Florida Faces Significant Property Tax Increases Amid Rising Home Values and Climate Challenges

Florida Faces Soaring Property Tax Bills Amid Housing Affordability Crisis

SEATTLE, October 28, 2024 — A new report from Redfin reveals that property tax bills have surged in nearly every major U.S. metro area since 2019, with Florida bearing the brunt of the increases. The Sunshine State is home to three of the five metros with the largest hikes, a trend that is compounding the challenges of home affordability for residents and newcomers alike.

According to the Redfin analysis, the median monthly property tax bill has skyrocketed in cities like Indianapolis, where homebuyers now pay 66.7% more than they did five years ago, totaling $205 per month. Atlanta follows closely with a 65.8% increase to $239. Florida cities are not far behind: Jacksonville’s property taxes have risen by 59.6% to $228, Tampa’s by 56.7% to $250, and Miami’s by 48.1% to $367.

This dramatic rise in property taxes is attributed to several factors, including the pandemic-driven homebuying boom that saw an influx of out-of-state buyers pushing home prices to new heights. Although prices have since dipped from their peak, assessed home values—used to calculate property taxes—remain significantly elevated compared to pre-pandemic levels.

Moreover, Florida’s increasing vulnerability to climate disasters has prompted local governments to raise property tax rates to fund climate-resiliency projects. With no state income tax, property taxes have become a crucial revenue source for municipalities aiming to enhance infrastructure and services in the face of rising natural threats.

Elijah de la Campa, a senior economist at Redfin, noted the irony of Florida’s allure during the pandemic. "Florida was seen as a haven for remote workers due to its relatively affordable housing. However, the surge in population has driven up home prices and property taxes, making homeownership increasingly unaffordable for many," he explained.

The report highlights that demand for homes in Florida has already begun to decline, with economists predicting a continued drop as the costs of homeownership—exacerbated by rising property taxes and insurance rates—become untenable for many buyers.

Nationwide, property taxes have increased by nearly 30% since 2019, with the average monthly bill now sitting at $250. While the effective tax rate has decreased slightly, homeowners are still feeling the pinch as they pay more in actual dollars than ever before.

In a broader context, the report indicates that property tax bills have risen in 48 of the 50 most populous U.S. metros since 2019, with only Las Vegas and Pittsburgh seeing slight declines. The findings underscore a growing affordability crisis in the housing market, particularly in states like Florida, where the combination of rising property taxes and home values is pricing many potential buyers out of the market.

As local governments grapple with the dual challenges of funding essential services and addressing climate change, homeowners and prospective buyers in Florida and beyond may need to brace for continued financial strain in the coming years.