A mortgage has a final payment. Property taxes do not. That distinction is becoming increasingly important as the housing industry searches for answers to an affordability crisis it usually defines in terms of home prices, mortgage rates and household income.
Those are obviously major factors. But they are not the entire payment.
Property taxes can add hundreds or even thousands of dollars to a homeowner’s monthly housing expense. They reduce buyer qualification, diminish purchasing power and continue long after the mortgage has been satisfied.
In 2025, approximately $396.8 billion in property taxes were levied on more than 89.6 million single-family homes in the United States. The average bill reached $4,427, or nearly $369 per month, according to ATTOM.
At a hypothetical mortgage rate of 6.5%, that $369 monthly tax payment is roughly equivalent to the principal-and-interest payment on $58,000 of 30-year mortgage debt. That makes property-tax policy housing policy.
It also raises a question that deserves far more attention from agents, lenders, builders, economists and policymakers: What would happen to the housing market if homeowners were allowed to keep more of that money?
Start with a $1 million home in Dallas
Dallas provides a useful real-world example.
For a property located within the City of Dallas and the Dallas Independent School District, the principal 2025 tax rates included 0.6988% for the City of Dallas, 0.993835% for Dallas ISD, 0.2155% for Dallas County, 0.106575% for Dallas College and 0.212% for the Parkland Hospital District.
Together, those rates total approximately 2.2267% before exemptions and any additional special-district charges.
On a $1 million taxable value, that equals approximately $22,267 per year, or $1,856 per month. That is before homeowners insurance, HOA dues, maintenance, repairs and utilities.
Some properties in the broader Dallas–Fort Worth area are subject to additional municipal utility district, public improvement district or other special assessments. Where the combined property-tax burden approaches 3%, the tax on a $1 million home reaches $30,000 per year, or $2,500 per month.
Put that into mortgage terms. At a hypothetical rate of 6.5%, a $1,856 monthly payment is approximately equal to the principal-and-interest payment on a $294,000 mortgage. A $2,500 monthly payment is approximately equal to the payment on a $396,000 mortgage.
The owner of a $1 million Dallas-area home may therefore carry a monthly property-tax obligation comparable to financing hundreds of thousands of dollars in additional mortgage debt.
There is one important difference: The mortgage payment reduces a loan balance, builds equity and eventually ends. The property-tax payment does none of those things.
Texas provides meaningful relief for qualifying primary residences. School districts must provide a homestead exemption, and local taxing units may provide additional exemptions. Qualifying homesteads also receive limitations on annual increases in appraised value.
But those protections create another issue for buyers. The seller’s tax bill may reflect years of appraisal limitations, an over-65 tax ceiling or exemptions that will not transfer to the new owner. The buyer may be looking at a historical tax bill that has very little to do with the obligation that will follow the sale.
Fannie Mae’s selling guide specifically requires lenders to project real estate taxes when a transfer is likely to trigger reassessment. Real estate agents should be doing the same thing during the earliest stages of the buyer consultation.
A home does not become affordable merely because the principal-and-interest payment fits the buyer’s budget. The complete payment matters.
Local officials also do not have to raise the tax rate to collect more from homeowners. When assessed values rise, property-tax bills can rise with them. That is how homeowners can be told that the tax rate was not increased while simultaneously receiving a larger tax bill. Both statements can be true.
Lower property taxes would increase purchasing power
Buyers purchase monthly payments, not asking prices. Principal and interest are only part of that payment. Property taxes, insurance, association dues, mortgage insurance and certain assessments all affect qualification.
If a recurring housing expense declines, the buyer can generally devote more income to the mortgage itself. Meaningful property-tax relief could therefore bring sidelined buyers back into the market without waiting for the Federal Reserve to lower interest rates.
It could also increase home values.
Federal Housing Finance Agency research examining Philadelphia’s 10-year property-tax abatement found that the value of the tax benefit was initially capitalized fully into home prices. In plain English, buyers were willing to pay more for homes because the future property-tax burden was lower.
