El Paso home values rising at slower rate than previous years, still at historic highs

EL PASO, Texas (KVIA) -- As the city of El Paso and other taxing entities are in the process of setting the property tax rates for the next fiscal year, property values for homes in the city have continued to rise year-over-year, though at a slower pace than previous years.

"Housing prices for new units are expected to rise by about 3.8% (for this year)," UTEP Economics Professor Tom Fullerton said. "Then for resale housing units, which is the biggest part of the residential real estate universe in El Paso, they're expected to rise by just a little bit over 4%. In terms of the median price values for new units, we're projecting that the average for the year is going to be $259,000 per unit. For existing units, it's going to be $250,000 per unit. So those are historically high numbers."

Fullerton tracks data on home valuations and numerous other economics indicators with the Border Region Modeling Project at UTEP. He says that home price increases are levelling out compared to previous years.

"Between 2021 and 2022, median price is rose by more than 30%," Fullerton said. "That's a very unique period in El Paso economic history. Things have cooled off a lot since then, they had no choice but to cool off once mortgage rates stop going up. You know, it was clear that housing prices were out of sync with income levels in El Paso."

The City of El Paso's representatives voted in a special meeting Thursday to introduce a "No-New Revenue" tax rate of $0.761405 per $100 of home valuation for the 2025 fiscal year, about a 7% reduction from the previous year's rate of $0.818875/$100. The "No-New Revenue" tax rate means the city would bring in the same amount of property tax revenue as the previous year.

According to a city spokesperson, that rate means that for an average $250,000 home in the city of El Paso, the tax bill would fall $144 for next year. Professor Fullerton says that for the city to still have the same revenue there must then be more and different kinds of properties in the tax base.

"That's got to be because a large portion of the property tax revenues are now being shouldered by the commercial and industrial side of the ledger. Part of that's probably due to the massive amount of industrial construction and nonresidential construction that took place from about 2017 up through 2021."

City documents calculating the tax base show a jump in the property tax base from last year. The "2024 Tax Rate Calculation Worksheet" filled out by city staff and put online ahead of Thursday's vote show that this year's total taxable value is $52,288,266,217. That's up from the prior year total taxable value of $46,948,442,200. Fullerton says the permits applied for in previous years are leading indicators of work that would add properties to the tax rolls in future years.

"We had more than $5.2 billion worth of nonresidential construction permits that were approved during that period (2017 to 2021)," Fullerton said. "It peaked in 2018 with more than $900 million worth of commercial space being permitted that year. Not all of it was was probably started and finished, but that's a huge number by historical standards and it really has remained quite active. Last year was another banner year for commercial space in El Paso. So, that has has probably allowed the city to adjust property tax rates such that it's going to give a $140 reduction to houses on average across the entire metropolitan area."

Thursday's city council vote set a public hearing for August 13 for final approval of the tax rate. The city's fiscal year begins September 1.