Surging price tags for single-family homes nationwide were one of the most attention-grabbing highlights of last year’s housing market as a perfect storm of factors resulted in double-digit annual growth by the end of 2021. According to a new report from ATTOM Data Solutions, property taxes for homes in the U.S. also climbed, albeit not as much as price appreciation.
ATTOM released its 2021 property tax analysis for almost 87 million U.S. single-family homes on April 14. The report found that $328 billion in property taxes were levied on single-family homes last year, marking a 1.6% increase from 2020, which tallied $323 billion.
Key findings:
- Property taxes increased faster than the national average in 74% of markets.
- Markets with the largest increases in average property taxes last year were Nashville, TN (+27%); Milwaukee, WI (+18.6%); Baltimore, MD (+12.3%); Grand Rapids, MI (+12.3%) and Louisville, KY (+11%).
- The highest effective property tax rates were in Illinois, New Jersey and Connecticut.
- Hawaii, Alabama, Utah, Arizona and Nevada posted the lowest effective rates.
- The average tax was as much as 10 times higher in most expensive versus least expensive states.
- New Jersey’s average single-family-home tax of $9,476 in 2021 led the nation.
- Average annual property taxes top $10,000 in 16 counties, including 12 in the New York City metro area.
- The top five were Kings County, NY; Marin County, CA; Westchester County, NY; Essex County, NJ and Nassau County, NY).
The takeaway:
“It’s hardly a surprise that property taxes increased in 2021, a year when home prices across the country rose by 16%,” said Rick Sharga, executive vice president of market intelligence at ATTOM. “In fact, the real surprise is that the tax increases weren’t higher, which suggests that tax assessments are lagging behind rising property values and will likely continue to go up in 2022.”
Experts at the organization noted that the YoY increase in 2021 marks the second smallest rise over the past five years, dropping from the 5.4% increase seen from 2019 to 2020.
The average tax on single-family homes in the U.S. in 2021 increased at the smallest pace in the five years, climbing 1.8% from $3,719 in 2020 to $3,785 last year.
Despite total taxes climbing in 2021, effective rates declined, which ATTOM attributed to home values surging faster than taxes around the country.
“Prospective homeowners often fail to include property taxes when considering the cost of homeownership,” Sharga added. “But, especially in some of the higher-priced markets across the country, property taxes can add thousands of dollars to annual ownership costs and possibly be the difference between someone being able to afford a home or not. It’s critically important for consumers to factor in taxes, insurance and maintenance when determining whether they’re ready for the financial responsibility of homeownership.”
Jordan Grice is RISMedia’s associate online editor. Email him with your real estate news ideas at jgrice@rismedia.com.
