Like most communities in Michigan, Grand Rapids has largely recovered from the Great Recession and accompanying housing crisis. As a result, property values have mostly returned to pre-recession levels, and they continue to rise. When buying real estate in Grand Rapids, it’s important to keep your budget in mind. Although lenders are still exercising extreme caution, they may still approve you for more than you can afford. While determining the affordability of homes for sale in the city, you must look beyond the asking price and keep things like insurance and property taxes in mind. Therefore, it is helpful to understand what the current Grand Rapids property tax rate is, as it makes it easier to calculate how much your monthly mortgage payments will be.
What Are the Current Grand Rapids Property Tax Rates?
Before delving into how Grand Rapids property tax rates are determined, let’s consider how much you can expect to pay per year for property taxes on a home that is valued at $150,000. Please note that this information is current as of February 2016, but may change as millage rates fluctuate. Currently, the average property tax rate for Grand Rapids is 34.718. For an owner-occupied home that is valued at $150,000, the annual property taxes would be around $2,630. As with all Michigan communities, Grand Rapids charges a winter tax and a summer tax, and those figures are both included in that total.
How Does Grand Rapids Property Tax Rate Compare with Other U.S. Cities?
At a glance, the fact that you’d pay roughly $2,630 in property taxes for a $150,000 home in Grand Rapids doesn’t mean a whole lot. The real question is how does the property tax rate in Grand Rapids compare with that of other major U.S. cities? For that information, we can turn to the 50 State Property Tax Study 2013, a report that was put together by the Minnesota Center for Fiscal Evidence. Although rates have likely changed a little in the years since, this is still a useful way to compare how Grand Rapids stacks up. The following year property tax totals are based on properties that were valued at $150,000:
- Bridgeport, CT – $6,143
- Detroit, MI – $4,988
- Portland, OR – $3,508
- Chicago, IL – $2,311
- Atlanta, GA – $1,782
- Phoenix, AZ – $1,438
- New York, NY – $1,087
- Washington, DC – $661
- Boston, MA – $175
In a list of more than 50 major U.S. cities, then, Grand Rapids would be ranked approximately 18th, which makes it among the most expensive cities in the country in terms of property tax rates.
What Were the Effects of the Great Recession?
Although Grand Rapids has a fairly high property tax rate, the actual amount that residents pay is based on the value of their homes. During the Great Recession, the housing market faltered enormously too. Home values plummeted around the country, and Grand Rapids was no exception. Property tax bills are based on regular property assessments. Fortunately, Grand Rapids keeps up with these assessments, so during the period when values were low, tax bills were too. Now that values have largely returned to pre-recession levels, tax bills are creeping up again. However, Michigan operates under a cap rate system, which means that an inflation rate multiplier is used. As a result, property values (for the purposes of property taxes) are assessed based on inflation rates and not solely by value fluctuations. This is good news for Grand Rapids homeowners, as the inflation rate has been low.
How Are Property Taxes Calculated in Michigan?
Property tax calculators are readily available online. The city of Grand Rapids has one that is free to use, and it should come in handy while attempting to buy a home in the area. To use it effectively, however, it helps to understand how property taxes work in Michigan. First, homes are assessed by cities and townships, and local sales trends are used to arrive at approximate values. For the purposes of calculating property taxes, Michigan uses the state equalized value, or SEV, of a property, which equals 50% of the assessed value. Therefore, if a home is valued at $150,000, its SEV would be $75,000. The city then adopts a millage rate, which is elected on by citizens, and equals  the total number of dollars per thousand that you will pay. You also need to know the current principal residence portion percentage to arrive at an accurate estimate.
Is Grand Rapids’ Property Tax Rate Higher than Most Michigan Communities?
Grand Rapids property tax rate ranks high on the list of major U.S. cities. How does it stack up when compared with other Michigan communities? The average property tax rate in Michigan in 2014 was 40.79 mills. Grand Rapids’ most recent property tax rate was 28.71 for the city itself but as high as 35.24 in suburbs like Forest Hills. The highest property tax rate in the state is in Ingham County, where it is 55.27 mills. That’s largely because huge sections of land are owned by the state. Meanwhile, the lowest property tax rate in the state is 25.6 mills up in Leelanau County, where property values are very high. With all of these points in mind, it appears that Grand Rapids property tax rate is still fairly high.
What are Some Tips for Buying an Affordable Home in Grand Rapids?
You can’t hope to find an affordable place to live in Grand Rapids without having a decent understanding of current property tax rates. Just because a home seems like a veritable steal doesn’t mean it’s affordable. After calculating the annual property taxes that you will have to pay to live there, it could turn out that the home isn’t quite as affordable as it appeared. When calculating property taxes for homes in Grand Rapids, remember that you will receive the Homestead exemption as long as the home will be your primary residence. Similarly, owner-occupied properties are assessed based on the principal residence percentage, which tends to make the taxes much more affordable.
2 Point Highlight
Currently, the average property tax rate for Grand Rapids is 34.718.
In a list of more than 50 major U.S. cities, then, Grand Rapids would be ranked approximately 18th, which makes it among the most expensive cities in the country in terms of property tax rates.
