Austin, TX--There's a tax reckoning across Austin and the taxman is coming with a vengeance. He's coming with hard-core declarations and big demands on your wallet. Pay up or else seems to be the whip he's cracking. As one of the hottest markets in the country, Austin is in a special pocket that continues to see huge price increases in the housing industry. Austin likes to keep things weird, but this may be too weird for residents to stomach. Two main ideas seem to have the biggest impact on the housing market.
1. The tech boom of big companies moving to Austin.
2. California residents escaping high prices there and buying sight unseen for a quick high offer close.
Realtor Cord Shiflet says:
"They could probably get $25 million for it, if they let go of it," he said of one property.
"March through June, we had 19 buyers that came that were up to $20 million," he told correspondent Janet Shamlian. "We've never seen that before. I lost count after June. And if I had to guess, I would say we had 40 buyers that were $20 to $50 million."
CBS This Morning reports that it's hard to close a deal with many competing offers from buyers who are eager to purchase a house they love:
"We had a house go on the market last week up near Round Rock, $400,000 house. It had 96 offers in two days," Shiflet said. "Buyers can't compete with that. I mean, if you're not all-cash, ready to close, you're not going to get it."
According to Zillow, home prices in Austin are up more than 18% in the last year, creating a shortage of affordable housing.
Where do all those tax dollars go?
One of the largest taxing entities is the school system. The same ISD that largely underperformed during the pandemic and is still ongoing. The Austin ISD continued to collect its share of taxes during the pandemic when schools were shut down for most of last year and many teachers were disgruntled about going live to educate students.
The Texas Tribune says:
"Some of that shift in cost can be attributed to rising property values during a prosperous time in the state’s economic history. When more money comes in from local school property taxes, the state gets a break and doesn’t have to pay as much to keep the schoolrooms open. Some, like former state Rep. Kent Grusendorf, who works on education policy at the conservative Texas Public Policy Foundation, think the local tax is functionally identical to a state property tax — one that is effectively controlled by the state of Texas."
What does this mean practically for Austin residents?
The state of Texas pays less to educate students and homeowners pay more in real estate taxes.
As an Austin homeowner myself who closed on my home in March of 2020, I've received my notice of appraisal from the Central Appraisal district with notice of a 21% increase in taxes. Having purchased my home recently, exactly 5 hours before Governor Abbot's shelter-in-place order went into effect for Austin, we were able to move if we did so without any help from others.
When I received my increase of tax notice I followed the instructions to read more information online. The verbiage said if your purchase price was lower than your proposed taxes for the coming year, and you purchase between January 1, 2020 and March 31, 2021, to use the express appeal process to submit your closing statement.
Here's the website for any Austin resident who wants to follow the steps for themselves: https://forms.zohopublic.com/williamsoncentralappraisaldist/form/ClientDetails/formperma/Rfrh_I-2jg_JvV8_msFWkjyGYqKXGatC0sKBk8WHV0Q
The logical assumption, based on website verbiage, is that the tax entity would use the home purchase price as the tax base. But, when I followed the process I received notice that my home actually went up in value and if they were going through the process today it would be valued at more than $100,000 higher than the original suggested amount.
That's a tough swallow for most Austin residents. Residents who paid full taxes last year for their kids to go to school and largely had to school kids themselves. It's time for Austin to revisit the relationship between real estate and the Independent School District.
Austin likes to keep things weird, but this may be too weird for residents to stomach.