North Carolina’s low property taxes could be a factor in state’s real estate boom

North Carolina’s low property taxes could be a factor in state’s real estate boom

May 13, 2022 0 By Victor Skinner

North Carolina property taxes ranked 13th best in the nation in a recent Tax Foundation analysis, a favorable rating that highlights a major factor behind the state’s booming real estate market.

The Tax Foundation evaluated state and local taxes on real and personal property, net worth and asset transfers to devise a ranking for each state based on how those factors attract business investment.

For the third year in a row, North Carolina ranked 13th nationally, well above neighboring states and among the best on the eastern seaboard. Florida was the only state along the Atlantic Ocean to rank better at 12th place, while neighboring Virginia came in 26th, Tennessee ranked 33rd, South Carolina ranked 36th, and Georgia ranked 25th.

“This year, the states with the best scores on the property tax component are Indiana, New Mexico, Idaho, Delaware, Nevada, and Ohio,” according to the Tax Foundation. “States with the worst scores on this component are Connecticut, Vermont, Illinois, New York, New Hampshire, Massachusetts, New Jersey, plus the District of Columbia.”

The property tax component comprises 14.4% of the Tax Foundation’s broader State Business Tax Climate Index, which also includes individual income tax, sales tax, corporate tax, and unemployment insurance tax.

North Carolina ranked 4th nationally in the State Business Tax Climate Index, behind Missouri in 3rd, and Wyoming and South Dakota, tied for first. Delaware was the worst state in the index.

The Tax Foundation analysis comes amid North Carolina’s ongoing real estate boom.

A recent analysis from RE/MAX, a national real estate firm, showed the median home sale price for Greater Charlotte “has reached a record high” at $388,000, “a 20% increase over last year,” according to the Charlotte Observer.

That figure exceeds the national average of $360,000 in March by $22,000.

Another “Home Value Index” developed by the real estate website Zillow that looks at seasonally adjusted middle-price tier homes puts the typical home value in Charlotte at $377,990, or 28% higher than last year.

The Raleigh-Durham area is also listed among RE/MAX’s five markets with the biggest year over year increase in median sales price at $415,660 in March 2022. That figure has increased 26% over the last year, from $330,000 in March 2021.

A shift to more online shopping during the pandemic has fueled higher demand for real estate in the industrial sector, as well, both nationally and in North Carolina.

Companies involved in e-commerce operations — such as a recently announced Macy’s fulfillment center in Rowan County, Kroger’s fulfillment center in Cabarrus County, and Amazon centers in Fayetteville, Johnston County, and Wake County — are helping to drive demand for industrial properties, WRAL reports.

Research from JLL, a global commercial real estate services company, shows that while the existing industrial inventory in the Triangle is nearly 85 million square feet, vacancy is at a mere 1.7%, according to the television station.

This article was originally posted on North Carolina’s low property taxes could be a factor in state’s real estate boom