Property values across Galveston County took a hit this year, appraisal officials said.
With a weakening economy and damage from Hurricane Ike, the declines in property values weren’t unexpected. They also were not as dramatic as first thought.
According to Galveston Central Appraisal District figures, taxable property values on homes and nonindustrial businesses dropped in seven of the county’s 13 cities. In Galveston, those values fell 10 percent, while the waterfront canal communities of Bayou Vista and Jamaica Beach, which have more residential property than commercial tax base, had the biggest drop in property values — 14 and 13 percent.
Five cities saw property values increase, but not as much as in years past. League City’s property values jumped 8 percent, driven mainly by the commercial development along Interstate 45 at FM 646, the district’s Chief Appraiser Ken Wright said.
Meanwhile, property values in Texas City were flat this year — minus new appraisals for the petrochemical industries, which are not completed. Wright said the appraisal district, which is using 2008 figures for the industrial base, is expecting the 2009 values to drop considerably given the slow oil market.
Hitting home
When commercial property values are removed from the equation, though, it’s easy to see the trend of ever-increasing home values slowed down — even in the robust residential communities of League City and Friendswood. In communities where Hurricane Ike did its worst damage, the losses in value are more dramatic.
Median home values in League City, the county’s largest city, increased by 1.4 percent, according to appraisal district figures. That’s off from the nearly 3 percent annual increases in the last three years.
By comparison, the median price of homes in Galveston dropped 18.3 percent, the appraisal district’s chief deputy appraiser, Mitch McCullough, said. The decrease in value is even more dramatic in neighborhoods where Hurricane Ike’s flooding was significant.
McCullough said appraisers with the district automatically reduced home values by about half in neighborhoods where flooding was evident.
That includes the homes along Wimcrest Drive, a street near Jones Road just six blocks from Offatts Bayou. One house in the 2000 block of Wimcrest Drive that was appraised at $114,220 last year was valued at $63,420 this year.
Median home prices decreased in Texas City by about $4,000, while across the county the median price of a house dropped from $143,060 to $140,210.
Appraisals by air
The appraisal process began Sept. 17, just four days after Ike made landfall. Instead of sending appraisers out to the field, the district instead took to the air.
The appraisal district routinely uses aerial photographs to help assess property values. Part of the contract with the company that takes the photos calls for a free survey if a strong storm — at least a Category 2 hurricane — strikes.
McCullough said using those photos, his appraisers noted properties where the houses were gone.
Values on Bolivar Peninsula and Galveston’s West End plunged. Many of the homes are no longer there, and in some cases the vegetation line — which distinguishes public from private property on beaches — is behind the homeowner’s original property line.
Because the law doesn’t allow a taxable property to have a $0 value, land that is now on what is considered public beach was still assessed for tax purposes.
For example, a house in the 900 block of Faggards Road in Gilchrist on Bolivar Peninsula that was valued at $49,670 last year is now assessed at $980 because the house is gone — as are all the others in that neighborhood — and the vegetation line now reaches state Highway 87.
Still too high?
Despite the drastic drop in property values, Wright said the assessed value still might be too high.
“All we can do is judge by what we see from the outside and what we know about the structure before the storm,” Wright said. “A home may look OK on the outside because of repairs or what have you but be totally gutted on the inside.”
That’s why the appraisal district sent letters to 90,000 of the county’s 183,000 property owners warning them even an assessed value that is half of what the property was worth a year ago may be too high. The letter asks homeowners to meet with the appraisal district and provide photos and any other documents to help determine a more accurate value.
“We probably missed a few along the way, we just don’t know,” Wright said.
Real impact
While lower home values will be welcomed by many homeowners as a form of tax relief, taxing authorities face serious budget crunches.
In the city of Galveston, the 10 percent reduction in property values translates to $2 million less revenue for the city, based on its tax rate of 49.4 cents per $100 of property value. For the county, which has to foot the bill for recovery efforts for Bolivar Peninsula as well as the hard-hit San Leon, Bacliff and Freddiesville communities, the 1 percent drop in property values means about $1.3 million less revenue.
For communities such as Bayou Vista, Tiki Island and Jamaica Beach where sales tax revenues contribute little to the revenue stream, the budget hit is more significant.
Bayou Vista stands to lose $69,466, 13 percent of its revenue, unless a tax hike is in the offing. Tiki Island could see a 6 percent loss in property tax revenue.
School districts a mixed message
The Galveston school district will have to deal with a loss of 14 percent of its property tax value. The median home price within the district’s boundaries has dropped 17 percent.
Even with the declining enrollment and the guaranteed loss in revenue, the school district apparently will remain a “property rich” school district under the state’s Robin Hood funding program, which means that, despite the hurricane, the school district in Galveston will still have to ship money back to Austin.
The High Island school district lost 56 percent of its tax base.
The La Marque school district saw its property values decrease by 5 percent, but that was more of a result of the general economic conditions in that community than the effects of the storm, Wright said.
Clear Creek, Santa Fe, Dickinson and Friendswood all saw at least a 4 percent increase in property values, while values in the Hitchcock and Texas City school districts were basically flat.
The unknown
While the reduction in property values in the county create an uncertain budget picture for fiscal 2009-10, Wright warns next year’s property values are “the real unknown factor.”
Again, Ike will be a factor as the values of many homes in the areas most affected by the storm will likely see their values decrease even more as property owners protest and values are adjusted this year.
There could be increases as the damaged homes are repaired, but that is unlikely to bring values anywhere close to those before the storm, McCullough said.
That’s because the housing market will still be reeling from the economic situation as well as yet unfixed damages from the storm.
“That’s what we are bracing for — next year,” Wright said.
Notes: Figures are taxable value of property and are rounded up. Heavy industry values are not updated with 2009 assessments, but include 2008 assessments.
Source: Galveston Central Appraisal District
+++
Median Home Prices
Taxing entity — 2008 — 2009
County — $143,060 — $140,210
Galveston — $133,995 — $109,345
League City — $177,890 — $180,550
Friendswood — $235,600 — $238,790
Texas City — $90,885 — $86,800
Galveston ISD — $132,140 — $109,560*
Note: Median prices for homestead residential properties. Does not include second homes or rental property values.
*Includes properties on Bolivar Peninsula, Galveston West End, Galveston and Tiki Island
