The good news: The city’s new growth and strong local economy have it set to head into the Fiscal Year 2024 budget cycle with as large a pot of money as ever.
The bad news: More of it’s coming from you.
Boston’s rolled out its tax info for this year, and while the rates themselves continue to creep downward — in an indication of a continually hot local real-estate market both on the residential and commercial sides — the average amount a single-family homeowner will pay is jumping up yet again.
The numbers
The residential rate is now $10.74 per $1,000 of value for residential property, down from $10.88 per $1,000 in 2022, and $24.68 for commercial and industrial, as opposed to $24.98 in 2022.
That means that the owner of a $500,000 house pays $5,370 this year, not counting the city’s homeowner exemption. That’s down from $5,440 in 2022 — that is, if the house had the same value each year.
In Boston, though, that last addendum rarely holds true. In 2019, an average single-family home in Boston was $596,698. Last year, it was $734,824. Now, in 2023, it’s $798,397.
That’s up 33.8% from five years ago, and 8.7% over the 2022 mark.
The city’s residential exemption for homeowners has grown, too, but the discount’s risen more slowly than the cost. The exemption is now $3,456.50, up 4.6% from $3,305.20 in 2020. It was $2,719.09 in 2019, so it’s risen 27.1% since then.
“The reality for residential property in Boston is that values are still climbing,” Commissioner Nicholas Ariniello of Boston’s Assessing Department told the Herald.
Ariniello said that the deadlines for people seeking abatements is coming up Feb. 1, and residential exemptions have to be in by April 3.
“There’s value in going to our website and seeing what your tax bill is based on — if we have something wrong, we want to be able to fix that,” Ariniello said. And, “If you can take advantage of the residential exemption, you should.”
Paying more
City Councilor Tania Fernandes Anderson, the Ways & Means chair, told the Herald that while “none of us intuitively love taxes,” they’re an important part of funding important city programs and services.
That said, “working and middle-class homeowners continue to be hit hard by increasing property taxes, which on top of their mortgages, can make it very difficult for them to remain in their homes and, if they are able to, it leaves little left over for repairs and maintenance,” Fernandes Anderson said.
“As it is, while it is good that we are acquiring sources of funding to the commons via property taxes, we need to think more about how said taxes have a disproportionately negative impact on working class homeowners, hence contributing to further displacement and gentrification,” she continued
Realtor Meg Grady of East Boston said she just wrapped up a big project restoring the house she’d been living in — and promptly got hit with two $3,000 tax bills each due in February and May. She said the combination of the fact that she couldn’t live there and get the exemption while she was renovating it and the fact that it was assessed so much higher than the original lender planned for have hit her pocketbook hard.
“The American dream for city dwellers is super hard to navigate, especially for families,” she said.
Fatima Ali-Salaam, the head of the Greater Mattapan Neighborhood Council and a homeowner herself in the neighborhood, noted it was important to have houses valued right, as opposed to the decades of heavily Black areas like Mattapan being undervalued in a way that made it hard for residents to keep up their homes and have access to capital through them.
That said, she added, “The rising tax rates hit hardest to people more if they’re older and not able to maintain their homes overall.”
Continued growth
Ariniello pointed to positive notes on the commercial side and around new growth. Assessments are based on the two calendar years previous, so this is now off of 2021 data, with last year coming off of 2020 — the heart of the pandemic, when everything shut down for a sizable chunk of the year.
So last year, based on the peak-pandemic numbers, the amount the city brought in from assessed “new growth” from development dipped significantly to $81,816,835 from an all-time peak of $102,673,140. But now, based on the 2021 numbers, it’s bounced back up to $97,704,718.
“We were not sure how that was going to play into calendar year 2021,” Ariniello said. “But we saw a nice rebound in growth.”
Another element that was notable in its normalcy was the commercial side of property tax assessments.
The city, as it does every year, raises commercial to lower residential rates in a split as large as is statutorily allowed. But this year — as was recently worried about by some city councilors and budget watchdogs — there was a fear that commercial and industrial values might start to tank because offices are looking to downsize as more workers do their jobs remotely, and that that would lead to residents having to pay even more.
That’s not reflected in this year’s data, at least, when commercial values continued to climb.
“We did not see a significant decrease in rents that were being asked for space — we did not see a significant increase in vacancy,” Ariniello said.
Again, he noted, this is based off of 2021 data, and the situation has rapidly changed over the past few years. He acknowledged that this is something they’re looking hard at as the city moves forward, but, “We don’t want to kind of hastily react to something that we haven’t seen yet.”
“We’re still kind of in that speculative stage where people are making educated guesses,” Ariniello said.
He noted that while there certainly are companies that are going to be cutting space the next time their leases are up, industries like biotech are booming here, and lab work isn’t something that can be done remotely so much.
He said that even though official data runs a couple years behind, they do keep an eye on reports of vacancies, sales and the like, and, “We’re not expecting there to be a precipitous decline in commercial value.”
One complicating factor for commercial property is that office leases are typically years long, so a company that decides to downsize now might not actually do so for a couple of years.
“If you look at the lease term expirations, ’23 and ’24 are big years,” James Rooney, head of the Greater Boston Chamber of Commerce, told the Herald. “In talking to my members in various industries, they’re thinking about their needs — their office-space needs.”
On downsizing, he said, “That’s going to happen. It’ll be a slow burn. We’ll see some impact there.”
On one hand, he said it bears watching how some of the ongoing and planned megaprojects such as Suffolk Downs, the Harvard Allston campus and Dorchester Bay City to see if developers look to delay completion of parts. That could suggest fewer companies are looking for space drops.
That said, biotech and and artificial intelligence seem to be where the money’s at — and it’s still there.
“I’m heartened by new demand,” Rooney said.
