On Monday, the City of Austin filed suit against the Texas Comptroller's Office over the state's ad-valorem tax system.

On Monday, the City of Austin filed suit against the Texas Comptroller’s Office over the state’s ad-valorem tax system.

The end of sales price non-disclosure might be near, if the suit filed by the City of Austin against the Texas comptroller’s office is any indication. Austin Mayor Steve Adler, who submitted the 10-page suit on Monday, argued that the ad-valorem taxation system is unconstitutional because it isn’t “equal and uniform.”

Texas is one of the few states that, instead of relying for sales figures for tax purposes, employs an appraisal system. However, with skyrocketing values for residential properties in Travis County, commercial valuations haven’t grown nearly so much. It’s becoming a big problem, the suit suggests.

“The lack of sales disclosures has made it nearly impossible for appraisal districts to comply with their statutory and constitutional duty to assess all properties at market value so that taxation is equal and uniform,” the lawsuit states.

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Dallas Q3 Housing Report

During the course of the year, spring and summer tend to be the hottest seasons for home sales, with the pace of closings slowing as fall takes hold and school starts. That’s not what happened in Texas during the third quarter of 2014, says the Texas Association of Realtors Quarterly Housing Report, which was released just now. Additionally, inventory increased this quarter each month, continuing to fuel brisk sales in some areas.

In Dallas, though, sales are down year-over-year by 2.36 percent, while median home prices are up 8.73 percent and inventory is down precipitously from Q3 2013 by 10.71 percent. Logic says that, until inventory increases, home prices will continue to increase and sales will continue their slow, downward trend. Still, some areas are seeing increases (Midway Hollow, Lakewood, Lake Highlands, West Kessler) while some areas and price ranges remain sluggish. All real estate is local, y’all!

“The third quarter of the year is typically a much slower sales period – summer is over, school has started and families are staying put for the upcoming holiday season. That was not the case this year,” said TAR chairman Dan Hatfield. “Texas home sales continue to slightly exceed last year’s levels. If this trend continues, 2014 will surpass 2013 to become the second-best year ever for Texas real estate.”

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Downtown San Antonio’s Dolorosa Bridge as seen from the Riverwalk

I have a few friends that moved to San Antonio after college. One of them is an architect and the other was a medical student. Both were initially bummed about moving to the Alamo City. It was so different from Houston and Austin and Dallas. They weren’t sure they would like it. They didn’t know a lot of people there.

I now see them post cool photos of cycling trips, historic buildings, trips to local watering holes and parks … they either learned to love San Antonio, or they busted their bottom to build the momentum the city needed to be a cool place. And you know what? More and more Millennials are doing the same thing, opting for San Antonio and Houston over Dallas and Austin according to Trulia’s dissection of U.S. Census Bureau surveys.

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YFZ Ranch

You’ll recall the hullabaloo caused by the raid on Yearning For Zion Ranch in Eldorado, which precipitated the arrest and conviction of FLDS leader Warren Jeffs on charges of sexual assault and aggravated sexual assault. Women in long prairie-style pastel dresses with whole hoards of children and babies were loaded on buses by child welfare officials after reports of underage marriages came through.

While the 2008 raid and investigation cast a spotlight on the YFZ Ranch and the small West Texas town just south of San Angelo, it did more to uncover the foreign lifestyle the fundamentalist Mormon followers had on the 1,600-acre property, including the several log homes surrounding the 3-story temple on the compound, which housed many families (some of which were allegedly polygamist, though that is yet to be confirmed). It also cast a glaring light on the shortcomings of the state child protective services, but that’s a whole different subject entirely.

Polygamist Retreat

Still, we’ll have to see what will actually happen to the ranch, as some YFZ residents (a pilot who frequently flies over the site estimates between 10 and 80 followers still remain) have made efforts to pay the ranch’s lofty outstanding tax bills.

