House Prices & Property Tax Revenues During the Boom & Bust: Evidence from Small-Area Estimates

22 Pages Posted: 11 Sep 2013 Last revised: 22 Sep 2018

Christopher B. Goodman

University of Nebraska at Omaha

Date Written: September 11, 2013

Abstract

Although the Great Recession put the U.S. economy into a tailspin, we know little about how the changes in house prices influenced property tax collections. Using local level housing data from Zillow matched to property tax data from 1998 to 2012, two questions are examined. First, the elasticity of property tax revenue with respect to house values is estimated. Second, the timing of this elasticity is determined. The analysis rules out that local policymakers capture the entire increase of house value in property tax revenues but unable to rule out that increases in house values are completely offset by changes in effective property tax rates. Decreases in values have an elasticity between 0.3 and 0.4 and take three years for changes in values to impact property tax revenues. While property tax collections declined, local policymakers adjusted effective millage rates such that revenues did not decline as much as home values.

Keywords: property tax, house prices, distributed lag model

JEL Classification: H71, R51

Suggested Citation

Goodman, Christopher B., House Prices & Property Tax Revenues During the Boom & Bust: Evidence from Small-Area Estimates (September 11, 2013). Available at SSRN: https://ssrn.com/abstract=2323804 or http://dx.doi.org/10.2139/ssrn.2323804

Christopher B. Goodman (Contact Author)

University of Nebraska at Omaha ( email )

6001 Dodge Street
Omaha, NE 68182
United States

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