Our real estate market has never been better. North Texas sales were up 26% in November. Our median home price is now $230,000. Yeah, the trophy home sales are a little soft, but our region saw some of the biggest property price/value increases in the country in September, just three months ago. We are up a whopping 8% year over year from 2015 (Standard & Poor’s/Case-Shiller Home Price Index) and only Seattle, Portland and Denver have bigger price gains. We are among the top U.S. cities with the greatest annual home price gains. Nationwide, prices were only up 5.5 percent from 2015. Says Standard & Poors:
“Other housing indicators are also giving positive signals: sales of existing and new homes are rising and housing starts at an annual rate of 1.3 million units are at a post-recession peak,” S&P’s David Blitzer said in the report. “We are currently experiencing the best real estate returns since the bottom in July of 2012.”
Dallas-area home prices are up over 30 percent from the pre-recession high in mid-2007, according to Case-Shiller.
But I am still terrified. And confused. All this could be wiped out by the absolute Class A disaster going on down at City Hall: figuring out how to save the Police and Fire Pension plan. Which has been around since the mid 1990’s. Did everyone just ignore the problems up until now? (Including me — wasn’t on my radar.) And where is the tax revenue on all these gains going? I sat at City Hall in late August and heard, with my own ears, Mayor Rawlings say there was “room in the budget”.
Could this be the next perceived nail in the Dallas real estate coffin? “Bad schools, bad taxes, let’s look in the ‘burbs.”
Mayor Rawlings personally filed a lawsuit on Monday to keep pensioners from running off with their funds, then even more ran off. He’s got the support of many, including past mayors, from Ron Kirk to Tom Leppert to Laura Miller. Meantime, the rest of the country is not seeing our healthy, zestful, 30% up real estate market but an article in the New York Times that said we might go bankrupt, like Detroit.
How the hell did this PR mess happen?
Between the failing police and fire pension fund and the eons old police pay lawsuit — the police are suing for back pay, the lawsuit filed in 1994, then at the same time asking us to bail them out. Who wants this kind of ying yang with the men and women who protect us? Our property values could rise by 200% and then we might be the ones filing bankruptcy to keep up with our property taxes. I’m exaggerating, but not too much:
Oh and don’t forget, Dallas County voted themselves a raise.
Fortunately, the state legislature is trying to prevent this from happening. As Jon wrote last week, a sweeping property tax reform and relief bill was filed in Austin recently by Paul Bettencourt whose mission is to attack property taxes. His bill is designed to fight the alarming statewide rise in property tax bills. The bill intends to increase accountability of appraisal district officials, and make it easier for taxpayers to challenge higher tax rates through ratification elections.
The Houston senator is a Republican and owner of a property tax fighting company, Bettencourt Tax Advisors. (He is also an Aggie.) Paul filed Senate Bill 2 the same day he released a 90-page laundry list report of tax office abuse. That report grew out of statewide hearings the committee held in which taxpayers complained their tax bills were rising faster than their ability to pay them.
That’s right, property taxes in Texas are forcing some people out of their homes.
According to Bettencourt, average home property tax appraisals have risen 22-24 percent over the past two years in the Fort Worth and Dallas area, up 20 percent in San Antonio. But in Bettencourt’s own Harris County, the average residential tax bill has shot up 36 percent in just three years.
— City officials want to raise the age at which officers and firefighters could receive full benefits to 60. Age 55 would remain the normal retirement age. (Editor’s note: should be 65.)
— The plan would allow all police and firefighters to become vested after only five years instead of 10.
— The city wants to freeze cost-of-living increases until the consumer price index, a common measure of inflation, catches up. Since 1989, the pension system paid out 4 percent annual cost-of-living increases, far outpacing inflation.
DPFPP leaders say it’s not fair to undo a past guarantee. They bought into a plan in the 1990’s that is now flip-flopping. Well, I always compare life to real estate: values go up, they go down and then when the mercury hits 100 degrees the AC breaks. There are no guarantees in life and as we all know, the road is loaded with disappointing landmines. Time to grow up.
Council member Lee Kleinman, the council’s ad hoc legislative committee chairman, said lawmakers have told him the same thing they’ve said publicly: They want an agreement between the pension board, police and firefighters and City Hall.
“If we have to go down to Austin for a fight, I think we have a slim chance of being successful,” Kleinman said.
Fortunately, the City won’t, I hope, let the plan run dry to an Enron-esque insolvency. Compromises must simply be made by all.