Lincoln Institute Whiffs On Houston Property Taxes

Did you hear the joke about Houston property taxes where the bill on a median value Houston home is only $2360? That’s the comical assumption put forth by the Lincoln Institute of Land Policy in their 50-State Property Tax Comparison Study. In a rather wonky trip down the rabbit hole, the Lincoln Institute would have us believe that Houston has an effective property tax rate of only 1.78 percent. When compared to other large U.S. cities, Houston apparently ranks 16th, and 23rd for its tax bill for a median for a median valued home.

For what it’s worth, Urban Edge is not the first local media outlet to regurgitate flawed analysis on Houston’s real property taxes. It seems just about every “estimate” that you come across these days takes some serious liberties with the truth in assessing real property tax obligations for Houston area homeowners. One could get the impression that some local city leaders are getting worried about revenue caps derived from our operationally corrupt property tax system. Apparently Mayor Sylvester Turner wants the citywide revenue cap which was approved by voters back in 2004 repealed. Good luck with that one Mr. Turner.

Former mayoral candidate Bill King is correct in suggesting that a move to repeal the cap is embarrassing. It’s a blatant insult to the intelligence of Houston voters, especially those homeowners who have been buried by skyrocketing appraisal assessments and the record-high property tax bills that come with them. Notwithstanding the current fiasco in the Texas Legislature when it comes to Senate Bill 2, most Houston homeowners aren’t stupid enough to believe that the property tax bill for a median value Houston home is only $2360 (see page 104 of the report). The only way you can get to that hilarious conclusion is to stick your head in the sand and ignore Houston’s real property tax rates or the cost of a Houston home.

Even inside the Houston loop nominal tax rates are roughly 2.6 percent. For newer homes in Houston’s suburbs property tax rates can range from 2.6-3.6 percent, and even higher in some cases. But just for comedy’s sake let’s assume that you get a median value home in Houston inside the loop and get the benefit of a full 20 percent homestead exemption from all taxing entities. What would the property tax bill be for a median value ($228,000) Houston home?

I located several great examples around the loop and even inside the loop that closed this year for close to the median price. The 2016 property tax estimates in our own MLS system show property tax obligations of roughly $5500-$6000. Again this is looking within the city of Houston. Zooming out to a popular Houston suburb, I found a house that closed this year for $227,000. The tax rate on this modest home was 3.12 percent (not bad for the burbs) and the 2016 property tax bill was $7002, almost three times the estimate of the Lincoln Institute figure cited for a median value Houston home. Even with a full homestead exemption the property tax bill on this property would be close to $6,000 per year if not more.

If you are looking at the real cost of a Houston area home, don’t ask someone from Minnesota or Massachusetts to estimate the property taxes for you. They apparently have no idea what’s going on in Houston Texas.

Houston Property Taxes

 

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