Housing prices across the U.S. are surging, scrambling the plans of many buyers and dashing others’ hopes of owning a home. Another rising cost that homeowners are grappling with? Property taxes.
In some counties around the country, average property tax payments hit record highs last year, according to a report released Thursday by Attom Data Solutions, a property data firm. Property taxes are a major source of revenue for local governments as well as a significant cost for homeowners.
Such taxes are also frequently opaque, making it harder for house-hunters to calculate the impact on their budget, said Rich Sharga, Attom’s executive vice president of market intelligence.
“A lot of people overlook these property taxes when they’re figuring out whether they can afford a home or not. They think about mortgage and interest payments, but they overlook things like taxes, insurance and maintenance,” he said.
“In some of these markets, you’re looking at an average of $1,000 a month in property tax payments,” Sharga added.
To be sure, those high figures apply to the wealthiest counties, such as in New York City and the state’s tonier counties; Fairfield County, Connecticut; or New Jersey’s Bergen and Essex counties. On the West coast, California’s Marin county has the highest property taxes, with an average annual tab of $13,700. Homes in San Mateo county, where Silicon Valley is situated, have an average annual tax bill of $11,500, according to Attom.
“These things add up”
Sharga’s advice for first-time homebuyers, particularly those stretching their budgets to buy a property, to consider taxes early in the purchase process.
A more typical property tax payment of $4,000 or $5,000 a year is easy to overlook when would-be buyers are considering hundreds of thousands in home loans, he said. But it could make the difference between comfortably paying for living expenses over a year — or not.
“That’s a fraction of what you’re paying for your mortgage, so there’s an assumption that you can afford it. But these things add up,” Sharga noted.
Generally, property-tax payments are higher in the wealthy Northeastern states and lower in the Southeast or Midwest. But taxes vary a lot within states, too. In Georgia, for example, the average statewide property-tax payment is $2,400 — in the bottom quarter of U.S. states. But that ranges to a high of $5,500 in Fulton county, which includes Atlanta, to a low of $760 in Laurens county in the south of the state.
Tax increases are slowing
There is one silver lining, according to Attom: Property taxes have risen much more slowly than home prices. In 2021, while values of single-family homes surged 16% from the previous year, property taxes rose an average of just 1.8%.
In fact, in 2021 property taxes rose at the slowest rate in five years, Sharga said. The effective tax rate that year was less than 1% of a home’s value. The down side? He expects that to change in the next year, as record-high home prices trickle down to tax assessments.
“Homeowners should probably expect to continue to see their property taxes go up over the next year,” he said. “My guess is tax assessors will be playing catch-up.”
This story has been updated to correct the description of California’s San Mateo county.
Thanks for reading CBS NEWS.
Create your free account or log in
for more features.