Property Taxes for Single-Family Homes Rose 3% Last Year

Home values went up faster than taxes, shooting up 7.9% on average.

The average tax on single-family homes in the U.S. rose 3% in 2022 to $3,901, according to a just-released property tax analysis by ATTOM, a provider of land, property and real estate data. In 2021, the average tax increase was just 1.8%.

The 2022 data represents an effective tax rate nationwide of 0.83% — down from 0.86% in 2021 and the lowest rate “since at least 2016,” ATTOM stated. The company defines the effective tax rate as “the average annual property tax expressed as a percentage of the average estimated market value of homes in each geographic area.”

Based on its sample of 87 million single-family homes in the U.S., ATTOM calculated that governments levied $339.8 billion in property taxes, up 3.6% from $328 billion in 2021.

Property taxes rose despite a lower effective tax rate because single-family home values nationwide went up faster than taxes, shooting up 7.9% on average in 2022, ATTOM noted. “That surpassed the average tax increase, resulting in the small dip in effective rates.”

However, the report warned, this trend could “easily reverse” if home values continue to fall as they began to do in the second half of 2022.

Furthermore, in 144 (65%) of the 223 metro areas analyzed average property taxes rose by more than 3%. The south and west were worst hit, with increases of 5.8% and 5.5% respectively. By comparison, the northeast saw an average increase of just 0.7% and 2.7% in the Midwest.

Describing 2022 property tax increases as modest, ATTOM CEO Rob Barber foresees difficulties ahead. “This year, local governments and school systems will face even greater challenges keeping taxes in check, given rising inflation rates and a growing number of commercial properties that could be eligible for tax reductions after suffering a surge of vacancies during the pandemic,” he noted.

The report also noted wide disparities from one area of the country to another. States with high effective property tax rates were concentrated in the northeast. Nebraska, Ohio and Iowa also fell in this group. The northeast also accounted for seven of the 10 highest average property taxes, led by New Jersey with a tax of $9,527 on the average single-family home. It was followed by Connecticut, Massachusetts, New Hampshire and New York ($6,673)

In contrast, states with the lowest effective property tax rates included Hawaii and some western states, along with southern states like Alabama, South Carolina and West Virginia. West Virginia also displayed the lowest average property tax in the nation – just $928 — followed closely by Alabama ($1,022), Arkansas, Louisiana and Mississippi.

Pittsburgh, Rochester, and Honolulu were among the metro areas with populations of 1,000,000 or more that saw the highest increases in average property tax. Those that benefited from decreases included Philadelphia, Grand Rapids, Buffalo, Phoenix and Tucson.

However, Barber warns, the low taxes come with a caveat.  He notes that the disparities in taxes are linked to the level of services and public employee wages local governments provide. “Depending on what prospective buyers want in a community and its school system, the gaps can have a wide impact on how easy or hard it is to sell a home,” he said.