Rising Property Taxes Add to State’s Housing-Affordability Woes

A new study by the Denver-based Common Sense Institute (CSI) examines the skyrocketing cost of property taxes and the implications for housing affordability in the state.

Released April 9, the study, “Colorado Property Tax Primer: Where do Property Taxes Stand and Where are They Going?” notes that a dramatic increase in home values combined with expanding local mill levies have pushed the property tax burden of most Coloradans higher than the national average. In fact, 63% of Coloradans live in a county where the property tax to income ratio is above the national average.

“Affordability and housing continue to rank as top issues for Coloradans, and the rising cost of property taxes is exacerbating the problem,” said Chris Brown, CSI vice president of Research & Policy. Under current law, property taxes are set to increase again over the next two years. Homeowners face an estimated 32% to 54% cumulative increase in their property tax bill between 2024 and 2026 for a $500,000 home.

The research calculates the property tax burden on middle-income Coloradans growing at a staggering pace. Property taxes alone account for 17% of the increase in household expenses this year.

“Rising property taxes are part of the larger affordability and housing challenges faced by Coloradans,” said Dr. Steven Byers, CSI chief economist.

An individual earning the average hourly wage to cover the monthly mortgage payment had to work 42 hours in 2013. In 2023, that number increased 172% and that same individual would have to work 114 hours just to cover the mortgage payment.

“Property taxes will continue to be a top issue for lawmakers and voters as everyone feels the pain of rising costs,” continued Brown. “Nearly every state property tax system has meaningful tax growth limitations that provide greater certainty and avoid the recurring need for last-minute property tax relief legislation. Without action, Colorado’s relative property tax competitiveness will decrease and continue to strain overall affordability.”

Read the full report at Common Sense Institute.