A New Housing Affordability Hurdle: Property Taxes

There has been a lot of talk about how soaring home values, along with high interest rates, are making home ownership unaffordable for the majority of Americans. But it’s not just impacting home buyers. The average single family home price shot up nearly 40 percent over the last three years, resulting in increased property taxes for millions of homeowners. It’s a problem for fixed-income retirees and low-income homeowners in particular because property taxes tend to take a larger percentage of their income and they are at higher risk of losing their house when that bill skyrockets.

In response, state lawmakers across the country are seeking to ease the burden, reports Kevin Hardy from Stateline. Last year, Idaho legislature approved nearly $100 million in property tax relief for homeowners in the state’s most populous county and home to Boise, Ada County. That amounted to a median cut of more than $500 per home. Montana is offering rebates of up to $675 for 2023 and 2024, and has launched a task force charged with proposing a longer-term relief plan. In Wyoming, organizers are seeking to put a relief measure on the statewide ballot after legislative efforts failed. And Nebraska Gov. Jim Pillen has proposed to offset a property tax reduction with a sales tax increase.

Jared Walczak, vice president of state projects at the Tax Foundation, told Stateline he expects many other states—both blue and red—to tackle the issue this year. 

Critics of across-the-board property cuts many states are considering say they are not sustainable, particularly when state revenues decline. Some are concerned such cuts could erode revenue for school districts and local governments. Alternatives to cuts include capping how much valuations of a home can rise each year or restricting the amount rates can increase.