For homeowners across Arizona, property taxes are becoming a significant addition to the cost of homeownership. Since 2019, property taxes have climbed nearly 30% nationwide, with Arizona residents feeling the pressure as home values surge. According to a recent Redfin Corp. analysis, the median monthly property tax payment now sits at $250, despite a slight drop in the national average effective tax rate from 0.77% to 0.67%. This increase is driven by a combination of higher property values and local government needs that impact residents across Arizona.
Why Arizona’s Property Taxes Are Rising
Daryl Fairweather, Redfin’s chief economist, explains that most municipalities — including some in Arizona — don’t update property tax assessments annually. This can create a lag between property value surges and tax assessments, causing many Arizona homeowners to see delayed increases from value spikes back in 2020 and 2021.
“Some of those increases in values that happened in 2020 and 2021 are still being baked into assessments,” Fairweather points out. While some areas adjust their tax rates to balance these valuation surges, others keep rates steady, passing on increased costs to residents. Inflation, too, has raised the expense of municipal operations, from public services to infrastructure, putting further upward pressure on property tax rates.
Growing Needs in Arizona’s Expanding Cities
As Arizona’s population continues to grow, the demand for public infrastructure and services rises. Arizona cities such as Phoenix, Scottsdale, and Mesa are expanding quickly, and these growing communities require funding for schools, emergency services, roads, and other essential services. Property taxes are a primary funding source for these needs, so as Arizona’s population swells, these taxes play an even more critical role in maintaining and developing municipal infrastructure. Consequently, property owners see these costs reflected in their tax bills.
Arizona’s Real Estate Market and Rising Property Taxes
In recent years, Arizona has become a hotspot for new residents, driving substantial growth in property values and increasing the cost of housing. Cities like Phoenix have experienced some of the fastest home value growth nationwide, making Arizona real estate particularly valuable. While beneficial for property value appreciation, these rising prices also drive up property taxes for homeowners. This trend affects both new homeowners and long-time residents who now face higher annual tax bills tied to increased property assessments.
For many homeowners in Arizona, these rising taxes are becoming a larger portion of their monthly housing costs. While mortgage payments might remain steady, property tax bills can shift significantly with new assessments, adding a layer of unpredictability to household budgeting. Monitoring local tax rates and assessment cycles can help homeowners in Arizona manage these fluctuations and stay prepared.
The Growing Impact of Property Taxes on Arizona Homeownership
For Arizona residents, rising property taxes mean increased monthly costs, particularly in regions that have seen significant home appreciation in the past five years. Property taxes now play a larger role in overall housing costs, underscoring the importance for homeowners to plan ahead. These taxes are essential to municipal budgets, but they directly affect affordability, especially in high-growth regions.
Understanding how property taxes are assessed and staying informed about changes in local tax rates will be crucial for Arizona homeowners to manage the ongoing costs of homeownership. From budgeting for these expenses to planning for potential tax hikes, Arizona residents can benefit from staying updated on how these tax obligations evolve with the market.
