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House prices and property tax revenues during the boom and bust: Evidence from small‐area estimates

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  • Christopher B. Goodman

Abstract

Although the Great Recession put the US 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.

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  • Christopher B. Goodman, 2018. "House prices and property tax revenues during the boom and bust: Evidence from small‐area estimates," Growth and Change, Wiley Blackwell, vol. 49(4), pages 636-656, December.
    • Handle: RePEc:bla:growch:v:49:y:2018:i:4:p:636-656
    DOI: 10.1111/grow.12261
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    Cited by:

    1. Tianbao Zhou & Zhixin Liu & Yingying Xu, 2024. "Characterizing Public Debt Cycles: Don't Ignore the Impact of Financial Cycles," Papers 2404.17412, arXiv.org.
    2. Howard Chernick & David Copeland & Andrew Reschovsky, 2020. "The Fiscal Effects of the COVID-19 Pandemic on Cities: An Initial Assessment," National Tax Journal, National Tax Association;National Tax Journal, vol. 73(3), pages 699-732, September.
    3. Chernick, Howard & Reschovsky, Andrew & Newman, Sandra, 2021. "The effect of the housing crisis on the finances of central cities," Journal of Housing Economics, Elsevier, vol. 54(C).

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