Texas’s last legislative session culminated in an $18 billion deal to reduce property taxes. The deal made a dent in property owners’ bills, but this year, lawmakers are coming back for more.
A Texas Tribune analysis showed school districts collected 10 percent fewer property tax dollars between 2022 and 2023. Even so, many of the legislative proposals filed ahead of this year’s legislative session still take aim at cutting property taxes. There’s plenty of money left to do so: the state is entering this budget cycle with a $24 billion surplus.
That jives well with the interests of top folks in Texas residential real estate, who want to see legislation that improves housing affordability. The median sales price in Texas, which has long been hailed for its affordability, has jumped more than 40 percent in the past five years, according to data from Redfin.
“There’s bipartisan support for property tax reform; that helps everyone,” said Matt Menard, owner of Austin Real Estate Experts.
That doesn’t mean lawmakers are on the same page about how to go about doing it.
Here’s an overview of bills filed for the legislative session, which opens today, that could affect Texas real estate. Reminder: thousands of bills are filed every session, and the vast majority don’t make it to the governor’s desk.
Property tax appraisals
For Rep. Cody Vasut, a Republican from Angleton, the answer to Texas’ property tax problem isn’t cutting taxes; it’s eliminating them. That would cost the state $82 billion a year, according to the Legislative Budget Board.
Some proposals attack taxes by proposing a cap on increases in a property’s annual appraisal. Under current law, the appraisal of one’s primary residence can’t be increased more than 10 percent in a year. Lubbock Republican Rep. Carl Tepper’s amendment would reduce that number to 2.5 percent.
Other lawmakers are looking for other funding sources. For example, HB 275 proposes a portion of the state’s surplus go to schools, thus reducing the amount districts need to collect from taxes.
Commercial property tax appraisals
Texas launched a pilot program in 2023 that put a cap on appraised value increases for non-homestead properties in a given year. This includes second homes and investment properties that are worth $5 million or less.The appraised values for these properties can’t jump more than 20 percent per year under the program. HB 1622 would make the program permanent.
Legislation proposed by Rep. William Metcalf, a Republican from Conroe, who has held sway in the House as Chair of the Committee on House Administration, would beef up the program to include commercial property with a market value of $10 million or less. One proposed bill would cap the appraised value increase at 20 percent; another bill would cap it at 10 percent.
Foreign buyers
Over the summer, Sen. Lois Kolkhorst, a Republican from Brenham, pledged to reprise her effort to ban citizens of “hostile” nations from owning property in Texas, even though similar legislation she proposed in 2023 was condemned as racist.
Her bill would ban citizens and organizations of certain countries from buying land or commercial property if the purchase would create a risk to the public. Specifically, she identified countries in the Annual Threat Assessment. The most recent report, from the Director of National Intelligence, names China, Iran, North Korea and Russia.
Jacksboro Republican Rep. David Spiller’s HB 191 is less restrictive; it would ban organizations from these countries from purchasing property.
Meanwhile, HB 733, proposed by Rep. Cecil Bell, a Republican from Montgomery, would only allow U.S. citizens to buy homes in platted subdivisions.
Houston Association of Realtors’ Kiley Rapier urged caution on this topic, noting legislation limiting certain populations’ real estate purchases could violate fair housing laws.
“We just want to make sure that Fair Housing doesn’t come into play and target individuals from poor countries,” she said.
If lawmakers claim these bills are about improving affordability, Menard is calling their bluff. These bills are “more about posturing than actually affecting the marketplace,” he said.
Institutional investor-owned single-family homes
Legislation proposed by Sen. Juan Hinojosa, a Democrat from McAllen, aims to curb the proliferation of corporate landlords of single-family homes. He proposed stipulating that corporate owners can’t own more than 10 single-family homes for rent. “Corporate owners” isn’t explicitly defined in the bill. The legislation would also create a database for these owners. Another proposal would direct the Texas Real Estate Research Center to conduct a study on corporate owners.
Affordable housing development
SB 234, proposed by Dallas Democrat Sen. Nathan Johnson, would offer low-interest loans to multifamily developers who built affordable housing. The program would prioritize mezzanine real estate loans for construction projects that reserve units for people earning between 50 and 120 percent of the area’s median income, ensure rents don’t exceed 30 percent of residents’ income and meet other affordability requirements for at least 20 years.
State, city zoning authority
Among the proposals to alleviate housing affordability are bills meant to relax local zoning regulations prohibitive for development. After Austin’s City Council allowed more homes to be built on single-family lots in 2023, and Dallas revamped its city land use plan last year, Sen. Bryan Hughes, a Republican from Mineola, and Rep. Vasut, are trying to resurrect a failed 2023 bill making it easier to add accessory dwelling units to single-family lots. Their bill would override local bans on ADUs.
Meanwhile, Rep. Tepper wants to remove municipalities’ authority to increase the number of dwellings allowed on land zoned for single-family homes.The latest shot over the bow from the state’s NIMBY movement would prohibit municipalities from passing zoning regulations that permit more than one single-family home to be built on a residential lot if it was zoned for single-family dwellings as of Sept. 1, 2023, or if the lot is in a subdivision where at least one lot has already been developed.
That could potentially reverse recent zoning reforms in Dallas and Austin, but the debate of YIMBY vs. NIMBY — as well as local vs. state authority — continues to escape easy prediction by party lines; Republicans in the legislature have filed measures seemingly in support of both sides, while Democrats signal support for allowing zoning reforms in the face of housing shortages after leading the charge against the previous ADU bill in favor of municipal zoning authority in 2023.
“I think they will largely get consensus around smaller lot sizes — they won’t supersede all city codes, but maybe just in this particular space,” Menard said.
Home sale price disclosure
Rep. Cecil Bell, a Republican from Montgomery, introduced HB 291, another attempt to require buyers to disclose home sales prices. Bell’s measure would require buyers to file a sales price disclosure report with the local appraisal district within ten days of recording the deed, in an attempt to improve accuracy of appraisals. A similar bill died in the 86th session in 2019, which included a civil penalty for those who failed to do so. This bill gives the chief appraiser authority to seek an injunction in the name of appraisal transparency.
“Having that disclosure might not be what’s best for consumers,” Rapier said, citing privacy concerns.