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By Giulia Carbonaro
Senior Reporter
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Rising property taxes are driving American retirees out of the country's most expensive states and straight into the cheapest ones, according to recent data analyzed by real estate market research company John Burns Research & Consulting (JBREC).
Why It Matters
Property taxes have surged in nearly every U.S. metropolitan area between 2019 and 2024, according to a Redfin report, exacerbating the ongoing housing affordability crisis affecting American homeowners and aspiring buyers.
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The real estate brokerage found that nationwide, property taxes are now nearly 30 percent higher than they were before the pandemic, with a monthly median of $250.
American homeowners are paying higher sums even though the average effective tax rate across the U.S. is down to 0.67 percent from 0.77 percent in 2019 because home prices have climbed much faster than the rates set by local governments.
Rising housing costs, including property taxes, are particularly burdensome for retirees, who often live on a fixed income and risk having their savings eroded by sudden increases.
What To Know
Ian Kennedy, a data scientist at JBREC, created a chart identifying where the highest property taxes in the country were in 2023, the latest data made available by the U.S. Census Bureau's American Community Survey.
In the dark red areas, property taxes exceeded 2 percent of a home's value. In the beige areas, property taxes were less than 0.5 percent of a home's value. Tax rates are set by municipalities and local governments and vary by town, city, school district, county and state.
According to JBREC analysis, American homeowners paid the highest property taxes on the East Coast, especially in New York, New Jersey, and Pennsylvania, where rates were between 1.75 percent and 2 percent of a home's value or higher.
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Many states in the Midwest also had relatively high property taxes, with rates in Illinois ranging between 1.75 percent and 2 percent of home values. The West and the South had generally lower property taxes, except Texas, where rates were between 1 percent and 1.50 percent.
Kennedy and his colleagues then compared property tax rates across the country with migration trends involving Americans aged 65 and older, finding that states with lower property taxes were attracting the highest number of out-of-state newcomers.
"High property tax rates in New York, New Jersey, and Illinois—among others—limit in-migration [the process through which residents of one country permanently relocate to a new area of that same country] among the 65+ population," Kennedy told Newsweek.
He explained that in 2023, no more than 1.1 percent of the 65+ population in these three states had moved from out-of-state during the prior year.
In stark contrast, in states with notably low property tax rates—including Nevada, Delaware, and Arizona—more than 2.5 percent of their 65+ population had moved from out-of-state during the prior year.
Where Are Retirees Moving To?
Data shows that retirees are moving as far as they can while trying to stay as geographically close as possible to their home states.
"Geography plays a major role," Kennedy said.
"Retirees on the East Coast generally opt to stay on the East Coast. The same is true out West. For example, in 2023, roughly 3.5 percent of Nevada's 65+ population moved from out-of-state during the prior year," he said.
"Among those out-of-state movers, roughly 36 percent moved from California. Likewise, about 3.3 percent of Delaware's 65+ population moved from out of state during the prior year, with roughly 50 percent of those movers coming from New Jersey, Maryland, or Pennsylvania," Kennedy added.
Kennedy said that, in general, "warm weather and sunbelt climates" still dominate migration trends for retirees, "though we are seeing this trend shift slightly further north as increasing hazard insurance premiums become a barrier to affordability in markets in Florida and Texas."
Why Are Retirees Moving?
According to Kennedy, property taxes make up an outsize portion of retirees' housing costs and can be a significant factor in their decision to relocate.
"Typically, their homes are larger and of higher value, meaning property taxes are a greater burden," he said. "On the flip side, they are less likely to have a mortgage or be impacted by other forms of taxation—sales tax or income tax—than younger Americans."
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Data from the U.S. Census Bureau's Current Population Survey confirms this trend. In 2023, the latest data available, American retirees moving out of their state were most likely to relocate for housing-related purposes (33 percent), followed by family-related purposes (27 percent) and other reasons (24 percent) during the prior year.
In some cases, senior vice president of research at JBREC Chris Porter told Realtor.com, American retirees are moving to be closer to their children and grandchildren who may not be able to afford high property rates or elevated housing costs in some of the most expensive states in the country, such as California and New York.
However, the high number of retirees relocating to cheaper states could increase competition for prospective buyers in these same states, which in turn could worsen the affordability crisis.
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