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Archive for August, 2008

Lubbock Bucks National Economic Trends

Wednesday, August 27th, 2008

The National Multi Housing Council (”NMHC”) released its “NMHC Market Trends” report earlier today. The report states in part “In the second quarter of 2008, apartment vacancy rates increased. The U.S. Census Bureau vacancy rate for all rental apartments (in buildings with 5 or more units) increased to 11.1 percent, up 0.4 percent from the previous quarter and one percent point from a year earlier. This is the highest vacancy rate since the first quarter of 2005.”

While the national trend is declining occupancy, Lubbock’s occupancy is improving. In its semi-annual survey dated June 2008, the Lubbock Apartment Association reports an occupancy increase of 4.09% from June 2007 to June 2008. This is the highest summertime occupancy since 2002.

I believe there are two significant reasons for this. First, the Lubbock market is continuing to absorb new construction that has come online since 2003 while the rate of new construction has slowed. Second, the national mortgage crisis has resulted in tightened credit standards for new homebuyers. This has the effect of keeping people in rental housing that might have otherwise bought homes within the last year.

It goes without saying that the continued growth and success of Texas Tech plays a large part in the overall Lubbock apartment occupancy as well. But when combined with these other factors, Lubbock continues to buck the national trend which is one of the many reasons The McDougal Companies love calling Lubbock home.

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Posted in McDougal Companies, McDougal Properties | 1 Comment »

The Suites at Overton Park

Tuesday, August 19th, 2008

Photo by Buffalo Framing & Truss

Construction of the Centre’s sister property, The Suites at Overton Park, is seen in this aerial photo provided by one of our business partners. Leasing began this month for occupancy in early 2009. This property will primarly house Texas Tech students in 298 apartments with just over 450 bedrooms. The continued growth of Texas Tech is important for the Lubbock economy and McDougal Companies takes pride in assisting Tech students with their housing needs.

Posted in McDougal Companies, McDougal Construction | 2 Comments »

Property Taxes

Wednesday, August 13th, 2008

McDougal Companies is working to keep property taxes low for homeowners and rental properties affordable. Following is an excerpt from testimony by Mike McDougal on Tuesday, August 12, before the Texas House Select Committee on Property Tax Relief and Appraisal Reform. We would like to hear your comments and ideas.

Property taxes and appraisal reform are priority legislative issues for our company and our many business partners across the state. We appreciate the efforts the Texas Legislature has made in recent years to lower property tax rates, but rate reductions without appraisal reforms HAVE NOT produced lower property tax bills. The appraisal process is broken and as a result untold amounts of time and financial resources are being expended that bring no net economic benefit to the state, our company, nor our customers.

One of the significant problems caused by the wide variations in appraisals for a specific property from one year to the next is that our business, particularly the apartment properties, are subject to long-term leases with no provisions for pass through of tax increases. In fact, sometimes the market will bear ZERO rent increase regardless of cost differentials. When property taxes increase 45% due to a reassessment from the district, there is no way these properties can increase rents in a similar amount. Residential rent is market driven and unlike commercial triple-net leases in which any changes in property taxes are automatically passed on to the tenants, residential leases don’t have such a provision and are absorbed by the owner unless the market allows for a rental increase….but then only at the expiration of the lease.

During the last legislative session, our company and industry supported a proposal that would have created a 5-year rolling average for appraisals. This concept would, at least, provide some predictability for both taxing entities and property owners. A 5-year rolling average would effectively cover up a lot of “sins” within the broken appraisal system. If, or I should say when, a property is mis-valued (either high or low), the property owner would have 5 years to plan for the change in taxes before the full impact hits his bottom line. This same predictability would also benefit taxing authorities as it would smooth out the ups and downs of tax collections just because properties increased or decreased in value during one particular year.

Bottom line, we believe the implementation of a simple 5-year average on appraisal value used to assess taxes would provide predictability and create a more stable economic environment for real estate across the State of Texas.

Posted in McDougal Companies | 2 Comments »

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