Stacy Fuller hoped to live out her retirement years in Fort Worth, her home since 1958, but property taxes drove her away.
The retired widow recently sold her longtime home in the city's Wedgwood area and downsized to a $40,000 home in a small city near the Texas-Arkansas state line, where property taxes are $475 a year — a tiny fraction compared to the $4,400 she was paying annually in Tarrant County.
She lives mostly on her pension from Union Pacific Resources, an oil exploration company, where she worked as a database manager.
"I would like to still be in Fort Worth. My daughter and grandchildren and great-grandchildren are there, and now it's a four-hour drive to see them," she said. "But I needed to be able to live on Social Security and my pension. I knew by the time I reached 65 the property taxes would take my entire pension check to cover. It's sad to work so long, to have a paid-for house and find you can no longer afford to live in it if you retire."
North Texas has already lost its reputation as a place where housing is dirt cheap, with home prices increasing 33 percent in the past three years. That's good if you're in the market to sell your home — but bad if you want to stick around and "age in place" during retirement years, while paying a much higher property tax bill.
Some residents who are at or nearing retirement age find they don't have enough saved up to pay living expenses, with several thousand additional dollars per year going toward property taxes that they didn't forecast in their budgets. Although some local governments offer residents a property tax freeze after they reach age 65, the freeze doesn't affect all taxes.
And many residents are being caught off guard by the steady rise in property values in their 40s and 50s as they begin to plan for retirement — well before they qualify for a tax freeze.
Angela White is worried about an unusual circumstance that occurred this year when she received her appraisal notice from the Tarrant Appraisal District. She is worried that the situation will make it difficult for her to protest future property value increases and cause her property taxes to skyrocket.
"I am a widow barely making ends meet, so I am very hesitant to protest or make waves," said White, an Arlington resident who works for a Dallas religious publication.
White's home, which is in the fast-growing Mansfield school district, actually dropped about $2,100 in valuation overall compared to last year. But the Tarrant Appraisal District used an unusual formula to determine her property values.
The value of White's one-third acre of land increased to $40,000, up from $25,000. But the value of her house dropped to $153,097, compared to $170,216 the year before.
White worries that the Tarrant Appraisal District will be able to raise her actual house value (known as the improvement value on appraisal records) in future years but that she won't be able to successfully argue against such increases because, based on comparable sales in her area, her home value will appear low.
"I find it quite odd that my land value could increase that much and my improved property value decreased a (comparable) amount to make it appear that I'll be paying a bit less in taxes overall, but what a can of worms that land value will open up for future appraisals," she said.
Property taxes — the main way that school districts, cities and other local governments pay for their services — are paid annually.
For example, the owner of a Keller home hypothetically worth $400,000 would pay about $10,302 in annual property taxes, not including any exemptions, according to Tarrant County's online tax calculator.
How big of an increase would that be from 2011? Well, since 2011, the median price of a home in Dallas-Fort Worth has increased about 67 percent, according to the National Association of Realtors. So a $400,000 home today likely would have been worth about $239,500 back then — and based on tax rates at the time, the 2011 property tax bill would have been $6,233, not including exemptions.
Just looking at the property taxes, that hypothetical home owner would be paying an extra $4,069 per year.
For residents with a mortgage, property taxes are often included in monthly payments. But for residents who have paid off their home, property taxes are paid separately — and it's an expense that for many has increased by several thousand dollars compared to just a few years ago.
High property taxes can be a hidden cost for home buyers, especially those moving to the Metroplex from other states that rely less on property taxes and more on other taxes (including a state income tax in most states), economists say.
But the trend likely will eventually stabilize, said Gus Faucher, who as chief economist at PNC Financial Services Group closely tracks housing trends nationwide.
"It does create pressure on people seeing a property tax increase at a more rapid pace than their labor income (from their jobs) and their investment income," Faucher said.
Once the supply of available housing in North Texas catches up with the demand caused by aggressive population growth — and once Americans lose their ability to deduct much of their property tax payments from federal income taxes, because of the new tax laws Congress passed last year — the cost of housing will slow its rapid rise, he said.
"With the reduced ability to deduct property taxes from the income tax," Faucher said, "effectively you are raising the price of buying a house."
But some local officials in North Texas see a more systemic problem with reliance on property taxes in the state.
Among them is Grapevine Mayor William D. Tate, whose modest home has nearly doubled in market value to $229,396 since 2013, although his taxable value is $190,466 because of exemptions.
Tate said the system was better in the past, when appraisals were done only about every four years and values were based on home sales in the same neighborhood.
"It bothers me. It hurts," Tate said of the pace of rising property valuations in his city. "I really think the appraisal method is not proper. They don't compare one property to another. They do it by computer. And they might pick a sale in Southlake and use it to appraise a house in Grapevine, when there are sales down the block. And if you have foundation problems and you argue that and get (the appraised value) cut down this year, well, next year they throw that away. It's not in the system. You have to start over."
Jeff Law, Tarrant Appraisal District chief appraiser, said most homes are appraised based on their neighborhood, although it's possible that in unusual circumstances some Grapevine homes in the nearby Carroll school district could be appraised similar to Southlake homes.
"We appraise over 1.755 million accounts annually," Law said in an email. "The computer formula Mayor Tate refers is actually mass appraisal modeling. Yes they are formulas and aid us in valuing a large number of properties in a relatively short time frame. However, when we do learn of a property that suffers from issues such as a foundation problem, that data is stored in our computer system. That data is then used for the next reappraisal cycle. With the real estate market being like it has been the past several years, it may appear that TAD is not recognizing the foundation issues. But the data is being kept and stored for future use."
Law also added that the district had conducted annual appraisals for more than 10 years.
State law requires that all properties must be appraised at their market value.
As for White, she plans to protest the $15,000 spike in her home's land value, even though she worries that by making noise she could set herself up for future property value increases.
"There doesn't seem to be a lot of equability in the arbitrary assignment of the land values," she said. "I'll be protesting the appraisal, but I don't know how much good it will do."
The deadline to file a protest is May 15.