Property tax delinquency rate falls back near pre-pandemic levels

The national average for property-tax delinquencies improved in 2021 after deteriorating the previous year, falling within striking range of pre-pandemic levels, according to CoreLogic.

The rate at which taxes on 10 million mortgaged properties went delinquent dropped to 5.9% from 6.3% last year. That left the rate just slightly elevated compared to 5.6% in 2019, and below the 10-year average of 6.2%.

The decline shows relief programs and economic recovery have diminished a risk for mortgage companies and consumers related to taxing authorities' claims on properties in event of non-payment. Those claims are a particular concern for servicers because they supersede all others.

“The rise in delinquency in 2020 and decline during 2021 reflects the large job loss during the early months of the pandemic and substantial job gain of last year,” Frank Nothaft, chief economist at CoreLogic, said in a press release.

However, while the national average for property-tax delinquencies is not too far from its decade-low of 5.4%, the range in different states varies considerably from a low of 1.2% in North Dakota to a high of 15.6% in Mississippi.

Property-tax delinquency rates have been a consideration as different jurisdictions deliberate over how to distribute monies from the Homeowner Assistance Fund. Those funds are aimed at helping to buffer the phaseout of earlier relief measures put in place to counter coronavirus-related hardships.

Some states, like Mississippi and New Mexico, allow money from the fund to be used to cover property-tax delinquencies because they’ve been particularly problematic either recently or historically. Not only did Mississippi have the highest, average property-tax delinquency rate in the past year, it also was No. 1 (15.9%) when the entirety of the past 10 years is considered. The Land of Enchantment had the fourth-highest average for the period between 2011 and 2021 at 9.6%.

Rounding out the five highest, average property-tax rates for states in 2021 were Delaware (14.5%), Virginia (10.5%), New Jersey/Massachusetts (tied at 10.2%) and Washington, D.C. (10.1%).

Joining North Dakota in the ranks of the five states with the lowest property-tax delinquency rates during 2021 were Minnesota (1.3%), Wisconsin (1.5%), Illinois (1.8%) and Utah (2.2%).

CoreLogic’s findings were based on information from 10 million non-escrowed loans.