With the release of new data from the Census Bureau’s American Community Survey, NAHB has extended its recent study of the 2009 effective property tax rates for all states and metropolitan areas to an analysis of those rates in more than 3,100 counties in the U.S., as well as cities, towns and smaller areas.

“The data reveal wide differences across counties, with median real estate taxes ranging from around $110 per home in several Louisiana parishes to more than $8,000 in Hunterdon County, N.J., and Westchester County, N.Y.,” writes Natalia Siniavskaia, an NAHB economist who is the author of the study.

“Similarly, the real estate tax rates display a wide range of values, from less than $1 per $1,000 of value in two Alaska Census areas to around $30 in several New York counties.”

Along with wide cross-country variations, the study also reveals a familiar geographic pattern, with property tax rates tending to be lower in the South, with the exception of Texas, and higher in the Northeast and Midwest.

There is also plenty of variation within the states, the study finds, although some show relatively few intra-state differences.

“For example, median property tax rates in all parishes in Louisiana and all counties in Alabama and Hawaii are consistently low and do not exceed $5 per $1,000 of value,” the study says.

“Alternatively, counties in New York have median real estate tax rates that range from less than $5 in Kings County to more than $30 per $1,000 in Orleans County.”

Drilling down to Census Bureau tracts — small subdivisions of a county with populations between 2,500 and 8,000 — the data show that even within counties, effective property tax rates can vary significantly.

Several factors were considered in the analysis of inter-tract differences, including the share of home owners who do not pay real estate taxes, median household income, the share of households with children, median home values and the median length of time owners had lived in their home.

“As expected, a large portion of inter-tract differences can be explained by their regional location, with tracts located in the Midwest, Northeast and Texas paying considerably higher property tax rates per $1,000 of value, compared to tracts in the South and West regions,” according to the study.

“This is just a reflection of a well-known and long established tradition of Southern states to rely less on real estate taxes as a source of government revenue.”

Among the report’s findings on differences in tax rates among tracts within a county:

• Tracts with a large share of home owners who are eligible for homestead exemptions and other tax credits and deductions register substantially lower median effective property tax rates compared to similar tracts with fewer exempt home owners.
  
  “For example, most tracts in Louisiana counties report consistently lower property tax rates, and consequently have a relatively low ratio between the highest and lowest tract rates within a county.
  
  “One obvious exemption is Orleans Parish, where the highest median tract property tax rate exceeds the lowest by more than 20 times.” None of the home owners in the parish are exempt from paying the tax, compared to the tract with the lowest rate, where 20% of the home owners pay no real estate taxes.
  
  
• There is a negative relationship between effective property tax rates and home values.
  
  Among the explanations for this: “Low property values drive state and local government to raise tax rates to boost government revenues; poorer neighborhoods require more public services that in turn dictate higher tax rates; when capitalized, lower tax rates boost home values.”
  
  
• Tracts that are part of counties with proportionately more children than other counties tend to have higher property tax rates.
  
  “Since property taxes are known to fund local public schools, it is likely that school districts with more children per household would set higher real estate tax rates to boost government revenues to pay for schools.” The study looked at the demographics of the counties because “school districts are typically larger than tracts and often overlap with counties.”
  
  
• Looking at how long owners were in their homes, tracts with the most recent home buyers reported slightly higher property tax rates.
  
  “This is likely to happen where localities have limits on annual property tax hikes but grant them only to existing home owners.
  
  “In this case, home buyers could face a much larger property tax bill compared to original or non-moving home owners of similar properties, resulting in higher effective tax rates in tracts with the most recent home buyers.”

To read the study, “Property Tax Rates by County and City,” click here.

For more information, email Natalia Siniavskaia, or call her at 800-368-5242 x8441.