Homeowners enjoying the equity gains of soaring property values are now contending with an unwelcome consequence: skyrocketing property taxes. Over the past few years, property tax payments have climbed sharply in many regions, particularly in states once regarded as affordable. This surge reflects a broader challenge of housing affordability as costs continue to rise.
Nationally, property tax payments increased an average of 5.5% from 2023 to 2024, according to CoreLogic’s latest research, and have risen 27.4% since 2019. The median U.S. property tax payment in 2024 reached $3,018. These increases highlight the growing strain on homeowners’ budgets, especially as nearly one-third of American households are now classified as cost-burdened.
“With nearly one-third of American households now considered cost burdened, concerns around housing affordability can no longer be ignored,” CoreLogic’s report states. “It’s clear that the increasing cost of homeownership is an issue that requires our attention.”
Tax Rates and Rising Home Prices
Property taxes are determined by state and local governments, and rates vary widely. Some states with lower tax rates have nonetheless experienced significant increases due to surging property values. Colorado, for example, boasts one of the lowest property tax rates in the country at 0.52%, yet the state has seen the largest increase in median payments. Colorado homeowners faced a 10.6% rise in property taxes from 2023 to 2024 and a staggering 52.9% increase since 2019. During the same period, home prices in Colorado climbed 47%.
Georgia and Florida have followed similar trends. Georgia’s property tax payments rose by 10.3% from 2023 to 2024 and 51.5% since 2019, while Florida’s payments increased 9.5% annually and 47.5% over the past five years. Both states have seen home prices grow well above the national average, with Georgia recording a 65% increase and Florida a 73% jump since 2019.
Even states with relatively affordable tax rates are feeling the pinch. North Carolina, which has a property tax rate of 0.79%, saw its median tax payments rise to $1,750 in 2024. Home prices in North Carolina have grown 13.9% annually, outpacing neighboring states like South Carolina and Virginia.
The Impact on Affordability
For prospective buyers, property taxes represent an essential component of overall housing costs. Originators must account for property tax estimates when calculating debt-to-income (DTI) ratios, a critical factor in determining mortgage eligibility. Higher taxes can therefore affect borrowers’ ability to qualify for a home loan.
The analysis notes that low tax rates don’t always guarantee lower tax increases, as rising property values can offset tax rate advantages. This dynamic is evident in Colorado and other rapidly appreciating markets.
Slowing Price Growth Ahead
Despite the rising expenses, home sales continued at a steady pace through 2024, sustaining moderate home price growth. CoreLogic reported a deceleration in appreciation rates, with home prices largely plateauing since mid-year. Economists predict further slowing in 2025 and 2026 as elevated mortgage rates and four years of rapid appreciation curb demand.
Markets in the Southeast and Texas have already begun to soften, reflecting broader trends of slowing price growth. Research from Milliman, a consulting firm, indicates that slowing appreciation has also increased the default risk for conventional purchase mortgages, with delinquency rates rising to 2.12% for loans acquired in Q3 2024.
As property taxes and other costs of homeownership continue to climb, affordability challenges are likely to persist. For policymakers and industry stakeholders, addressing these issues will be crucial to ensuring sustainable homeownership for millions of Americans.
Click here for more on CoreLogic’s examination of property taxes in 2024.
