends, it is hard to see how Tarrant County can rationalize the substantial increases in commercial property tax assessments.

Tarrant County - Commercial

There is no reprieve for Tarrant County commercial owners with property of any age range, however value assessments are up the most for property constructed in 2001 and later. These values are up a whopping 35.7%. Owners with property built between 1961 and 1980 are similarly grieved with values increasing by 35.4%.

Tarrant County Commercial Value Taxable Range

Tarrant County commercial property owners with property in the range of $1M to $5M may think they are stinging from seeing their assessments go up by over 20%, but owners with property valued at $5M and higher are seeing sky-high assessed values of 37.4%.

Tarrant County - Apartment

With an average increase of 39.7% for assessment on Tarrant County apartments, it shouldn’t be a shock that there are property owners receiving even higher increases for 2023, but that is little comfort to those who own property built between 1961 and 1980. Assessed values for this age range are up over 40%.

Tarrant County - Office

Tarrant County commercial office property owners are seeing increases below average for commercial property at around 10% increase in assessed values. When reviewing office property by age range, it is again property constructed in the era of 1961 to 1980 where values have gone up the most.

Tarrant County - Retail

Breaking from the trend, it is the properties built prior to 1960 where retail commercial properties in Tarrant County are seeing the largest bumps in value assessments. Owners of these retail properties face increases of over 35%.

Tarrant County - Warehouse

Tarrant County warehouse assessments are up an average of 21.1% for 2023. Property owners with the most substantial growth to their assessed values are those with warehouses built before 1960 (up 28%) and those with newer warehouses built in 2001 and since (up 24.7%).

Tarrant County - Office

O’Connor has analyzed office property value increases by property sub type and while this group of commercial properties is not seeing the radical hikes seen by other commercial properties, medical offices are clearly hardest hit among office property owners. Tarrant County medical office properties are up 15.4% for 2023.

Tarrant County Apartment Sub Type

At an average increase of over 40%, Tarrant County apartment property owners are likely to be more than just a little annoyed. This doesn’t begin to describe the feeling of property owners with senior living apartments, where assessed values in 2023 have skyrocketed almost 53%!

Tarrant County Retail Sub Type

When breaking down the Tarrant County increase in values by retail property subtypes, neighborhood shopping centers are being clobbered with assessed value increases of 25.3%

Tarrant County Warehouse Sub Type

The average rise in assessed value for Tarrant County commercial warehouse property is around 19%, but when comparing self-storage warehouses and standard warehouses, there is a distinct difference in the level of increase, with increases of 11.9% and 20% respectively.

The protest deadline is May 15, 2023. Whether you are a residential or commercial property owner, protest now to be certain you don’t miss the deadline. There are three steps to the appeal process: informal, formal or appraisal review board, and judicial. O’Connor expects record reduction in Tarrant County tax assessments for 2023.

Remember, you do not have to accept the new appraisal value, it is a property owner’s right to appeal. Don’t pay more than your fair share. Record levels of property tax protest are expected to follow.

About O’Connor:

O’Connor is among the largest property tax consulting firms in the United States, providing residential property tax reduction services in Texas, Illinois, and Georgia, as well as commercial property tax reduction services across the United States. O’Connor’s team of professionals possess the resources and market expertise in the areas of property tax, cost segregation, commercial and residential real estate appraisals. The firm was founded in 1974 and employs more than 600 professionals worldwide. O’Connor’s core focus is enriching the lives of property owners through cost effective tax reduction.

Property owners interested in assistance appealing their assessment can enroll in O’Connor’s Property Tax Protection Program ™ . There is no upfront fee, or any fee unless we reduce your property taxes, and easy online enrollment only takes 2 to 3 minutes.

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