Property taxes are on the rise in California
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Property tax bills are steeper nationwide, including in California, after U.S. home prices surged nearly 40% during the pandemic, according to a new report.
Why it matters: The increase comes as Californians grapple with living costs that remain higher than pre-pandemic times, even as inflation slows.
Driving the news: Median property taxes in California rose from $4,017 in 2019 to $4,933 in 2023 — a nearly 23% increase, per data from financial and property information company CoreLogic.
- Property taxes, which are based on a home's assessed value and the local tax rate, typically climb as home values rise.
Zoom in: San Francisco metro area's median home value increased 32% from March 2020 through June 2022 amid a pandemic-fueled surge nationwide, San Francisco Chronicle reports from Zillow data.
- The market experienced a slump shortly after — San Francisco's typical home value dropped almost 4% over the past year while California's rose by more than 5%.
State of play: In San Francisco, property taxes are calculated based on annual assessments by the Office of the Assessor-Recorder, which is overseen by Joaquín Torres.
- Property owners can file an appeal if they disagree with the assessed value.
- Over 6,800 people attempted to do so for their 2023-24 tax bills — more than triple the number of applicants for the prior year, an analysis by the San Francisco Chronicle found.
- California caps reassessment increases at 2%, until the next sale or extensive new construction, as a requirement of 1978's Proposition 13.
What they're saying: "As U.S. home prices have continued to rise and reach record highs, millions of owners are feeling the pinch from soaring property taxes," CoreLogic principal economist Yanling Mayer wrote in the report.
- San Francisco County's effective tax rate was 0.65% in 2023, real estate data firm Attom reports in a new analysis.
Between the lines: San Francisco's local property assessment roll for the 2023-24 cycle is valued at approximately $344 billion — a roughly 4.5% increase from the prior year despite the city's economic challenges, Office of the Assessor-Recorder spokesperson Abby Fay told Axios via email.
- The total assessment roll is expected to generate an estimated $4 billion in property tax revenue.
- About 64% will go to San Francisco's general fund, 34% to its schools and 2% to public transportation and air quality management.
What to watch: San Francisco's assessment roll has generally risen steadily for the last few years — approximately 45% from the 2017-18 cycle to the 2023-24 one — but that growth is projected to slow to an estimated 3% this next cycle, Fay noted.
- That's due to economic factors including high interest rates, high office vacancies and the impacts to downtown commercial valuations, as well as the rise in assessment appeals and associated refunds, Fay added.