Where Are Property Taxes Rising The Most?

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This is the no Closer show where you get the latest developments in distressed note investing and learn the secrets of how you can control millions of dollars worth of property for panties on the dollar. Get educated and entertained by someone who has closed thousands of deals and lives to support you in achieving the same. Now here's your host CEO of We Close Nodes, Scott Carson.

Hey everybody, Scott Carson here. Just want to say thank you again for listening to the podcast. If you've been listening for a while, you're subscribed to the podcast. First of all, thank you. Second of all, hey, you know if you're you're not one of our coaching students or you haven't signed up for one of our three day workshops, here's an opportunity for you. You want to check out our WCN membership. This is the biggest bang for the buck of the notice street. Besides our one on one coaching, this is our monthly membership for 97amonth that gives you access to all of our online training, our virtual workshops, our Note weekends, our special one day master classes that we've taught in the past, anything that we have going in the future, as long as you're a live member, if I can't make you or save you $97 a month, I'm doing something wrong. But save you paying 997 or 99 bucks or 399 here or anything like that. 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This is not a blow smoke up your tail, give you the crappy tapes left over or up, charge you 10, 15, $20,000 per asset. No, we want you to buy direct. And we've always found if you can show a man how to fish, you'll feel for a lifetime. So let's get started. You being a note investor for the rest of your investing lifetime. Good morning, good afternoon and good evening. Welcome to this episode of the Note Closure show. As always, Scott Carson, excited to be here today. Today's episode is something that I think we all worry about as real estate investors, property owners and especially for the last five Years, we've all seen property taxes increase across the country. And this episode, rising costs, where our property tax is exploding is definitely something that you're going to want to probably listen to, probably take some notes on, and then also probably check out the actual chart that we share with you guys to take a look to see how you, your largest metro that you near ranked. And what is this in response to? This is a response to. Redfin released an article where they checked property taxes across the 50 largest metros. And here's a bit of the map and you can see how it ranks from anywhere from like point seven percent increase tax rate all the way up to like one and a half percentage points. And yep, the Lone Star State, we had the highest percentage increase across the board. But also Florida was hit hard and also the Hoosier state was hit hard. And what they said is that the top five metro areas where property taxes have increased the most in the last five years since 2019, number one was basically Indianapolis. All right, and the median total monthly housing payment change from 2019 is, it's gone up basically just under 106%. Okay. Meeting total monthly housing payment is 20 $100 a month. Okay. Meeting monthly property tax payment 205. Next up on the list where it's gone up the most 106.8% on housing payments is Atlanta. I see monthly property taxes jump up to 239amonth. Okay. Jacksonville, Florida is at 99% increase in the last five years. Tampa came in at 112.4% increase and Miami came in fifth at 125.7. Now they rolled all this together to basically ranked it by how the median monthly property tax payment change came in. So I actually misquoted. So basically Miami was at 48.1% tax increase on a monthly basis in the last five years. Tampa 56.7. Jacksonville just under 60. Atlanta 65.8. Indianapolis was 60. Almost a 66.7% increase change in the last five years. Of course, this is according to Redfin as a report based on August numbers. Now we all know what's going on. The last couple months, people have been opposing their count, you know, their property taxes. And we know what's going to happen here in the next few months. New property taxes increases to come out for 2025. And here in Texas, yeah, it's, it's high because we don't have a state income tax. And a lot of those cities that you see on there, the same thing, they don't have state Income tax. But here in Florida, for some reason, for several reasons, proper taxes surged. Rising home values. The first thing that have gone up, but prices have come down a little bit. But part of it is that we had, you had so many out of town buyers moving in, pushing up prices, obviously increasing frequency intensity of natural disasters. And that Florida's had to increase their property taxes to invest in climate resist the resiliency projects. Property taxes are an especially important way for governments to pay for those projects in states like Florida and Texas that don't have state income taxes. Additionally, some homes that are especially vulnerable to climate disasters like hurricanes and flooding are essentially uninsurable. That also motivates the state government to invest in projects to protect homes and of course the increasing population of God's waiting room. The state's increasing population has also caused increased demand for government services, schools, roads, which can motivate