Not even a pandemic can stop the growth of homeowners’ property taxes. In fact, it seems to have sped it up.
The growth of property taxes on single-family homes doubled to 5.4 percent last year from 2019, an analysis found. The average U.S. home’s tax was $3,719, or 4.4 percent higher.
The report by Attom Data Solutions blamed the increase on the rising costs of services to run local government and public school systems, but acknowledged that the effective tax rate actually dropped as home values soared.
The effective rate — a home’s annual property tax expressed as a percentage of its market value — was 1.1 percent, on average, in 2020, down from 1.14 percent in 2019.
Attom, which curates a national property database, analyzed about 87 million single-family homes. It used an automated valuation model to estimate homes’ market values and collected property tax data from tax assessors across the country.
The report found that the government levied $323 billion in property taxes on single-family homes last year, up from $306.4 billion in 2019.
“Fortunately for recent home buyers, they have mortgages with super-low interest rates that somewhat contain the cost of home ownership,” said Todd Teta, Attom’s chief product officer. “But the latest tax numbers speak loud and clear about the continuing pressure on both recent and longtime homeowners.”
New Jersey has the highest property tax rate at 2.2 percent, followed by Illinois, Texas, Vermont and Connecticut. New York has the seventh highest tax rate at 1.68 percent. Attom’s rankings were little changed from 2019.
Hawaii has the lowest tax rate at 0.37 percent, and is preceded by Alabama, West Virginia, Colorado and Utah. The average property tax on single-family homes in New Jersey — $9,196 — was 11 times higher than Alabama’s $841.
Among the 220 markets analyzed in the report, property taxes increased the most in Salt Lake City — 11.4 percent — followed by San Francisco and San Jose, California. Seattle and Atlanta were fourth and fifth, respectively.
Property taxes are a crucial revenue source for local governments because they are stable and predictable, unlike income and sales taxes, which can fluctuate significantly with the economy. Housing experts note that property taxes are an incentive for empty nesters to downsize, freeing up larger homes for families.
But they are also a source of controversy as they do not necessarily align with homeowners’ incomes or with their property values, generally because of political machinations and inconsistent assessments.