Rising Property Taxes Can Make New Housing Harder to Build
Property taxes fund schools, public safety, infrastructure, and other essential services. They also represent a significant ongoing housing expense, with implications for both existing apartment communities and future construction.
In its recent Expense Watch analysis, the National Apartment Association reports that the typical market-rate apartment property devoted 8.8% of total income to property taxes, compared with 4.0% for affordable housing properties, during the 12 months ending July 2026. While national median property-tax growth remained relatively modest, several markets experienced increases that substantially outpaced rental income growth, adding pressure to operating budgets.
The connection between property taxes and housing production begins before construction. Developers, lenders, and investors evaluate whether a proposed community will generate enough income to cover operating expenses, repay financing, and provide a sufficient return to attract investment. Anticipated property taxes are part of that calculation.
When projected tax expenses increase without a corresponding increase in revenue, less income remains to support financing. A developer may need to contribute additional equity, revise the project, or delay construction. For a development already close to the threshold of financial feasibility, additional recurring expenses can determine whether it moves forward.
The same pressure affects existing communities. Higher tax bills can reduce the funds available for renovations and other improvements, particularly when insurance, maintenance, utilities, and payroll are also competing for limited revenue.
What this could mean for North Carolina: As local governments consider future budgets and tax decisions, the effect on housing investment deserves attention. If property-tax expenses rise faster than rental income, they could make some planned communities more difficult to finance and slow investment in existing housing.
These are potential development consequences, rather than a North Carolina construction forecast from NAA’s research. The national findings nevertheless underscore why policymakers should examine ongoing operating expenses alongside land prices, construction costs, financing, and development requirements.
For the Charlotte region, encouraging housing production requires considering the full cost of providing homes over time. Efforts to streamline approvals and expand development opportunities will be more effective when paired with predictable operating costs.
Policy takeaway for elected officials: Tax policy is also housing policy. GCAA encourages state and local leaders to consider how tax decisions affect housing feasibility, support transparent and predictable assessment practices, and work with housing providers to balance essential public services with continued investment in housing supply.