municipalities to raise taxes. Inflation also plays a role because those services cost more than they used to. Here's a quote here from Elijah De La Campa, senior economist at Redfinning. Because Florida was alerting for remote workers during the pandemic because of its relatively affordable housing. Somewhat ironically, the state's population boom has driven up home prices and property taxes along with it. The cost of owning a home has gone from affordable to unaffordable. For a lot of local Florida residents and out of towners. Home prices that are much higher than in pre pandemic times and disaster driven surge in HOA insurance costs are now pricing home buyers out of the market. I mean these are the reasons I'm not really buying in Florida anymore. Florida used to be a lot more affordable. Obviously prices have gone up, they've gone down a little bit, but they're still not as affordable as it used to be. And remember Florida was the, the haven. All the retirees that we'll move down there, buy affordable condo and be able to live our life and afford the sunshine states altogether it has to offer. Well, that's not the case anymore because of Florida. Now here's another thing. Increasing home values, inflation are also among major drivers for the big property tax increases in Indianapolis and in Atlanta. Also worth noting that there are many idiosyncratic syncretic reasons municipalities raise property taxes. And those aren't captured by this metro level analysis. For instance, perhaps a government issued a big new bond or a new administration is making a major infrastructure investment. In Atlanta, for example, taxes increased from 2019 to 223 partly because budgets for parks and city operations increased. Okay, hey you're getting taxed for green spaces, okay. But nationwide, property taxes in dollars have increased nearly 30% since 2019 to a monthly medium of $250 a month. So basically, $3,000 a year on average is going to property taxes. Now, the average effective tax rate across US is 0.67%. So 2/3 of 1%, and that's down actually 10 basis points since 2019. Now, the effective tax rate has declined over that period because home prices have increased more than the tax rate set by local governments. Appreciation is going up faster than taxes. That's why that ratio goes down. Even though the effective tax recognition has declined, homeowners feel the burden of increasing property taxes because they're paying more in dollars than they used to. That's so true. On a metro level, monthly property tax bills increased in 48 out of the 50 most populous metro since 2019. They've declined in just two markets. Las Vegas, where they decreased from 4.3. They decreased 4.3% to just $167 per month, technically. And the Steel City Pittsburgh, where they decreased 1.7% to just $233 per month. Okay, Yay. Woo. Big whop. No surprise there. Yes, property values go up. Your property taxes are going to go up definitely. Right now. Here's some other metro level highlights. Okay. Property tax bills are highest in New York and New Jersey, lowest in the Sun Belt. New York and New Jersey home buyers have the highest property tax bills. Nassau county in New York, which is where Long island is, has the highest median monthly property taxes in dollars, clocking at the whopping at 905amonth. It's followed by Newark, New Jersey at $848 per month. New York at 821. Silicon Valley in San Jose is $782. You would kind of expect California to be a little bit higher, but anyway. And New Brunswick, New Jersey at $706 per month. Median monthly property tax bills are lowest in Phoenix, 151, Nashville, 152. Charlotte at 157, Las Vegas at 167, and Detroit at 124. Effective property tax rates are fairly low in those Sunbelt states, under half of 1%. And while rates are higher in Michigan, homes there are inexpensive. Something to keep up. More bang for your buck. All right, maybe you want. If you're looking for affordable property taxes, there you go. Although I think Phoenix prices would be a little bit higher than. I don't say, probably. Detroit and Charlotte would probably be the best to Take a look at other Nashville, you know, it's gone up crazy. Las Vegas is still. Detroit is still affordable, even though I've seen a bit of a rebound. Phoenix is just. I think they're too expensive. Now, here's the thing about being here in the home state. Okay. Effective property taxes are highest in Texas, lowest in the Sun Belt in California. All right, they're referring to property taxes here. Okay, so effective property tax rates are highest in Texas, and guess what? In the capital city of Austin, it's the highest at 1.8%, followed by Newark, New Jersey, San Antonio, Houston and Chicago, each of which have a 1.7% rate. Effective tax rates are lowest in Nashville, Phoenix, Las Vegas and Charlotte, each with rates of half of 1% or less. Effective tax rates are also low in California, with rates of 0.7 of 1% or less in every major metro in the state. Anaheim followed by la, Oakland, Riverside, Sacramento, San Diego, San Francisco and San Jose. So it's noting that the effective rate is quite low in California, largely because Prop 13 puts a lid on how much property taxes can increase. True. When you buy a property in California, Prop 13 says that basically no matter how long you owe own it, you're only gonna be taxed on when you buy. So that's why you have a lot of these mansions that people lived in for 30, 40 years. They're still paying