Warning, Homeowners: Property Taxes Are on the Rise Across the Country

For the past few years, the spotlight has been on homebuyers and renters navigating the topsy-turvy housing market. Then the market shifted, and the focus began veering toward home sellers.

But what about homeowners?

Across the country, many homeowners are being squeezed hard by higher property taxes. Nationally, average property taxes jumped nearly 4%, to a total of $340 billion in 2022, according to a 2022 Property Tax Analysis report released by real estate data firm ATTOM. The increase was more than double the 1.6% growth in 2021, but smaller than the whopping 5.4% increase the prior year.

The report looked at property tax data collected from states, metropolitan areas, and counties. It also factored in the estimated market value of 87 million single-family homes.

“Two major factors, rising costs and higher inflation, are surely at work driving property taxes ever higher. A third factor could involve property tax bases dwindling following the coronavirus pandemic,” says ATTOM CEO Rob Barber.

Property taxes keep rising each year because employee salaries, building maintenance, equipment and supplies, and other costs related to government services and public schools went up with inflation.

“The average single-family tax bill around the country increased last year at close to twice the pace of the prior year,” says Barber. “That showed the pressures of inflation, rising costs, and the possible loss of commercial tax bases—all forces likely to continue through 2023.”

However, taxes could go down if home values fall as the housing correction continues. Home prices have already begun to dip in certain markets, particularly the ones that saw the largest run-ups in prices during the pandemic, as a result of higher mortgage interest rates. Those higher mortgage rates have made buying a home unaffordable for many Americans, leading to prices coming down a bit.

Where are homeowners paying the highest property taxes?

So, where are homeowners paying the highest taxes? It’s usually the places where real estate costs the most.

Taxes were the highest in New Jersey. In the Garden State, a homeowner with a typical single-family home paid an average of $9,527 in property taxes last year. That was more than 10 times what homeowners in West Virginia paid, an average of just $928.

Connecticut homeowners paid the second most in taxes, at $7,671, followed by Massachusetts, at $7,044. New Hampshire, at $6,855, and New York, at $6,673, rounded out the top five.

The lowest taxes were in the South. West Virginia was the state that had the lowest taxes, followed by Alabama, at an average of $1,022 a year; Arkansas, at $1,228; Louisiana, at $1,296; and Mississippi, at $1,311.

Homeowners in New York County, NY, which includes Manhattan, had the highest property tax bills, at an average of $42,627 a year. It was followed by Marin County, CA, outside of San Francisco, where homeowners paid about $14,415 a year. Rounding out the top five were three counties just outside of New York City: Essex County, NJ, at $13,168; Bergen County, NJ, at $13,115; and Nassau County, NY, on Long Island, at $12,890.

(The counties with the highest bills needed at least 10,000 single-family homes in 2022 to be included in the analysis.)

“That raises the costs of living in what are already some of the most expensive parts of the U.S.,” says Barber. “It also adds a significant factor in the decision-making process of homebuyers, sometimes making it harder for sellers to sell.”

The post Warning, Homeowners: Property Taxes Are on the Rise Across the Country appeared first on Real Estate News & Insights | realtor.com®.