Across the country, many homeowners are being squeezed hard by higher property taxes. Nationally, the average property tax jumped nearly 4 per cent to a total of $340 billion by 2022, according to a 2022 property tax analysis released by real estate data firm ATTOM. That increase is more than double the 1.6 per cent increase in 2021, but smaller than the previous year's whopping 5.4 per cent increase.
The report examines property tax data collected from states, metropolitan areas and counties. It also took into account the estimated market value of 87 million single-family homes.
"Two major factors, rising costs and higher inflation, are certainly driving rising property taxes. a third factor may involve a reduction in the property tax base in the wake of the coronavirus pandemic," said ATTOM CEO Rob Barber.
Property taxes have been rising every year as staff salaries, building maintenance, equipment and supplies, and other costs associated with government services and public schools have risen in line with inflation.
"The average single-family tax bill across the country grew at nearly twice the rate of the previous year last year," Barber said." This shows the pressure of inflation, rising costs and the potential loss of the business tax base - all forces that could continue into 2023."
However, if home values fall as the housing adjustment continues, taxes could fall. Home prices have already begun to decline in certain markets due to higher mortgage rates, particularly those that saw the greatest price increases during the pandemic. These higher mortgage rates have made homes unaffordable for many Americans, causing prices to retreat.
So, where do homeowners pay the highest taxes? It is usually those places where real estate costs are highest.
New Jersey's taxes are the highest. In the Garden State, a homeowner with a typical single-family home paid an average of $9,527 in property taxes last year. That's more than 10 times what a West Virginia homeowner paid, which averaged just $928.
Connecticut homeowners paid the second highest 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 is the state with the lowest taxes, followed by Alabama with an average of $1,022 per year; Arkansas, $1,228; Louisiana, $1,296; and Mississippi, $1,311.
Homeowners in New York County, New York (which includes Manhattan) had the highest property tax bill at an average of $42,627 per year. This is followed closely by Marin County, California, outside of San Francisco, where homeowners pay approximately $14,415 per year. Rounding out the top five are three counties outside of New York City: Essex County, New Jersey, at $13,168; Bergen County, New Jersey, at $13,115; and Nassau County, Long Island, New York, at $12,890.
(The counties with the highest bills would need to have at least 10,000 single-family homes in 2022 to be included in the analysis.)
"This raises the cost of living in what are already some of the most expensive areas in the U.S.," Barber said." It also adds an important factor in the homebuyer's decision-making process, sometimes making it harder for sellers to sell."
