New Jersey homeowners paid the highest property taxes in 2016, with an effective tax rate averaging 2.31%, or $8,477, according to a report Thursday by ATTOM Data Solutions.
Nationwide, the average annual property tax on a single-family home was $3,296, an effective tax rate of 1.15%, according to the Irvine, California-based housing-research firm, which is the parent company of real-estate website RealtyTrac.
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A total of $277.7 billion in property taxes was levied on 84 million single-family homes, analyzed by ATTOM based on tax data at the state, metro and county levels. The effective tax rate is defined as the percentage of the average annual property tax divided by the average estimated market value of homes in each geographic area.
Following New Jersey on the list were Illinois (2.13% tax rate), Texas (2.06%), New Hampshire (2.03%) and Vermont (2.02%). New York ranked eighth with an effective property tax rate of 1.88%.
At the other end of the spectrum were Hawaii, Alabama, Colorado, Tennessee and Delaware, each with effective tax rates averaging less than 0.55%. Hawaii had the lowest rate at 0.32%.
"Property taxes are a major cost of homeownership and factor into a buyer’s decision to buy or not buy," said Daren Blomquist, the lead researcher of the report and a senior vice president at ATTOM Data Solutions.
"On one hand, bloated property tax rates may have a dampening effect on home price growth and home sales. We see evidence of this in states like New York and New Jersey, where home price appreciation over the past five years has not been as robust as in many other markets," he told Mansion Global.
According to Mr. Blomquist, median home prices statewide in New York were up less than 1% compared to five years ago, compared to a 45% increase nationwide. Home prices in New Jersey were up 5% over the same time period.
"On the other hand, artificially capped property taxes like we see in California with its Prop 13, which limits property taxes from rising more than 2% a year, may sometimes result in overheated home price appreciation," he said. California home prices over the past five years have grown 76% by ATTOM’s calculation.
This is the second report by ATTOM on property taxes across the country. In its 2014 report, the national average property tax rate was 1.29%, or $3,188. Texas had the highest tax rate at 2.18%, New Jersey ranked fourth at 2.07%, but in terms of absolute dollar value of property taxes, it was the most costly state in which to own a single-family home. Homeowners in the state paid an average of $8,108 in property taxes in 2014.
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Other major findings in the 2016 report include:
Among 217 metropolitan statistical areas with a population of at least 200,000, Binghamton, New York has the highest effective property tax rate (3.10%), followed by Rochester, New York (2.99%); Rockford, Illinois (2.96%); Atlantic City, New Jersey (2.77%); and Syracuse, New York (2.67%); Among the 217 metro areas analyzed for the report, those with the lowest effective property tax rates included Honolulu (0.32%); Montgomery, Alabama (0.35%); Tuscaloosa, Alabama (0.36%); Florence, South Carolina (0.44%); and Colorado Springs, Colorado (0.44%); Nine counties out of 586 counties with a population of over 100,000 and 10,000 single-family homes posted average annual property taxes of more than $10,000, including Westchester, Rockland, and Nassau counties in New York; Essex, Bergen, Union and Morris counties in New Jersey; Marin County, California; and Fairfield County, Connecticut. Owner-occupied properties (1.21%) paid higher tax rate than investment properties (1.03%) nationwide. A total of 34 states registering lower tax rate for investment properties than owner-occupied homes, including California, Texas, Ohio, Illinois and New York.
Click here to read the full report.