Households’ Real Estate Asset Value Falls for First Time Since 2012

2023-03-10T09:15:48-06:00

By Jesse Wade on March 10, 2023 • The most recent release of the Z.1 Financial Accounts of the United States shows a decrease in the value of households’ real estate assets over the fourth quarter of 2022. As home prices begin to decrease from pandemic highs, households’ real estate asset value fell for the first time since the first quarter of 2012. The level of households’ real estate assets decreased by $0.07 trillion from $43.57 trillion in the third quarter of 2022 to $43.50 trillion in the fourth quarter of 2022. The market value of owner-occupied real estate increased 10.77% on a year-over-year basis from $39.27 trillion in the fourth quarter of 2021. Real estate secured liabilities of households’ balance sheets, i.e., mortgages, home equity loans, and HELOCs, increased over the fourth quarter from $12.36 trillion to $12.52 trillion, a 1.25% quarterly increase. Year-over-year, real estate liabilities increased 6.48% from $11.75 trillion in the fourth quarter of 2021. The year-over-year growth of real estate liabilities has decelerated for two consecutive quarters as home sales have slowed down across the country. Aggregate owners’ equity (i.e., the difference between homeowners’ real estate assets and liabilities) fell from $31.21 trillion to $30.98 trillion, representing 71.22% of all owner-occupied household real estate. Related ‹ Cost of Constructing a Home in 2022Tags: home equity, homeowner equity, household balance sheets, household debt, market value, mortgage debt, residential real estate

Households’ Real Estate Asset Value Falls for First Time Since 20122023-03-10T09:15:48-06:00

Property Taxes by State – 2021

2022-12-15T08:23:06-06:00

Real estate taxes vary widely across states both in terms of annual taxes paid as well as effective tax rates. In 2021, the difference between average real estate taxes (RETs) paid by New Jersey and Alabama home owners was $8,336. New Jersey continued its perennial distinction as having the highest average real estate tax bill per home owner ($9,151) as well as the highest effective tax rate (2.02%). Hawaii (0.28%) and Alabama ($815) were at the other end of the spectrum, boasting the lowest average effective tax rate and annual real estate tax bill, respectively. The difference between the highest-taxed state (New Jersey) and lowest (Alabama) grew by $362 between 2019 and 2021, more than double the growth between 2017 and 2019 ($170). The overall distribution has remained roughly unchanged since 2019, as the composition of the top ten remained the same except Washington replaced Texas as the state with the 10th-highest average real estate tax bills. The map below illustrates the concentration of high average property tax bills in the Northeast. In contrast, southern states (excluding Texas) boast some of the lowest real estate tax bills for their resident homeowners. As property values vary widely by state, controlling for this variable produces a more instructive state-by-state comparison. In keeping with prior analyses, NAHB calculates this by dividing aggregate real estate taxes paid by the aggregate value of owner-occupied housing units within a state. The effective tax rate can be expressed either as a percentage of home value or as a dollar amount levied per $1,000 of this value. The map below shows that New Jersey has the dubious distinction of imposing the highest effective property tax rate—2.02% or $20.22 per $1,000 of home value. Hawaii levies the lowest effective rate in the nation—0.28%, or $2.82 per $1,000 of value. However, this low rate combined with extremely high home values results in middle-of-the-pack per-homeowner property tax bills. Hawaii’s average owner-occupied home value ($822,187) is second only to California’s ($831,859) and is 61% higher than New York’s ($509,768). Interstate differences among home values explain some, but not all, of the variance in real estate tax bills across the country. Texas is an illustrative example of a state in which home values hardly, if at all, explain real estate tax bills faced by homeowners. While Texas ranks in the bottom half of states in terms of average home values, it is 11th in average real estate taxes paid. Other factors are clearly at play, and state and local government financing turns out to be a major one. Property taxes accounted for 36.2% of state and local tax receipts in 2021 after making up 39.9% of the total in 2020 due to a broad decline in income tax revenue as a result of the pandemic. However, some state and local governments rely more heavily on property taxes as a source of revenue than others. Texas serves as an excellent example once again. Unlike most states, Texas does not impose a state income tax on its residents.  Even though per capita government spending is tame compared with other states—14th-lowest in the country—Texas and its localities must still find a way to fund spending.  Local governments accomplish this by levying the sixth-highest average effective property tax rate (1.50%) in the country.  The state government partly makes up for foregone individual income tax revenue by imposing its corporate tax on revenue rather than income. Of course, neither home values nor a state’s reliance on property tax revenue is fully responsible for the geographic variance of property tax rates and revenues.  State spending per resident, the nature of this government spending, the prevalence of homeownership within a state, and demographics all affect tax policy and, thus, the type and magnitude of tax collections. These variables combine to explain the variance that the two factors discussed here do not fully capture. Related ‹ Downshift for the FedTags: Building Materials, cost of homeownership, effective tax rates, inflation, local government, property tax, property tax rates, property taxes, real estate taxes, residential real estate, state and local government, state and local taxes, taxes

Property Taxes by State – 20212022-12-15T08:23:06-06:00

Households’ Real Estate Asset Growth Continues to Slow in Q3

2022-12-12T08:28:16-06:00

By Jesse Wade on December 12, 2022 • The most recent release of the Z.1 Financial Accounts of the United States shows a sharp slowdown in the quarter-over-quarter growth of households’ real estate assets. After six consecutive quarters of above 3 percent growth quarter-over-quarter, the third quarter of 2022 saw a 1.74% increase in households’ real estate asset value. The level of households’ real estate assets increased by $0.72 trillion from $41.19 trillion in the second quarter of 2022 to $41.91 trillion in the third quarter of 2022. The market value of owner-occupied real estate increased 13.82% on a year-over-year basis from $36.82 trillion in the third quarter of 2021.  The slowdown in growth of real estate assets coincides with the housing market correction as housing prices adjust across the U.S. Real estate secured liabilities of households’ balance sheets, i.e., mortgages, home equity loans, and HELOCs, increased over the third quarter from $12.15 trillion to $12.35 trillion, a 1.73% quarterly increase. Year-over-year, real estate liabilities increased 7.43% from $11.50 trillion in the third quarter of 2021. This was the fourth consecutive year-over-year percentage increase above 7 percent. The year-over-year growth of real estate liabilities has steadily been accelerating over the past 3 years, from 2.59% in the third quarter of 2019 (Pre-Pandemic) to now above 7 percent for the past 4 quarters. Aggregate owners’ equity (i.e., the difference between homeowners’ real estate assets and liabilities) rose from $29.05 trillion to $29.56 trillion, representing 70.52% of all owner-occupied household real estate. Related ‹ Concrete Prices, Volatility Continue Torrid Pace as Lumber NormalizesTags: home equity, homeowner equity, household balance sheets, household debt, market value, mortgage debt, residential real estate

Households’ Real Estate Asset Growth Continues to Slow in Q32022-12-12T08:28:16-06:00

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