By Alice Seeley
With the average house price in America increasing by 16 % over the last year, it would make sense if property taxes dramatically increased as well. Surprisingly, the average property tax only increased by 1.8%, the smallest increase in the past five years.
These low property taxes may not last long. According to Rick Sharga, Executive Vice President of Market Intelligence at ATTOM, due to the dramatic increase in house prices, property taxes have not caught up yet but definitely will.
“It’s hardly a surprise that property taxes increased in 2021, a year when home prices across the country rose by 16%,” Sharga said. “In fact, the real surprise is that the tax increases weren’t higher, which suggests that tax assessments are lagging behind rising property values, and will likely continue to go up in 2022.”
Mortgage rates are also on the rise. The average 30-year fixed-rate mortgage reached 5% on April 14. In the last five weeks alone, the rate has climbed 1.24 % and is 1.89 % higher than at the end of last year. Mortgage rates increased 0.28% from the prior week alone and are at the highest mortgage rate since 2010.
The average monthly mortgage payment is now $530 more than a year ago, adding more than $6,300 to a homeowner’s annual budget. With the rapid rise in mortgage rates due to inflation, the average American is struggling to buy a house. According to Freddie Mac’s Chief Economist, Sam Khater, “the pursuit of homeownership is the most expensive in a generation.”
The high mortgage rates may slow down the housing market, according to Benjamini Keys, a professor of Real Estate and Finance at the University of Pennsylvania’s Wharton School. Chief Economist at Pantheon Macroeconomics, Ian Shepherdson, said that house sales will “fall by 20 to 30% by mid-year.” Other economists disagree and expect a large number of Americans to buy a house before the Fed’s next rate hike so they can have lower rates.