That is an important distinction.
Reducing or eliminating property taxes would not necessarily make the underlying homes cheaper. Some of the monthly savings would likely be converted into higher purchase prices as buyers competed for available properties.
Existing homeowners could benefit twice: Their carrying costs could decline while their property values increase.
First-time buyers might experience a mixed result. Their monthly qualification could improve, but higher prices could increase the down payment required to buy.
Still, the immediate market effect would be difficult to ignore. Lower monthly expenses would mean more purchasing power, more qualified buyers and stronger demand.
What would homeowners do with the money?
The average national property-tax bill represents approximately $369 per month. What would that money mean to a typical household?
Some homeowners would spend it. They might renovate a kitchen, replace a vehicle, travel, eat at local restaurants or hire contractors.
Others would pay down credit-card balances, medical bills or student loans. Some would build emergency savings. Others would fund retirement accounts, college accounts or investment portfolios.
A homeowner who invested $369 per month for 20 years and earned a hypothetical average return of 7% would accumulate approximately $192,000. After 30 years, the balance would be approximately $450,000.
Returns are never guaranteed, but the example illustrates the opportunity cost. Money paid in property taxes cannot simultaneously be saved, invested or used to eliminate debt.
A homeowner could instead apply the money to the mortgage principal. Consider a $350,000, 30-year mortgage at 6.5%. Adding $369 per month to the principal payment would reduce the payoff period to approximately 20½ years.
The homeowner would become mortgage-free nearly a decade earlier and save roughly $163,000 in interest.
Now multiply those choices across tens of millions of households.
The result would not simply be higher consumer spending. It could mean stronger household balance sheets, faster equity accumulation, lower personal debt and more private investment.
Property taxes and sales taxes are not the same
Any serious discussion of property taxes eventually runs into the argument that government must collect revenue somewhere. That is true. But not all taxes affect behavior and ownership in the same way.
A sales tax is generally triggered by a transaction. The consumer decides whether to purchase the new television, furniture, automobile or boat. The purchase can be postponed. A less expensive product can be selected. The consumer can decide not to complete the transaction at all.
Sales taxes are not entirely voluntary. People must purchase necessities, and some states impose tax on used or private-party transactions. But consumers usually retain meaningful control over when taxable spending occurs and how much they spend.
Property taxes are different.
They are imposed year after year because the person continues to own the property. It does not matter whether the owner’s income increased. It does not matter whether the owner retired, lost a job or began living on Social Security. It does not matter whether the home was purchased three years ago or 50 years ago. It does not matter whether the mortgage is still active.
The bill continues indefinitely. A consumer can walk away from a purchase. A homeowner cannot walk away from the property-tax bill without eventually walking away from the property.
Failure to pay a sales tax generally prevents a purchase from taking place. Failure to pay property taxes can cost someone an asset that may already be owned free and clear.
A paid-off mortgage does not mean a paid-for home
This may be the most disturbing part of the property-tax system. A homeowner can make every mortgage payment for 30 years. The loan can be satisfied. The bank’s lien can be removed. The house can be owned without a mortgage.
The homeowner can still lose that house for failing to pay property taxes.
Older homeowners are especially vulnerable. Many are house-rich but cash-poor. They may possess hundreds of thousands of dollars in equity while living on fixed incomes that do not keep pace with rising taxes, insurance and maintenance expenses.
The risk can increase after the mortgage is paid off. While the loan is active, the mortgage servicer often collects property taxes through an escrow account and pays the taxing authority automatically. When the mortgage ends, that system may disappear.
The older homeowner becomes responsible for receiving the bill, budgeting for it and paying it directly. A missed notice, illness, cognitive decline, death of a spouse or simple inability to pay can begin a process that ultimately threatens a mortgage-free home.
How many Americans lose homes this way every year?
The honest answer is that no one knows and that may be the most troubling fact of all.
