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By Tim Brown, Operations Manager, County Information Project |
As everyone knows , the average cost of new homes is climbing. According to the Real Estate Center, the average value of new homes almost tripled in Texas, rising from $51,900 to $155,000 between 1980 and 2006.1 Nationally, inflation actually increased at a slower rate as what took $100 to purchase in 1980 could be purchased for $244.66 in 2006.
The distinct difference in percentage change between inflation and the value of new homes points out a problem that has plagued the discussion on appraisal caps. Some pundits, when discussing the growth in property values, fail to distinguish between the change in value of all homes and the change in value of homes that existed unchanged over the entire time period in discussion. For example, an average home built in 1980, and valued at $51,900, would have been worth $126,979 in 2006 if its value had increased in step with inflation. However, the average Texas home built in 2006 would have been worth $155,000. That is 22 percent more than the older home!
Naturally, if the owners had added a new room to the older home or otherwise remodeled, then it likely would have been closer to the new home in value. However, the point is clear. When discussing the change in property values of homes, it is important to distinguish whether the discussion is about existing homes or if new homes are being included.
