Home Property Taxes Post Alarming Rise

If you thought your property tax bill was higher than usual last year, it probably was. The average tax on single-family homes rose 4.1% in 2023 to $4,062 – higher than the 3% increase recorded in 2022, according to ATTOM’s just released analysis of 2023 property taxes. However, 52.9% of metro areas studied saw average property taxes rise by more than 4.1%. And homeowners in 21 of 1,502 counties had it much worse, with average property taxes exceeding $10,000.

Across the nation, local governments saw higher property tax collections last year, with a 6.9% spike to $363.3 billion — a rate almost double the 3.6% increase to $339.8 billion in 2022. That increase was the largest of the past five years, based on a study of 89.4 million single-family homes.

“The latest average tax resulted in an effective tax rate nationwide of 0.87% — up slightly from 0.83% in 2022, marking the first increase since 2017,” ATTOM noted. “The effective tax rate shows the average annual property tax expressed as a percentage of the average estimated market value of homes in each geographic area.”

A double whammy of declining home values that slipped 1.7% and rising taxes propelled the increase in effective tax rates. “Property taxes took an unusually high turn upward last year, pushing effective rates up, while huge gaps in average tax bills between different parts of country remained in place,” said Rob Barber, CEO at ATTOM.

Tax disparities are usually related to varying levels of government services provided as well as “reduced economies of scale in metro areas with many small municipalities that each maintain separate local governments and school systems,” Barber added.

What this year holds will depend on whether lower mortgage rates and low supply of homes on the market push home prices up. “A renewed spike in values that outpaces tax increases would lower effective rates, while the opposite would likely happen if prices stagnate,” ATTOM noted.

Seven of the top 10 states with the highest average property taxes on single-family homes were in the Northeast. New Jersey headed the list with an average $9,488 – almost 10 times more than West Virginia’s $989. Other high-tax states were Connecticut ($8,022), New York ($7,936), Massachusetts ($7,414) and New Hampshire ($7,172).

These states, as well as others in the Northeast, also had some of the nation’s highest effective property tax rates. Other states in this category included Nebraska, Kansas, Ohio and Illinois. In contrast, the states with the lowest effective rates were primarily in the South and West, led by Hawaii, Arizona, Alabama, Delaware, and Tennessee, and including Idaho, Utah, Nevada, Colorado, and West Virginia. Southern states also had the lowest average taxes.

The highest average increases in metro areas with a population of more than one million were felt by Charlotte (31.5%), Indianapolis (18.8%), Kansas City, MO (16.8%) Denver (15.7%) and Atlanta (15.2%).

Some markets, however, escaped. Average property taxes slid in Rochester, NY (down 28.6%), Houston (26%), San Antonio (11%), Baltimore (8.3%) and Buffalo (3%).

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