There is no reliable national database tracking completed property-tax foreclosures and the number of homeowners ultimately displaced. The data is scattered across thousands of counties, municipalities, courts and taxing authorities using different laws and reporting systems.
The United States tracks mortgage rates, mortgage delinquencies, bank foreclosures, prices, sales, listings and housing starts. But it cannot say with confidence how many people lose mortgage-free homes because they could not afford a local property-tax bill.
The 2023 Supreme Court caseTyler v. Hennepin Countyillustrates the stakes. Geraldine Tyler, then 93, accumulated approximately $15,000 in unpaid taxes, penalties, interest and costs on a condominium. The county sold the property for $40,000 and kept the $25,000 surplus.
The Supreme Court ruled that the government could not take value beyond the amount legally owed without providing compensation.
That ruling was important. It protects a homeowner’s remaining equity after the tax debt is satisfied. But it does not make the property-tax obligation optional. It does not prevent a tax foreclosure. And it does not allow the owner to remain in the home. Protecting surplus equity is not the same as protecting possession.
Property-tax collections have surged
Local governments have become accustomed to property-tax revenue moving in one direction: up. Census Bureau data published through the Federal Reserve Bank of St. Louis show that rolling four-quarter state and local property-tax collections increased from approximately $515 billion in late 2015 to approximately $834 billion in late 2025.
That is an increase of nearly 62% in nominal dollars over 10 years.
Those figures are not adjusted for inflation, and local governments have faced higher labor, healthcare, construction and operating costs. Still, revenue growth on that scale deserves scrutiny.
Homeowners should be able to ask whether the quality of services improved at a rate comparable to the increase in revenue. In many communities, homeowners do not believe they did.
Meaningful property-tax relief would force local governments to ask questions that private businesses confront constantly: What must be funded? What can be consolidated? What can be automated? What can be outsourced? What has failed? What no longer needs to exist?
That review should not require a financial emergency.
Reform has to include spending
None of this means essential local services should disappear. Schools, police departments, fire protection, roads, sanitation and emergency services must be funded.
Eliminating property taxes without reducing government spending would merely transfer the burden to another form of taxation. Homeowners would gain little if the property-tax bill were replaced dollar-for-dollar with higher sales taxes, income taxes, utility charges, assessments and fees.
Meaningful relief requires actual spending restraint.
It requires governments to distinguish between essential services and institutional spending that continues because the revenue has always been available.
The real economic opportunity would come from allowing households to retain more money while government becomes more efficient—not simply collecting the same amount through another door.
Property taxes should be discussed during the first buyer consultation, not discovered at the closing table.
Agents should show the full monthly housing expense from the beginning. They should identify every taxing authority attached to the address. They should not assume the seller’s bill will resemble the buyer’s bill. They should understand how reassessment, exemptions and special districts affect the payment.
Lenders should be equally cautious when projecting taxes after a transfer.
Housing professionals should also recognize that property-tax policy can materially change buyer qualification, home values, migration patterns, investment returns, rental costs, household mobility and the ability of older owners to remain in their homes.
This is not a side issue. It is a central housing-market issue.
The real estate industry has spent years waiting for lower mortgage rates to restore affordability. But rates are not the only recurring expense standing between buyers and homeownership.
Property taxes can consume the equivalent of hundreds of thousands of dollars in borrowing capacity. They can rise without an increase in the stated tax rate. They can continue after the mortgage is paid. And failure to pay can result in losing a home that no lender has any remaining claim against.
Meaningful property-tax reform could lower monthly housing expenses, increase purchasing power, strengthen household finances and support higher home values.
It could also force local governments to answer a question that has become increasingly difficult to avoid:
If property-tax collections and city budgets have increased dramatically, why has government efficiency not increased just as dramatically?
A mortgage has a final payment. For millions of American homeowners, property taxes do not.
The housing industry should stop pretending that distinction is minor.
Tim and Julie Harris are real estate coaches, bestselling authors and the publishers ofHarris Real Estate Daily, a daily source of housing-market intelligence and practical analysis for real estate professionals.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
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