Property Taxes & Household Income Growth
Well, today we're going to look at a couple of items that should be of interest to both homeowners and those considering becoming homeowners. Usually, this type of info pops up on the pages of the Wall Street Journal, or on a financial website. But, as both subjects are important to anyone owning or thinking of owning a home, we're giving the latest, "right off the presses" as it were, on both the rate of household income increases and property taxes. The first goes toward how much house someone can purchase and maintain, while the latter gives some detailed information about what your property taxes on that home really are, in comparison to other states, and why.
Household income growth in the Bay Area is the highest rate of growth in the nation.
The Bay Area leads the nation in median household income growth according to new data from the U.S. Census Bureau, the latest indicator of our region’s remarkable economic strength.
The median household income rose an estimated 5.1 percent from 2012 to 2013 in the San Francisco metropolitan area, which includes San Francisco, Alameda, Contra Costa, Marin, and San Mateo counties. The San Francisco region outpaced both the U.S. (0.6 percent) and California (1.7 percent) in terms of annual income growth.
Households in the San Francisco metro area earned a median income of $79,624 in 2013, the second-highest in the U.S. behind the Washington, D.C. region. The Census Bureau estimates last year’s U.S. median household income at $52,250 and California’s at $60,190.
Median income is the midpoint in the range of household incomes, from the very wealthy to those with no income.
The income data was released as part of the Census Bureau’s annual American Community Survey, which measures income and poverty levels across the country. San Francisco has placed second in median income among the nation’s 25 most-populous metro areas for at least three years.
Household income is a barometer of purchasing power and is closely tied with real estate activity. The latest Census Bureau results suggest that the Bay Area’s real estate markets will continue to strengthen along with the regional economy. Sounds like a pretty good reason to buy a house and live here in the area, particularly in Marin County, which, within the greater Bay Area, has in its own right, one of the highest income growth rates in the state.
As for property taxes, the following may surprise you, especially given the cost of housing here. The National Association of Home Builders (NAHB) this week released a report on state real estate taxes across the nation, citing data from the U.S. Census Bureau’s latest American Community Survey. Living in high-tax California, we would absolutely expect to see the Golden State way up on the list of largest real estate taxes paid.
And sure enough, California had the 11th highest annual median real estate tax bill among the 50 states and Washington, D.C. in 2013 — $3,015.
Northeast states tended to have the highest tax bills, with New Jersey No. 1 in the nation at $7,331. The lowest taxes paid were in the South — Alabamans (they ranked 51st) paid $532. So California was solidly on the side of big-tax states.
But wait. Number-crunchers at the NAHB went on to note that it would also be useful to compare real estate tax rates. Most counties sets their own real estate tax rates, but dividing taxes paid statewide by the aggregate value of homes within a state reveals an effective real estate tax rate for each state.
By that calculation, the picture changes dramatically.
California, it turns out, has an effective tax rate of 0.77 percent, owing to its expensive real estate. It ranked 34th among the states.
To be sure, New Jersey is still No. 1 when it comes to real estate tax rates, at 2.09 percent, and Alabama was only one step above the bottom, at 0.39 percent. (Hawaii’s rate was 0.29 percent.) But California, in fact, sits quite comfortably among the low-tax-rate states.
Of course, this may be scant consolation for Bay Area homeowners who still pay hefty taxes for their high-value homes, but it’s worth noting a more accurate source of the pain.
For a look at the complete state rankings, including median home values, click here.
Finally, if you want to get an estimate of what your home is worth, or are thinking of buying, give us a call. We can provide you with the latest up-to-the-minute information. Peter: (415) 279-6466; Jane: (415) 531-4091.