What we’re wondering is, if the state is successful in its attempts to seize the ranch, what will it become? I think it would be an interesting investment for anyone who wants to start a camp or commune, maybe even a self-sustaining farm. One thing is for sure: Thanks to the shale gas and domestic drilling boom, there’s a shortage of available housing in West Texas, and these units could be an interesting addition to the mix. Texas Monthly writer Katy Vine has a few ideas:

After the property has been vacated, law enforcement will begin taking inventory and the compound will be sold. This raises the question, Who will buy it? Oil-field companies needing housing? A group needing a religious retreat facility? Some in town have imagined a boy’s home or some other nonprofit purchasing the land—situations that would prove problematic for the local school district, which has grown to depend on the ranch’s taxes for 5 to 10 percent of its budget. A few, noting the original watchtower and the community-living structures, have even proposed a minimum-security prison. That would be one way to circumvent a marketing challenge.

Lance Armstrong Lake Austin

We knew 2013 was a banner year for Dallas Realtors as our market pulled itself up by its bootstraps and posted post-recession growth that amazed even the most seasoned brokers. But according to research from the Real Estate Center at Texas A&M University, the market posted year-over-year numbers that showed Texas flexing its economic muscles like never before.

Numbers are up across most demographics, with condo sales, luxury sales, and investment properties getting snatched up at record paces.

“The Texas real estate market showed strength in sales volume and price all year long and the fourth quarter was no exception,” said Texas Association of Realtors chairman Dan Hatfield. “We’ve now seen year-over-year increases in both sales volume and price every quarter for more than two years. This makes it clear – demand for Texas homes is strong and enduring.”

We agree, as the Texas tech industry continues to boom in Austin, pushing up prices and demand reminiscent of the Bay Area’s unfettered growth. High salaries and limited inventories — the statewide numbers show a precipitous drop to a 3.6-month supply of homes (6.5 is recommended for balance between supply and demand) — have resulted in huge price increases. But, as Candy pointed out, not all growth is good for everyone. As prices increase, housing affordability decreases, pushing out lower wage earners.

But Austin’s growth isn’t isolated, as every metropolitan area in Texas posted sales volume and price increases in the fourth quarter of 2013. According to the report, 60,998 single-family homes were sold in the state during the fourth quarter — 6.78 percent more than fourth quarter 2012. Median home prices increased 8.48 percent from fourth quarter 2012 to $172,600, and the average home price was a whopping $226,216 — up 8.88 percent from Q4 2012.

Real Estate Center economist Jim Gaines Ph.D. explained: “One thing that is notable about the price increases seen in the fourth quarter is that they are relatively consistent across the state. Those increases are being seen in markets of every size, not just in the largest Texas markets, so that indicates broad-based appreciation for Texas real estate.”

“Demand for Texas homes in 2014 should continue, but it’s possible that a shortage of inventory could inhibit sales volumes,” Gaines added. “The steady price increases we’ve seen recently should help alleviate that, enticing more sellers into the market, but buyers should continue to expect to compete for desirable properties.”

Interesting outlook for 2014. What do you think? Will the growth price-wise lure more sellers to the market?

Kathryn Roan 1

Is there a more perfect last name for an equestrian than “Roan”? Seriously, we think Kathryn Roan, an Ebby Halliday Realtor with Texas Equestrian Properties, was made for this business. With only a year under her belt as a Realtor, Kathryn already has excellent perspective on the market.

You’ll be seeing more of Kathryn on SecondShelters.com, and occasionally on CandysDirt.com, too, as our farm and ranch correspondent. We’re thrilled to have this talented Realtor and horse-lover on our team.

Want to find out about this lovely gal? Our Q&A with Kathryn is after the jump!

CandysDirt.com: Where are you from?

Kathryn Roan: I was born in Midland, Texas, and raised in Dallas, graduating from Highland Park High School in a year I’m not willing to share!

CD: How did you get into real estate?

Roan: After spending 10 years in the oil and gas industry, it was time for a career change that involved less traveling. The time frame from when I decided to go into real estate to the point I had my license was about six weeks. When I interviewed with Ebby Halliday Realtors, I had yet to start my real estate classes. It was all a bit spontaneous.

CD: You specialize in farm, ranch, and equestrian properties with Ebby Halliday Realtors. Tell us: What are some unique challenges that Realtors face in this market?