taxes like it was 30, 40 years ago, which I do. I don't necessarily think that's correct. All right, Effective tax rates have increased since before the pandemic in just five U.S. metros. All right, San Antonio comes first with a 12 basis point uptick since 2019, followed by San Francisco at six points, Indianapolis, three, Jacksonville, two and Atlanta, two points. They've declined most in Newark, New Brunswick, Pittsburgh, Nassau county and Montgomery County, Pennsylvania. That's because home prices, those those places rose while the tax rate set by New either stayed the same or rose only slightly. Okay, New Yorkers, here's a disturbing figure. New Yorkers spend 10% of their monthly income on property taxes more than anywhere else. Man, talk about tithing to the property owner. Wow. Typical New Yorker buyer spends 10% of their income every month on property taxes, a higher share than any other metro area. Next shows new work at 9%. Austin, 8. 8%. Not Nassau County, 8. And New Brunswick, 7%. Yeah. NE Austin, Texas, 8% of what you take home each month is going to go. You don't have time, you don't have any extra money to tip to God or your retirement. Right. And Nashville, Phoenix, Charlotte, Las Vegas, Denver. Buyers put between 2 and 3% of their income towards property taxes. That's the lowest shares in the nation. Okay. In Newark, buyers were putting 11% of their income towards property taxes in 2019. Today it's 9%. That's the biggest decline in the US. Next comes Nassau County, Pittsburgh and New Brunswick and Philadelphia. The typical US home buyer spends 4% of their income on their property tax bill, essentially unchanged for 2019. The typical. Well, we live in an atypical world in a lot of cases. Okay, here's for you guys here in a Lone star state. For many, Texas property taxes make up roughly 20% of the monthly housing bill. When we know 10% is going to taxes or 8%, 20% is going monthly housing bill. We all know Austin is one of the most unaffordable cities in the country. Property max taxes make up 20% of the median house housing bill in Austin, more than anywhere else in the country. Next comes Newark at 19, San Antonio at 19, Houston at 19 Houston and Fort Worth at 18. Dallas was in there as well somewhere. Just tells you the Lone Star State is no longer affordable. Craziness. Property taxes make up about 5% of housing payments in Nashville, Phoenix, Las Vegas, Charlotte and Anaheim. Smaller, sure, than anywhere else in the country. You know what, hey Steph, we're moving to Charlotte. We're just getting the hell out of Dodge and moving to Charlotte. Okay. Property taxes make up smaller share of monthly housing payments than they did before the pandemic in every major US metro. The declines are biggest in some of the places with the highest effective property tax rates, led by Newark where property taxes make up 19% of housing payments now down from more than 30% in 2019. Was crazy. Next comes New Brunswick, Pittsburgh, NASA county and Chicago. Chirac, Crook County. In San Fran, property taxes make up 6% of the typical home buyers housing bill down just slightly from about 7% and the smallest decline of the metros in this analysis. It's followed by Jacksonville, Atlanta, Indianapolis and Denver. Nationwide, property taxes make up 8% of the typical home buyers housing bill. Now think about that when you start looking at debt to incomes and payment costs, stuff like that taxes make up. This is also why you see a lot of defaults in these communities with new build homes, especially first time home buyers. The property taxes often based just off the lot, not the improvements. And we see that happening where, oh, after the first year. Now the taxes are based on the improvements and it's going through the roof and people can't afford it. Because they didn't figure that into their budget. All right. If you'd like to check out the full article, the full graphs where you can see how the top 50 rank, you can do so by going to HTTPs basically snip.ly backslash property taxes. And we'll put the link below in the chat roll or in the description for you. Take a look at. But I just found that interesting. Why you know, Austin, you know, somebody was figuring out it's like it's over like a $3,000 a month extra or not $3,000 but $3,000 a year bonus for living here in Austin. Now the tacos are good, breakfast tacos are good, but I don't know if they're worth 3,000 good. Some people would say yes, our weather's great. You, you know, some would say it if you've lived here for a while like I have, it may not be worth it any much because the city has changed so much. But anyway, stay tuned guys for more stuff. I hope you enjoyed that. But yeah, property taxes, I think we can agree are going up everywhere for the most part but may come into a bigger consideration when you're looking at buying real estate. For me, it's made some changes for me in buying. Really stop buying in Florida. But I do like Indianapolis, I do like Indiana, I do like parts of Tennessee outside of Nashville. I do like Sin City. You know, there's some different opportunities there for you, but definitely something to keep in mind when you're looking to invest because taxes, property tax is something that's just going to get paid. Otherwise if you don't pay your property taxes, you won't own your property very much longer. So anyway, hope that's helpful guys. Go out, take some extra money and we'll see at the top. Bye Sam Ra.