If you're in the market for a new home, don't just look at what the current property taxes would be. Instead, step back and consider the bigger picture -- because the current tax rate may very well be increased significantly in the near future.
Many cities, counties, and states are facing budget crises, and as they desperately seek new sources of revenues, property taxes are likely to increase. So are fees charged for new construction -- which may translate to higher home costs.
In Odessa, Texas, property taxes recently jumped 4.6%. That's nothing, though, compared to Gloucester County in New Jersey, where the increase from 2002 to 2003 was more than 25%. In Massachusetts, meanwhile, a Boston Globearticle explains that "Massachusetts residents experienced the largest two-year increase in property taxes in a dozen years as cities and towns struggled to make up for a slowdown in state aid between 2001 and 2003." Atlanta is currently facing increased property taxes, as are Berkeley, Ca., and countless other municipalities.
So what's a would-be homeowner to do? Look for the inside scoop. Read through back issues of the local paper to familiarize yourself with your chosen town's financial health. Talk to local residents. Simple steps like these can help you avoid moving to a location with rickety finances, or one mired in fiscal shortfalls. Even if you end up still moving to the area, you'll at least do so knowing what to expect.
A final consideration is making sure that you can afford any major property tax increases. Some homebuyers buy as much home as they can afford, which isn't the smartest thing to do because you leave yourself little wiggle room, should taxes rise or major urgent home repairs become necessary.
In a CBS MarketWatch
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