Property Tax Increases Present Another Challenge for Housing Providers
We took a deeper look at recent increases in King and Pierce Counties.
King County residents will face property tax increases of up to 4 percent on average – and some areas may see even greater increases into the double digits. While there are some opportunities for payment plans for those who qualify, most homeowners will have to make their first of only two payments on April 30.
This increase comes on the heels of dramatic year-over-year increases of 35 percent since 2013. The result is a property tax regime that is among the highest in the nation. Rents were steadily increasing in King County until COVID-19 hit. But this February, Seattle rents dropped by 20 percent compared to this time last year. While Seattle has seen the steepest decline, other locations are also seeing decreases during the pandemic.
Pierce County residents will face property tax increases anywhere from 4 percent to 20 percent dependent on where taxpayers live in the county. Homeowners should have received property tax statements for 2021 in February. Most homeowners will have to make their first of only two payments on April 30. The Pierce County Assessor-Treasurer’s Office has announced that property taxes countywide will see a 4.8 percent increase this year over 2020.
The percentage changes across the county are dependent on multiple factors like school bonds and levies, city taxes, fire district taxes, noxious weed control taxes, and Sound Transit taxes. The breakdown from the Pierce County Assessor-Treasurer’s Office shows state and school taxes add up to nearly 60 percent of all Pierce County taxes, 21 percent allocated to city and county, including the road district, fire districts are allocated 11 percent, while parks, libraries and transit account for the remaining taxes. The increase is in part attributed to Washington State Legislature’s decision to increase in the maximum local school district Enrichment Levy, from $1.50 to $2.50 per $1,000 of property value.
In addition to increased property tax, rent is steadily increasing in Pierce County. This January, Tacoma average rent surpassed national average rent and saw a 4.8 percent increase compared to last year.
What Does This Mean for Housing?
Ninety-one cents of every dollar of rent goes to costs like property taxes, maintenance, and utilities. Only nine cents returns to the housing provider. As costs like taxes go up, so must rent.
For some rental housing providers, this deadline is looming– especially for those who have not received rent payments for several months during the pandemic as a result of the eviction moratoria in place for more than a year. Unlike when COVID first hit, there is no option to defer payments this year. Housing providers are required to make property tax payments even if they are not receiving rental income, which can present a significant financial challenge. Many are not receiving true mortgage forbearance or flexibility on utility payments during this time, which further exacerbates the situation they face.
This is just another example of why we urgently need an influx of rental assistance throughout Washington. It is the best solution to make sure that residents stay in their homes, while ensuring housing providers receive the funds they need to maintain their financial obligations.
As we continue to track towards gradual recovery and reopening in Washington, we know that housing is an integral part of the equation. We face a great risk of downstream effects of lost tax revenues to our county if housing providers find themselves unable to pay. And for those housing providers who have been struggling for nearly a year during the pandemic, even a slight increase in expenses may be the final straw. Increasing costs to housing providers with no recourse is unsustainable and increases the risk of viable rental housing units leaving the market permanently – further exacerbating our regional housing crisis for both housing providers and tenants.