Roan:Farm and ranch owners are a breed all their own. They don’t respect money, labels, or high heels. They respect hard work and a willingness to get dirty. On a recent listing appointment, to which I had worn boots and jeans, one of my current sellers said to me, “Our last Realtor showed up in heels and stepped around all the horse poop. We didn’t like her.” A rural realtor has to understand that the land and the barn is more important than the house. If the land doesn’t “work,” it doesn’t matter if the house is the Taj Mahal. Sometimes a client loves the land, and hates the house … or loves the house and hates the land. You have to find the right combination of both.

CD: Where is home for you in Dallas?

Roan: I live on an 8 acre horse farm in a community east of Rockwall called Poetry, TX. It’s a darling horse-owning paradise on sandy loam soil, earning the area the nickname “Little Aubrey.” In true horse person fashion, I purchased for the land and not the house, which we all lovingly refer to as “The Shack.”

Kathryn Roan 2

CD: And you drive a … let me guess, Mercedes Benz?

Roan: I had a Mercedes in college. A dark gold 1985 turbo diesel. It looked like a baby Rolls and I LOVED it. But alas, practicality wins the day and I drive a Chevy 3500 dually diesel for showing big property and pulling the horse trailer. Not to be left out, my daily driver, a Nissan Altima, has driven a few properties! Only got it stuck once …

CD: What’s your favorite ‘hood in Dallas and why?

Roan: I really do love the Rockwall area. There is something to the lake-culture-meets-East Texas thing. People are just nicer on this side of the lake! It’s very city-meets-country.

CD: What was your best/highest sale?

Roan: A lakeside house in Rockwall.

CD: Likewise, what was your most challenging or memorable transaction?

Roan: My most memorable thus far was a property that had quite a few different personal issues going. My sellers did not get along, and the buyers were from out of state. The house had been vacant for over a year, so I ended up doing a lot of clean-up on the house myself, and went through about 30 cans of wasp spray. I was elated and relieved to get that one closed!

CD: How quickly have you ever turned a house?

Roan: Not very. Farm and ranch property takes time. Its extremely rare to see a property sell in a matter of days like you’ll see in the city.

CD: How much did you sell last year?

Roan: Zero. I was still working in oil & gas last year!

CD: What words of wisdom do you often share with clients?

Roan: Not to panic that they will have nowhere to go when their house sells. Moving a farm to a new farm is a production. You cannot just pack your boxes and call a moving van. There are often horses, cows, and farm equipment to consider. I explain their options and am happy to start looking for property before they have a contract on their current home, so they’re reassured that they won’t be standing on the curb holding leadropes on closing day.

CD: If you ever change careers for an encore you’ll…

Roan: Probably go back to oil & gas.

CD: Do you have a second home? If so, where?

Roan: I do not. But if I did, it would be 100 acres of sandy loam soil, all pipe fenced, with a 30-stall barn and a huge indoor arena. A girl can dream, right?

I asked this yesterday: why is our market so darn tootin’ healthy when others are not? David Brown over at MetroStudy gave me some good answers.

First of all, Case-Shiller is so like yesterday’s news. This is one reason why I don’t like this index and warn y’all not to get your panties in a wad when it comes out. The release we get at the end of May is for Jan. Feb. March closings. Those were negotiated back in the fall of 2011. So that news, though good, is old news. The index is not really indicative of what we see happening in the spring/early summer or NOW! What we see happening is what we tell you on these here web pages: inventory is very low and homes are selling.

Atlanta? That’s an anomaly. David says builders who work in both Dallas and Atlanta say the place where Al Hill III moved continues to be very soft.

David says our market is a reflection of our economy, as most of us suspected. The Dallas economy has been right at the top in terms of job growth in the nation. New York slipped ahead of us, but Dallas and Houston have doubled our growth rate. We were late going into the downturn, early coming out. We never let our inventory out of line in a huge way. In isolated pockets, appreciation is popping up.

“The strength of our economy is what is helping us in this market,” says David, Director of the Dallas/Fort Worth Region at MetroStudy. “The key to demand is people have to have jobs to afford mortgage payments.”

