The US city where property taxes rose the most in the last year will probably surprise you

Today’s homebuyers may be in for a shock when a tax man comes to call.

In 2021, about $328 billion in property taxes will be levied on single-family homes across the country, according to a new report from real estate analytics firm Atom Data Solutions. Growth in property taxes slowed last year, despite the increase in property values, suggesting that larger tax bills could come down.

Between 2020 and 2021, the amount collected in property taxes increased by just 1.8% on average, which is the second smallest annual increase in the past five years.

β€œIt is no surprise that property taxes will increase in 2021, the year home prices across the country rose by 16%,” said Rick Sharga, executive vice president of market intelligence at Atom, in the report. “In fact, the real surprise is that the tax increases were not higher, which indicates that tax assessments are lagging behind rising property values, and will likely continue to rise in 2022.”

The rise in home values, which far outpaced the increase in taxes, means that the effective tax rate last year actually fell to 0.9% from 1.1% the year before.

But in most markets, property taxes have increased faster than the national average. The largest increase occurred in Nashville, where property taxes rose by an average of 27%. Milwaukee came next with a slight increase in property taxes of 18.6%, followed by Baltimore and Grand Rapids, Mitch.

Cities with lower property taxes in 2021 include Pittsburgh (down 35.1%) and New Orleans (down 20.1%). Multiple cities in Texas β€” Houston, Dallas, and Austin β€” have also seen a significant decrease in their average property tax bill.

See also  Stocks falter as tensions in Ukraine escalate, investors seek safety in bonds

Statewide, Illinois had the highest effective tax rate in the country at 1.86%, followed by New Jersey at 1.73%. Notably, New Jersey has the highest average property tax bill for single-family homes in the country at $9,476. In general, metro areas in the Northeast and Midwest have had higher property tax rates than the rest of the country.

The possibility of significantly higher taxes in the future could be a major concern for home buyers at a time when mortgage rates have soared to 5%.

“Prospective homeowners often fail to include property taxes when considering the cost of home ownership,” Sharga said in the report. “But, especially in some of the higher-priced markets across the country, property taxes can add thousands of dollars to annual property costs, possibly the difference between someone’s ability to buy a home or not.”

Leave a Reply

Your email address will not be published.