House prices across the US are on the riseshuffling the plans of many buyers and discarding others hope to have a house. Another rising cost facing homeowners? Property taxes.
In some counties in the country, average property tax payments hit an all-time high last year, according to a report released Thursday by Attom Data Solutions, a real estate data company. Property taxes are a major source of revenue for local governments, as well as a significant cost to homeowners.
These taxes are also often opaque, making it difficult for house hunters to calculate the impact on their budget, said Rich Sharga, executive vice president of market intelligence at Atom.
“A lot of people overlook these property taxes when it comes to whether or not they can afford a home. They think about mortgage and interest payments, but they overlook things like taxes, insurance, and maintenance,” he said. to say.
“In some of these markets, you’re looking at an average of $ 1,000 a month in property tax payments,” Sharga added.
Undoubtedly, these high figures apply to the richest counties, such as New York City and the richest counties in the state; Fairfield County, Connecticut; or Bergen and Essex counties in New Jersey. On the west coast, California County Marin has the highest property taxes, with an average annual tab of $ 13,700. Homes in San Mateo County, where San Francisco is located, have an average annual tax bill of $ 11,500, according to Attom.
"These things add up"
Sharga’s advice for first-time home buyers, especially those stretching their budgets to buy a property, consider taxes at the beginning of the buying process.
A more typical property tax payment of $ 4,000 or $ 5,000 a year is easy to overlook when potential buyers are considering hundreds of thousands of home loans, he said. But it could make the difference between comfortably paying for living expenses for a year or not.
"That's a fraction of what you're paying for your mortgage, so you're supposed to be able to afford it. But those things add up," Sharga said.
In general, property tax payments are higher in the rich northeastern states and lower in the southeast or midwest. But taxes also vary widely within states. In Georgia, for example, the average statewide property tax payment is $ 2,400 in the bottom quarter of the U.S. states. But that ranges from a maximum of $ 5,500 in Fulton County, which includes Atlanta, to a minimum of $ 760 in Laurens County, in the south of the state.
Tax increases are slowing
According to Attom, there is a favorable aspect: property taxes have risen much more slowly than house prices. In 2021, while the values of single-family homes increased by 16% over the previous year, property taxes increased by an average of only 1.8%.
In fact, in 2021 property taxes rose at the slowest pace in five years, Sharga said. The effective tax rate that year was less than 1% of the value of the home. The downside? He expects that to change next year, as record house prices run out of tax rates.
“Owners should probably expect their property taxes to go up over the next year,” he said. "My guess is that tax assessors will play catch-up."
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