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Over the next two years, Texans are slated to receive some $18 billion in property tax relief, but what if any of those savings will go to renters? That's the question reporter Jasper Scherer poses in his examination of how the recent new property tax relief changes could affect renters.
Houston has been called "a city of renters" with 58% of households in Houston renting rather than owning in 2021, according to the Kinder Institute's 2023 State of Housing report. Even though rent prices are no longer skyrocketing like they were in the pandemic, affordability still remains a critical concern. (As we noted in last week's newsletter, Houston was actually the only major Texas metro where rent prices did not drop in the past year, according to MRI Real Estate Software.)
The tax-cut package, passed by the Legislature over the summer and resoundingly approved by voters, drives down local school district tax rates and more than doubles Texas' homestead exemption, allowing homeowners to pay school property taxes as if their residence was worth $100,000 less than its true appraised value, Scherer writes.
Theoretically, landlords could pass along these cost savings to renters by keeping a lid on rent increases. But there is no guarantee this could happen, particularly as landlords face a host of other climbing costs such as ballooning insurance rates and higher construction prices.
Whether or not renters see rent relief likely will depend on local market dynamics impacting rent prices.
"If there's a serious housing shortage, as there has been in recent times in a lot of markets, then it would be reasonable to expect that landlords would really have no need, or reason, to lower their rents," said Lynn Krebs, an economist at the Texas Real Estate Research Center at Texas A&M University.
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