Pedro Hernandez likes life in Westway, a low-cost subdivision in Canutillo.
He says you can find the best meat in El Paso County at a tiendita a few minutes walk from his house. It was a good place to grow up, and he’s chosen to continue to live there.
But he was shocked last month when he received the El Paso Central Appraisal District’s property tax valuation on the modest three-bedroom home that his parents bought in 1993, then gave to him in 2015. The property was valued at $148,009, a 74% increase in just two years.
“I was like, there’s no way in hell. There’s just no way,” said Hernandez, 32, a high school social studies teacher at Da Vinci School for Science and the Arts.
Hernandez actually fared better than many of his neighbors. The average value of single-family homes in the Westway subdivision increased from just over $62,000 in 2020 to more than $133,000 this year, an increase of 115%, according to an El Paso Matters analysis of El Paso Central Appraisal District valuations.
The El Paso Matters analysis examined valuation trends in 297 subdivisions with at least 200 single-family homes. The analysis excluded subdivisions that have seen significant new home construction since 2020, because that distorts home valuation trends.
The analysis showed that the subdivisions with the highest rates of valuation increase over the past two years generally were working-class neighborhoods with low-cost housing.
In addition to Westway, two other El Paso County subdivisions featuring low-cost homes saw average home valuations double in the past two years.
A Segundo Barrio subdivision called 23 Magoffin saw the average single-family home valuation go from less than $40,000 to almost $83,000. A Canutillo subdivision called Westway #3 went from a $64,000 average home value in 2020 to $133,000 this year.
Other working-class subdivisions such as Ysleta in the Lower Valley, Clardy Fox in East-Central El Paso and Womble near the Marathon Refinery saw average single-family home valuations rise by more than 70% between 2020 and 2022.
Most of the subdivisions with the highest growth in valuations since 2020 have long featured homes that sell for less than $100,000.
In contrast, the lowest rate of home valuation growth over the past two years has been concentrated in tonier subdivisions such as Kern Place and Alexander near the University of Texas at El Paso, where houses sell for upwards of $250,000, and The Willows in the Upper Valley, where houses often sell for more than $400,000.
The valuation of the average home in Westway has grown almost six times more rapidly than the average valuation of homes in Kern Place or The Willows in the past two years, the El Paso Matters analysis shows.
What’s happening with valuations?
The 15 El Paso County subdivisions with the highest rate of property valuation growth over the past two years had an average home value of just over $79,000 in 2020; the 15 subdivisions with the lowest rate of growth had an average home valuation of almost $193,000 in 2020. The valuation changes mark a shift in the overall property tax burden to neighborhoods that traditionally have had lower-cost housing.
David Stone, the assistant chief appraiser for the El Paso Central Appraisal District, said home valuations are based on recent sales of nearby homes. A combination of a low inventory of houses for sale and a high demand during the pandemic have led to a sharp increase in home prices in many communities, including El Paso.
Stone said low housing costs in El Paso’s traditional working-class neighborhoods make those homes attractive to buyers.
“They are less expensive for people looking for a new home as well as property investors. An increased demand for affordable houses would drive their price up,” he said.
“More expensive homes have a much smaller pool of eligible buyers. They are less attractive to investors and are more likely to be purchased by someone intending to live in them. We have much fewer sales of higher valued homes than lower valued homes,” Stone said.
The property valuations set by the Central Appraisal District play a role in how much property tax the owner will pay. The most important decisions on property taxes are made by elected officials, who determine the tax rates.
State law provides some protections against sharp increases in property valuations. Local governments almost certainly will have to reduce property tax rates this year to offset at least part of the increase in valuations. And people with homestead exemptions on their property – meaning they live in the home they own – can only see their taxable valuation rise by 10% in any year.
But owners of commercial properties and rental housing don’t have any protection on how much their taxable valuations can go up in a single year. They are likely to face sharp increases in their property tax bills this year – increases that likely will be passed along to customers and tenants.
In places like Westway, where average home values have doubled, people with homestead exemptions may face 10% annual increases in their taxable valuation for the next decade or more. That could lead to $2,000 or more in additional property taxes over the next 10 years for an average Westway home.
Deciding to protest
The threat of increasing property taxes led Hernandez to protest the valuation of his home. It was a step he and his parents decided not to take in 2021, when their valuation rose from $85,000 to $125,000.
“Last year we didn’t, and that’s because I spoke with my parents and it was still affordable in regards to paying the property taxes that we were expected to pay. But then once we got it for this year, now they were like, you know what, we need to protest,” Hernandez said.
He paid almost $2,900 in property taxes last year, an increase of more than $850 in just a year. His 2022 property tax bill won’t be known until local governments set rates later this summer, but even with an expected decrease in tax rates, he could be facing another increase of several hundred dollars based on the new valuation.
“The more I think about it, the more angry I get,” he said.
Hernandez doesn’t have a homestead exemption on the 0.15-acre property because he rents out the main 1,300-square-foot house and lives in a 390-square-foot apartment that his parents built for his grandmother in 2008. That means he’ll face the full impact of rising valuations this year, rather than having it spread over several years.
A friend, Oscar Trillo, protested his valuation last year. Trillo’s property in Westway jumped from $69,000 in 2020 to $102,000 in 2021, but was lowered to $71,000 after the protest, El Paso CAD records show. The valuation remained unchanged this year.
Trillo, a government teacher at Canutillo High School, said his protest was a positive experience.
“The people at EPCAD were a great help. In fact, I had filed wrongly on my protest and the panel corrected my protest petition. I did not have to set a new protest or protest date,” he said.
One challenge with filing a valuation protest is that property sale prices are not public record in Texas. So there’s no way for most people to quickly look up what nearby properties have sold for in recent months.
Real estate agents have access to the Multiple Listing Service, which includes data on sales prices. So Trillo hired a friend who is a real estate agent to help him look up recent sales near his home. Hernandez paid the same real estate agent $50 to pull information on four recent sales in Westway.
“I think, based on all the research that I gathered, that the real estate advisor provided for me, I would put (his home valuation) anywhere between $100,000 to maybe $110,000,” compared to CAD’s valuation of more than $148,000.
Hernandez has a protest hearing June 1. The deadline to file a protest this year was Monday, May 16, or 30 days after the date of the valuation notice, whichever is later. (UPDATE, JUNE 1: The El Paso Central Appraisal District and Hernandez agreed on a $141,000 valuation. Hernandez said he believes that’s still to high.)
He said he and his parents felt they had to do something about their property taxes. “I mean, I love this little neighborhood. I grew up here. I don’t want to leave. And I don’t want the property taxes to be the reason for that.”