Photo-Illustration by Realtor.com; Source: Getty Images
In May 2025, nearly 1 in 5 homes on the market had a price cut, according to Realtor.com® data—a clear sign that some of the country’s hottest housing markets are starting to cool.
For homeowners who’ve watched their property tax bills climb as new home sales pushed their assessments higher and higher, it might seem like long-awaited relief is on the horizon. But the reality is far more complicated.
Even as prices dip in some areas, many homeowners won’t see a drop in their tax bills any time soon—a frustrating outcome, but one rooted in a system that was built to prioritize stability over short-term responsiveness. So while prices may be falling in some areas right now, homeowners may still be paying taxes on yesterday’s highs. That disconnect is fueling growing frustration and renewed calls for legislative reform.
Why falling prices don’t always mean lower taxes
Many homeowners are learning the hard way that property tax relief doesn’t move at the speed of the market.
Just as it took years for property tax bills to catch up with skyrocketing home prices during the pandemic, it will take just as long—if not longer—for them to reflect today’s cooling values. That’s because property assessments don’t update in real time. They’re based on past sales and often calculated months, or even years, before a homeowner ever sees a bill.
“When taxpayers get a bill from my office, those taxes owed reflect a value done by professional licensed appraisers at the Travis Central Appraisal District,” explains Celia Israel, Travis County Tax Assessor-Collector. “That appraisal was done several months prior to getting their bill. As we know, markets are dynamic, and there is not a world in which cost estimates for schools and roads can be as fluid as the real estate market.”
In places like Austin, TX (which is in Travis County), this lag can be especially painful. The average property tax bill jumped $1,123 for the 2024 tax year, KXAN reported in December—only for news to break the next month that home prices there had fallen close to 8%.
It’s a disconnect rooted in how property tax systems are designed. “Assessments are there for localities to capture a snapshot in time,” adds Brittany Ping, director of property management at Ledgeview Commercial in New Hampshire. “They’re not the same as a comparative analysis done by a real estate professional.”
In other words, your property tax bill isn’t based on what your neighbor’s home just sold for; it’s based on a data-driven estimate from a fixed point in the past. So while the price cut your neighbor’s home took last week might be top of mind, your tax bill won’t reflect that until (and unless) that dip becomes a sustained trend in the broader data.
The trade-offs behind stability
Assessments often run on multiyear cycles and include built-in guardrails like caps, phase-ins, and smoothing formulas that buffer sudden shifts. In some areas, like Cuyahoga County in Ohio, reassessments only happen every six years. While these mechanisms can help protect homeowners from steep tax hikes during boom times, they can also delay or mute the effects of a downturn.
“In Iowa, property value assessments generally can tick upward by no more than 4% annually, so even when values fall, taxable values may only inch downward,” explains Jacob Naig, a real estate investor and agent based in Des Moines.
Phoenix illustrates this dynamic well. After skyrocketing during the COVID-19 pandemic housing boom, home values in the region have since cooled. But thanks to a local cap on how much tax bills can rise each year, many homeowners continue to see their tax bills increase (albeit by tiny margins) even as their home’s market value declines.
Take my own parents, who’ve lived in their home in the Valley of the Sun for over 30 years. Their home value peaked in March 2023 at just under $700,000, and their assessed value jumped from $28,500 in 2022 to $42,410 in 2023—a 67% increase. But because of the county’s tax cap, their actual bill only rose by $16 that year, from $1,724 to $1,740.
Even as their assessment dropped the following year to $39,610, their property tax bill continued to inch up, rising another $40.
To be clear, they’re not complaining. The slow, capped increases have allowed them to stay in the only home they’ve ever owned, even as costs around them have soared. But it shows how tax protections designed to soften the blow during market run-ups can have surprising effects when values slide—sometimes delaying relief, and sometimes extending modest annual hikes even in the face of falling prices.
The cost of disconnect
This gap between falling home prices and rising or unchanging tax bills doesn’t just frustrate homeowners. For many, it reshapes how they feel about owning a home at all.
Across the country, there has been an outcry for property tax relief, from the SALT cap debate on Capitol Hill to states like Montana raising taxes on second homes to grassroots measures in Ohio for the addition of a constitutional amendment abolishing property tax all together.
The roller coaster ride that homeowners have been on with their tax bills has left many shaken, especially long-time owners on fixed incomes. When assessed values suddenly jump, as they did in the pandemic, households can face higher bills without the income or capital gains to absorb them.
“It’s this sentiment that really impacts our aging population,” says Ping. “They’re on fixed incomes, and large assessments can make their forever home unaffordable.”
The impact isn’t just theoretical. Naig has seen it play out firsthand.
“I have had families postpone holidays or tap their emergency funds because of a surprise tax increase, even as the value of their homes deteriorated,” he shares.
Where this is playing out now
The disconnect between home values and property tax bills is unfolding in real time across the country, creating financial and emotional strain for homeowners navigating a housing market in flux.
Ping shares a personal example. In 2016, she purchased a three-bedroom home in West Manchester, NH. But by 2021, the assessed value had increased 61%. She sold the home a year later.
Meanwhile, in Des Moines, modest home price declines aren’t translating into lower tax bills. One of Naig’s clients recently asked him if a 7% decline in home value would reduce her property tax bill.
“It wouldn’t,” he says. “Unless combined with a winning appeal showing localized distress.”
In Austin, the story is a bit different, but no less emblematic of the larger challenge. Israel points to proactive efforts to manage affordability by reforming local zoning laws. Those efforts have helped pull home prices back from their highs, but even as new developments aim to rebalance the market, it will take time for that balance to be reflected in property tax bills.
“Housing is still an unbalanced part of the family budget in Travis County,” she says. “But my hope is we will see improvements as we look back on the impact these projects are having on the market.”
Across these regions, the same pattern emerges: The rapid appreciation of the pandemic years has caught up with homeowners, and longtime owners who never had any intention of profiting from the run-up in prices are left footing the bill.
“Most Realtors will tell you the slowing down in the real estate market is probably a correction we have needed in a market that was overheated,” Israel adds. “Perhaps there is some steadiness ahead.”
What homeowners can do
For homeowners facing sticker shock on their property tax bills, the good news is that they’re not without options—but it requires vigilance, planning, and, in some cases, a little paperwork.
One of the most effective tools homeowners have is the right to protest their property valuation, says Israel. As both a longtime Realtor and newly elected tax assessor-collector, Israel brings a rare dual perspective to the issue. She understands the emotional and financial stakes for homeowners—but also the legal and logistical realities behind the system.
“[Real estate agents] should encourage their clients to take a close look at their Notice of Appraised Value and be familiar with the appraisal and protest process,” she says.
In many counties, the process is straightforward: Homeowners can submit evidence such as recent appraisals, sales data for similar homes, or evidence of property damage to argue for a lower assessment. Realtor.com offers a tool to help homeowners gather data on comparable properties that they can use as evidence in these appeals.
Even experienced tax professionals admit they could be doing more.
“I always think I should do more of this as it actually doesn’t take that much time to write a protest letter and every bit counts,” says Crystal Stranger, a tax expert and real estate investor.
It’s also important to understand who sets the rates and rules. In Texas, appraisal districts determine property values, but local elected bodies set tax rates, and the state legislature controls rules around caps, exemptions, and deferrals. Under Texas’s truth-in-taxation laws, tax rates can rise when values fall to help local governments raise the same amount of revenue.
The best defense is staying informed. Know your local assessment cycle, track your property’s estimated market value, and keep an eye out for your next tax notice. When the numbers don’t add up, it may be time to speak up.