I also found out why Houston and Austin/San Antonio were not on the list: Case-Shiller does not track Houston. But Huston, Austin and San Antonio are also healthy markets, David told me. For the first year since 2007 and 2008 builders are telling him they are ahead of their business plans.

Now every time we hear that rents are going up, we should probably do a little high school cheer. With rates still low and FHA loans available for as little as 3% down, those higher rents are pushing buyers to buy. In fact, David says a lot of tenants seeing their second year in a row of rent increases are saying, maybe we ought to get a 4% mortgage and buy a house. In some Class A units, those increases are exceeding 10%.

 

 

I hope not, because I just calculated that we have had a 32% increase in the physician population of our state since 2000. And that’s good news for Texas real estate.

Now a commenter offered a different look at Texas Real Estate. Can’t say I totally disagree with him, he’s spot on about property taxes:

Candy, keep on spreading propaganda about Texas’ economy. Keep believing that you will be able to pay the bills as a real estate agent. Texas has the nation’s highest property taxes (not to mention the nation’s highest homeowner’s insurance and highest closing costs), making Texas one of the worst states to buy real estate.

Stop cherry-picking inaccurate cheerleading pieces on the economy and real estate and start getting patched into reality. It’s a depression; a depression in real estate and a depression in the economy. And it isn’t going to end anytime soon.

So no cherry-picking. There is a real possibility that our government won’t be able to meet payroll in August. Social Security checks, military veterans, Medicaid payments to physicians and hospitals — the president has warned that without a budget deal by the August 2 deadline,  “there may simply not be the money in the coffers to do it,” Obama told CBS TV. I have a tenant who depends on her social security check to pay rent. if she cannot pay it, then how will I pay my mortgage payments on the property? If this happens, truly the dominoes will line up.

Experts say such a default could cause a spike in interest rates, which we do not need right now, of course. That’s a gloomy national outlook, of course, and the current upward blip in home sales could very well be wiped out. That’s also national. If all of this happens, all states will suffer.

But do you agree with this comment? Glenn Beck may be loving Texas because we have created 4 out of every ten jobs in America and pay no state income tax, but our corporations pay taxes and our property taxes are among the highest in the nation. And many analysts say those jobs we are creating are not exactly for rocket scientists — many are low level clerical. Or the hamburger flippers at In N’ Out. Over at The Business Insider, Beverly Mann picks on that recent cheerleading story in the LA Times on Texas job growth written by Rick Wartzman, executive director of the Drucker Institute at Claremont Graduate University. Other states cannot duplicate our oil and commodities industries, but they can learn from our limits on taxes, regulations and lawsuits:

“At the same time — and this, of course, is the tough part for those on the left to swallow — it is clear that the state’s limits on taxes, regulations and lawsuits are contributing to the job machine. “The most important thing I think that’s happened to us is tort reform,” Fisher, the Dallas Fed president, has said. He added that when John Deere and other companies have decided to hire in Texas, they’ve been largely driven by steps the state has taken to cap non-economic damages in medical malpractice suits and to make it harder to bring product liability and class-action cases.”

She goes onto say that Texas is a “lowest-common-denominator state”  for pro-business laws, which is why it is attracting businesses from other states, grabbing the hiring  that would have gone elsewhere. Yet she says the numbers don’t prove that tort reform helped, because companies can get sued from other states, and doctors are not flooding in to work in Texas.

Wrong. Doctors are actually coming here in droves because of tort reform. Checking with the Texas Board of Medical Examiners, there were 33,622 licensed physicians in Texas in 2000, prior to tort reform. By 2005, there were 41,316 physicians, by January of this year there were 50,595 and 51,058 by May, 2011. That’s a 32% increase, some of which comes with our general population growth.

If we had NATIONAL tort reform, that would solve her other beef. We did some very good things in Texas which is why we created 43% of the new jobs in America from 2009 to 2011, a brutal period.  Things may be bad out there, and they may get worse, but I’d still rather be buckling my seat belt in Texas