Property taxes are rising in every major US metro. One Michigan broker has a strategy that keeps his clients one step ahead
Rising escrow payments are one of the forces squeezing homeowners right now. Mortgage rates get the headlines, but it is the escrow portion of the monthly payment, property taxes, insurance, HOA fees, that keep climbing regardless of what the Fed does. For many buyers, the number they agreed to at closing looks very different a year or two later.
New data from LendingTree illustrates how significant the property tax piece has become. The median homeowner now pays $3,119 annually in property taxes, up 5.1% between 2023 and 2024. For homeowners with a mortgage, that figure rises to $3,489, nearly $913 more per year than those without one. Property taxes rose in every one of the 50 largest metros during that period.
For Chris Sbonek (pictured top), president and CEO of Mitten Mortgage Lending, none of this is news. He said the problem is that property taxes only get a fraction of the attention online that mortgage rates get.
"Taxes are still the biggest problem," Sbonek told Mortgage Professional America. "The rates, I don't even care about the interest rates, I'm so numb to them. The taxes are the problem."
Changing how buyers shop
Sbonek does not wait for clients to ask about property taxes. His team sends the answer before buyers ever walk through a door. When a buyer comes for a pre-approval, they leave the call with a custom spreadsheet showing the projected monthly payment, including property taxes for each city in their search area across their entire price range.
Buyers can pull up the document on their phone during a showing and work out the real cost without calling their broker every time they walk into a house.
"If you tell me you're shopping in Wyandotte, Trenton, and Southgate for between $200,000 and $250,000, we're going to send you a spreadsheet as part of your pre-approval,” Sbonek said. “We’ll go through the call with you and tell you, ‘Hey, if you buy at $200,000, here's your mortgage price. Here's what your taxes will end up being if you buy at $200,000 in Southgate. Here's what it is in Trenton.’
“And they'll look, and they'll go, ‘Oh, wow, $200,000 in Trenton costs me $2,200 a month, whereas $200,000 in Southgate costs me $2,000 a month.’"
Sbonek said the system was built by one of his loan officers, and the whole company now uses it.
"You're shopping, your agent takes you out and about,” he said. “You don't call me on Saturday and say, ‘Chris, this one's $235,000, can you run the payment?’ No, you've got it. I still think one big call upfront saves you 30 little calls down the line."
He believes that buyers who have the numbers in front of them tend to make different decisions.
"We've had people who have seen this sheet, and they've literally said, ‘If we go up to $250,000, it won't be in Trenton, because they'll see what those taxes will turn into,’" he said.
Escrow discussions are critical
Among the 50 largest metros, Tampa saw the biggest property tax increase at 7.7%, followed by Denver at 7.4% and Miami at 7.1%. At the top of the national table, New York's median property tax bill exceeds $10,000 annually. San Jose came in at $9,901 and San Francisco at $8,522. Four of the ten highest-tax metros are in California, and two are in Texas.
Matt Schulz, chief consumer finance analyst at LendingTree, said the Texas numbers are a good example of why buyers need to do their homework before assuming they know what property taxes will look like in a new market.
"Some of it will surprise some people, like the fact that Texas has some high property tax places," Schulz told Mortgage Professional America. "But as somebody who has been a homeowner in Texas for many years, I was not surprised in the least."
Schulz said the broader issue is that property taxes tend to sit outside the frame when buyers are focused on rate and price. A fixed-rate mortgage locks in the interest payment but not the escrow, and buyers aren’t paying enough attention when brokers tell them how the overall mortgage payment will increase.
"We talk about the whole fixed rate mortgage and how your rate doesn't change over 30 years and all that, but that doesn't mean that your monthly payment doesn't change because property taxes can vary pretty significantly over time," he said.
Rising home values have delivered trillions of dollars in paper gains for existing owners, but the same appreciation driving those gains is also driving up tax assessments. Schulz said that the connection tends to get lost when the conversation is focused on equity and wealth. He said having that conversation early in the transaction allows brokers to stand out as a true advisor in the process.
"Not only does it help protect the borrower a little bit, but it's good business," he said. "That sort of openness and transparency and willingness to go beyond and educate the consumer is something that would serve the business well."
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