The Midland Central Appraisal District released certified valuations for 2014 earlier this week, and as expected, Midland’s market value and taxable value have both increased by the billions.
In Midland County, the total market value for 2014 came out to $23.3 billion, a 15 percent increase from 2013. But the county’s taxable value came out to $21.1 billion, $2.2 billion less than the market value.
“That’s a hefty increase from one year to the next in market value,” said Karr Ingham, an Amarillo-based economist.
The increases in billions held true for other taxing entities. The market value within the city of Midland’s boundaries reached $11.1 billion, a $1.6 billion increase. The city’s taxable amount, $10.1 billion, increased by $2.4 billion.
And within the Midland Independent School District, the market value jumped from $18.9 billion to $21.8 billion and the taxable value’s increased from $16.9 billion to $18.9 billion.
The distinction between the market value and the taxable value is caused by property tax exemptions. Some exemptions include a residence homestead, veterans’ exemptions and charitable organization exemptions.
The increase in valuations is reflective of the housing conditions, Ingham said, adding that it is no surprise.
The year-to-date average home sale price increased 14.2 percent to $246,259, and the year-to-date sales of existing homes increased 3.7 percent to 1,579 sales, according to Ingham’s June Midland-Odessa Regional Economic Index that he prepares for the Midland Development Corp. and Security Bank.
“In the second quarter of 2014, the number of (home) sales is going up and the price is just skyrocketing in terms of the average price,” Ingham said. “So the condition of the housing market, which is being driven by what’s going on in the oil and gas business, really has everything to do with the appraised value of housing on which taxes are levied.”
MCAD’s role in the property tax system is to assess property values and collect the property taxes for the taxing entities, and hear the protests of property owners who dispute the assessed values. Bundick said the district heard 3,000 protests this year, but also noted it is not MCAD that controls property values.
“That’s our philosophy, to basically study and reflect the market value rather than play some active role in setting the values,” said Jerry Bundick, MCAD’s chief appraiser.
MCAD’s assessed valuations are close to the sale price of the home, but the district utilizes a mass appraisal method rather than individual appraisal. Bundick said MCAD does not typically go inside a person’s home and find unique qualities to assess valuations. Instead, the district uses market indicators such as condition and square footage to appraise.
“I’m sure there’s an effort on the part of the appraisal district to try to keep a lid on these appraised values, but housing there is worth more, each and every year, because of essentially the housing shortage that’s driving up prices.”
One Midland Realtor said there are many nuances to the relationship between property valuations and the price of homes.
“There’s a lot of new construction, then there are a lot of areas where there are old homes but new homes are being constructed around them,” said Susan Palmer, a Realtor with Legacy Real Estate. “Then there are areas where they are doing updates to existing properties. So, they (property valuations) are probably reflective of the true market, but you really can’t just put a blanket over it and say that’s what our value is.”
As for the market’s demand, Palmer said the market is still having to deal with the number of new people and families moving into Midland who are looking for a new home. She also discussed how some Midlanders, mostly those close to retiring or retired, are considering selling their homes and moving out of Midland.
“They’re thinking they’ll eventually move closer to their kids,” Palmer said. “Or, some people who thought that might not be a possibility down the road are making those decisions sooner than later, just because they know the values of their house are at a premium right now.”
And if the premium pricing trend continues, Palmer acknowledged how some residents, such as teachers or public servants may be priced out of the market, whether they’re trying to rent or buy.
“That’s what we’re seeing all across town,” Palmer said. “People are struggling to bring people in because they can’t find comparable housing like they were used to from the cities they’re from.”
District 2 Councilman John Love III, who works in an office in Midland’s Southside, said a lot next door to the office was once on sale at a county auction. He was interested in bidding for it, as the lot was valued at $700.
“Well, it sold for $4,700,” Love said. “There was a $4,000 premium on this property. So that plus the construction of the home made the property look extremely high. … That’s just another example of how speculation on land is causing the value of property to increase all over town.”
The home on the lot went on the market for $147,000, he said.