ASK JOHN: Increased property values not all bad
Alene: I understand that you have experience with property values. Please explain why the value of my home in Burleson seems to increase every year.
John: I am not an expert in home values, but I witnessed the steady rise in home values during my years of experience in real estate lending and serving a term on the board of the Johnson County Central Appraisal District.
I am amazed that some residents mistakenly think that the value of their property is the amount they paid for it, instead of what it could sell for. I think the value of anything is “what it is worth on the date of the sale." The problem is that many of us have a different opinion of what something is worth.
Recently, I paid $12.95 for a haircut. The price brought back memories of my high school years when I paid $1 for a haircut. This haircut was 13 times more expensive than in the 1950s and I have less hair. Was the haircut worth $12.95? I guess it was, because I do feel spiffy.
Another example of inflation concerns real estate values. When my family moved to Burleson in the early 1960s, we bought a home on SW Taylor Street for $8,500. Today, the JCCAD appraises the house and lot for $83,000, which is approximately 10 times what we paid for it – too bad we sold the house 40 years ago. Is the property now worth $83,000? It could be. The value assessed by the JCCAD is usually based on the sales price of comparable property in a neighborhood. What the property is actually worth will depend on the outcome of the negotiations between the seller and purchaser.
Burleson has an interesting history of property values and how they were determined. My good friend and mentor, Neal Jones, discovered an abstract of title dated Dec. 27, 1939, in the wall of a house on N. Clark Street that he was refurbishing. The abstract of title has the history of the land, now known as Burleson, beginning in 1860 when President Sam Houston of the Republic of Texas gave 898 acres to the heirs of Hanson G. Catlett for services Hanson rendered to the Republic. In 1879, Henry Renfro purchased 281 acres out of the original 898 for $3.94 per acre.
In 1881, G.M Dodge with his International Railway Improvement Company began laying track for the Missouri, Kansas and Texas Railway (KATY) from Ft. Worth to Waco. The book, "The Katy Railroad and the Last Frontier," describes the route from Fort Worth to Waco as: “continuing south in classic fashion, breeding towns at the end of each 10-mile section and selling lots like hotcakes."
I assume Henry Renfro owned the land at the end of the first 10-mile section out of Fort Worth. Renfro’s property could also provide water for steam engines and land for a train depot. In 1881, after negotiations with Renfro, G.M. Dodge had his son-in law, R.E Montgomery, purchase the 281 acres from Renfro for $4.98 per acre. The property value had increased by 26 percent in only two years. Montgomery developed a portion of the property for a train depot and a town site. Montgomery owned the property for only seven months before he sold 161 of the acres to G.M. Dodge for $9.23 per acre. Developing the acreage was part of the increase in value. Property value had increased another 88 percent in seven months. Dodge owned all the developed lots.
Dodge sold one of the first lots to M.W. Bailey on Oct. 10, 1881, for $40 (this is considered to be Burleson’s Founders Day). The terms for the sale was 50 percent down and the balance to be financed for one year with a 10 percent interest rate. Dodge then sold more lots. Dodge realized that a person could get rich buying land by the acre and selling it by the square foot.
I realize you dislike paying higher taxes, but if you invest wisely and values continue to increase I believe you could be a wealthy lady someday in spite of paying taxes on the increased values.
The Burleson Museum and Visitor's Center has a map showing the towns originated by the KATY and a copy of the 1939 abstract of title is available. Come in and take a look.
John Duke Smith is a Burleson history buff. Ask him a question you've always wondered about with the subject "Ask John" at firstname.lastname@example.org and what he finds out may be a future column.