COVID-era stimulus and rate cuts drove a 27% rise in North Carolina property taxes

The average North Carolina homeowner has seen their property tax bill increase by 27% since 2019, a rise that is nearly three times the increase in average household income. This tax burden is a result of how local counties, the taxing authority in North Carolina, assess asset values for property taxes.

This valuation surge was driven by a 41% increase in home prices between 2020 and 2022. The price spike was caused by a mismatch between supply and demand: homebuilding declined during the pandemic while buyers surged. This surge was fueled by 30-year fixed mortgage rates falling below 3%—the lowest in modern history—and households holding savings from federal COVID assistance programs.

These market conditions were created by massive federal intervention. In 2020 and 2021, the federal government injected $5.1 trillion into the economy via relief programs, while the Federal Reserve slashed its key interest rate to effectively 0% and pumped $6 trillion of cash into the system.

As inflation rose from just over 1% in 2020 to nearly 7% in 2021 and 2022, the Federal Reserve reversed course, increasing its policy interest rate to combat the price increases. This shift caused private interest rates to climb, pushing mortgage rates to over 7%.

While mortgage rates have since decreased from their peak, the 27% increase in property tax bills for North Carolina homeowners remains.