Price, Rate, and Tax: The Real Cost of a Home Across Our Four States
The Mistake Most Buyers Make
When people compare housing costs across states, they compare sticker prices.
"Homes are $300,000 cheaper in Texas than in California." True, for most markets. But it doesn't answer the question the buyer is really asking, which is: what will my monthly cost actually be, and how does that compare to what I'd pay somewhere else?
The sticker price is one of three numbers that determines that. The other two are the mortgage rate you can get, and the ongoing property tax you'll pay. The rate is mostly national. The price and the tax are state-specific. And they don't move in the same direction.
This is worth understanding before you decide a cheaper state is automatically cheaper, or that an expensive state is automatically out of reach.
The Three Variables
Price
What you pay for the house. Determined by local supply and demand, land cost, construction cost, and the regulatory overhead built into new construction. Varies dramatically by state and metro — a median-priced home in a California coastal market can be three times a median-priced home in a Texas metro for comparable square footage.
Rate
What you pay the lender for the money to buy the house. The 30-year mortgage rate is a national number, driven by the 10-year Treasury yield, inflation expectations, and Fed policy. The rate you personally qualify for varies by credit profile, down payment, loan program, and property type — but those variations don't depend on what state you're in. A 740-credit-score borrower with 20% down gets roughly the same rate quote in Oregon as in Texas.
At current levels (30-year conventional in the low 6s as of this writing), the rate variable doesn't move the comparison between our four states. It moves the comparison between today and the rate environment you'd buy into six months from now.
Tax
What the local government collects on the house every year. Property tax is a state-and-local number, and it varies more across states than almost any other line item in homeownership.
- California: Prop 13 caps the base property tax rate at roughly 1% of assessed value with limited annual growth.
- Texas: No state income tax, so property tax carries more of the state's funding load. Base rates are meaningfully higher than California's, and in a MUD district the combined rate can be higher still.
- Colorado: TABOR-constrained tax structure with residential assessment rates that have historically been low, though recent adjustments have moved the number. Ranges vary meaningfully by county.
- Oregon: No sales tax; property tax rates sit in a middle band, with Measure 50 capping annual assessment growth in a way loosely similar to California's approach.
The gap between a 1% effective property tax rate and a 2.5% effective rate is a big deal over a 30-year horizon. On a $500,000 home, that's roughly $7,500 a year in additional tax — about $225,000 over the life of the mortgage before accounting for any assessment growth.
How the Three Numbers Interact
Here's the part buyers tend to miss.
A $400,000 home in a high-property-tax state and a $600,000 home in a low-property-tax state can carry monthly costs closer to each other than the sticker prices suggest. Not identical — but closer than "$200,000 cheaper" makes it sound.
The mortgage payment is driven by the loan amount (sticker price minus down payment) and the rate. The property tax is driven by the assessed value (usually close to the sticker price) and the effective rate. They both roll into the monthly cost of ownership, and they pull in opposite directions across state lines: Texas wins on sticker price, California wins on property tax, and the net number depends on where you buy, what you buy, and how long you keep it.
Oregon and Colorado sit in the middle on most comparisons, with local variation by county that can swing the answer noticeably within each state.
When the Tax Advantage Offsets a Higher Price
The short version: over long holding periods, low-property-tax states with higher sticker prices can pull closer to — or even below — higher-property-tax states with lower sticker prices.
The math depends on several factors:
- How long you plan to own. Property tax compounds over time. Sticker price is a one-time cost (paid down over the life of the loan). Longer holds amplify the property tax impact; shorter holds favor low-sticker markets.
- Assessment growth. California's Prop 13 caps annual assessment increases at a defined rate. Texas and Colorado allow more growth. A buyer in California with a 10-year hold may see their assessed value remain close to purchase price; a Texas buyer with the same hold may see their tax bill grow meaningfully.
- Income tax offset. Texas has no state income tax. California's top state income tax bracket is one of the highest in the country. For a buyer with significant income, the income tax savings in Texas can offset some or all of the higher property tax. For a retiree with modest income, that offset is smaller.
- Deductions. The SALT deduction cap under current federal tax law limits how much property tax you can deduct on a federal return. If you're already over the cap for other reasons, additional property tax doesn't reduce your federal liability the way it once did.
None of these factors is the answer on its own. They all feed into a single question: over your actual holding period, with your actual income tax situation, which state gives you the lower total cost of ownership?
What This Means If You're Weighing a Move
A few honest observations for buyers comparing our four licensed states.
IF you're moving from California to Texas to save on housing, the sticker price savings are real, and they're often large. But the property tax differential narrows the gap, the income tax savings depend on your specific bracket, and new construction in a MUD district adds a tax layer you wouldn't face in California. The "Texas is half the price" framing is right on sticker and partly right on net cost; the size of the net-cost gap depends on your holding period and your income profile.
IF you're staying in California and wondering whether a higher sticker price still pencils out, Prop 13 is doing real work for you. Your property tax compounds slower than a buyer in most other states. Over a long hold, that's a meaningful hedge against the higher entry cost.
IF you're in Colorado or Oregon, the middle-band position means neither the sticker price nor the tax is the dominant story. Local factors — the specific city, the specific neighborhood, new vs. resale, HOA structure, whether the property is in a metro district — tend to drive more of the variation than the state-level numbers.
IF you're comparing all four states with a spreadsheet, include the property tax line for the specific address, the income tax line for your actual bracket, the full 30-year loan math at the rate you qualify for, and a realistic holding period. A spreadsheet that compares sticker prices alone will mislead you. A spreadsheet with all three variables gets close to the real answer.
What Rate Environment Does to the Math
A lower rate environment reduces the gap between sticker prices, because the interest portion of your monthly payment shrinks. A higher rate environment widens it.
At today's rates, a $100,000 sticker price difference translates to roughly $620-ish per month in principal and interest, depending on loan program and exact rate. At rates a full point lower, that $100,000 difference shrinks to roughly $560 per month. Not a huge shift, but enough to change breakeven calculations for borrowers on the margin between two markets.
The practical implication: don't make a four-state comparison based on last year's rate. Use today's rate for today's decision, and expect the answer to change if the rate environment shifts.
The Takeaway
"Where is the cheapest place to buy" has no single answer because affordability is a three-variable equation. Sticker price tells you what you pay up front. Rate tells you what you pay the lender. Property tax tells you what you pay the local government, year after year.
A low-price, high-tax state can cost more to own over ten years than a higher-price, lower-tax state. The opposite is also true. The answer depends on your holding period, your income profile, the specific property, and the rate you qualify for today.
If you're weighing a move — or just trying to understand why your Texas cousin's monthly payment looks similar to yours in California despite the price gap — the math is in the three variables, not the one.
When you're ready to compare, the rate tool shows the full math on rate, APR, payment, and breakeven for any specific scenario. The state pages — California, Colorado, Oregon, Texas — have state-specific context and current rate scenarios. And if you have a specific address in mind, we can pull the actual tax data for that property before you run the numbers.
NetRate Mortgage is a mortgage broker licensed in California, Colorado, Oregon, and Texas. NMLS #1111861. David Burson NMLS #641790. Equal Housing Opportunity. Rates shown are approximate and subject to change without notice. Not a commitment to lend.
Licensed in California, Colorado, Oregon, and Texas. NMLS #1111861. Equal Housing Opportunity. Rates shown are approximate and subject to change. Not a commitment to lend.