Prospective home buyers on a budget have a lot to be anxious about as they track rising home prices and interest rates, check out how much house they can afford, and research everything they can find on down payment help. But one financial factor that they may not take into account is how their future home’s location determines the size of their annual property tax bills.
And those bills can be quite high—especially for homeowners in the upstate New York metro of Binghamton.
Homeowners in the former manufacturing hub that still suffers from high unemployment hadthe highest property tax rates (compared with local home prices) in the nation, at 3.1%, in 2016,according to a recent report from ATTOMData Solutions.
ATTOM, a real estate data firm that is the parent company ofRealtyTrac, came up with the tax rates by analyzing property tax data at the state, metro, and county levels and the estimated property values of single-family homes across the nation. The report looked at the 217 metros with more than 200,000 residents, and counties that had at least 10,000 single-family homes.
Three of the metros with the highest tax rates were in upstate New York. Rochester, NY, came in second, at 2.99%, and was followed by Rockford, IL, at 2.96%; Atlantic City, NJ, at 2.77%; and Syracuse, NY, at 2.67%.
That’s partly because property taxes are high in New York, New Jersey, and Illinois, saysDaren Blomquist, senior vice president at ATTOM. But it’s also often due to lower home appreciation in those parts of the state.
Tax rates “are not a reflection of how well a market is doing,” he says. “Sluggish housing markets are more likely to have higher tax rates.”
Buyers are paying closer attention to property taxes, saysBinghamton-based real estate broker Barbara Gallo.Many of her clients want to know how much the taxes are before even viewing a property. The average property tax bill in the metro is$3,700 a year, according to the ATTOMreport.
But Gallo was quick to point out that the high taxes are offset by reasonable home prices. The median list price inBinghamton is just $85,000, according to realtor.com®.
“We’re affordable pricewise,” says Gallo, of Exit Realty Front and Center. “But when you factor in the taxes, it throws us out of whack.”
Who has the highest tax bills? Depends on how you look at them
Binghamton property owners had the highest tax rates when comparing those fees withtheir property values. But homeowners in the wealthy New York City suburb of Westchester County paid quite a bit more in dollars and cents—an eye-popping average of$16,493 a year in property taxes in 2016, according to the report.
That does make sense, however, as the median home list price in the county is $489,000.
Westchester was followed by fellow New York City suburbs Rockland County, NY, at $12,309; Essex County, NJ, at $11,597; Bergen County, NJ, at $11,323; and Nassau County, NY, at $11,232.
For comparison’s sake, the average homeowner across the country paid about $3,296 in 2016, according to the report. That equaled more than $277 billion in property taxes paid by American homeowners last year.
Westchester “taxes have always been high,”says Keller Williams Realtor® Cristina Gaspar, who sells homes throughout the county. “Anyone coming in buying in Westchester is well aware of what they are.”
But folks still purchase homes in the area because they grew up nearby or want to get more space than in New York City and to enroll their children in the top-notch public school system, she says.
And the taxes are still cheaper than in New York County, akaManhattan, where the average homeowner dropped $34,285 last year. The median list pricein the county was $1.9 million, according to realtor.com. (It wasn’t included on the list because ATTOMlooked only at counties with at least 10,000 single-family homes, which Manhattan fell short of.)
Where property tax bills are just a few hundred bucks
Buyers seeking to save more than a few bucks on their annual taxes should consider moving south—to Etowah County, AL. The median home price in the county seat of Gadsdenwas just $107,000, according to realtor.com, while county residents paid an average of $493 on their taxes last year. That’s right. That’s 3,245% less than Westchester and 6,854% less than Manhattan.
“When people come in from out of state, they always ask about how much the property taxes are,” says Gadsden real estate broker John Bone of Bone Realty. “They’ll say, ‘Oh, a month?’ We’ll say, ‘No. That’s for the whole year.'”
He also sees quite a few investors who buy homes in the area and then rent them out, as well as retirees moving in for the lower cost of living.
The second-lowest property tax bills were in Houston County, AL, at $508, followed by Calhoun, AL, at $519; Aiken County, SC, at $529; and Morgan, AL, at $539.
“The markets that have done the best in the housing recovery are the ones with the lower property taxes, such as California and Arizona,” Blomquist says.
Meanwhile, the metros with the lowest tax rates were Honolulu, at 0.32%; Montgomery, AL, at 0.35%; Tuscaloosa, AL, at 0.36%; Florence, SC, at 0.44%; and Colorado Springs, CO, at 0.44%, according to the report.
These metrosare all in states with low overall property taxes, and all are seeing high price appreciation.
“Places like Montgomery and Tuscaloosa have become very attractive markets for real estate investors,” Blomquist says. And in Colorado Springs, about two hours outside of Denver, homes “are appreciating very quickly, which results in this rock-bottom tax rate for homeowners.”
