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The Effect of Property Assessment Reductions on Homeownership: A Quasi-Dynamic Economic Analysis

Author

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  • Fernanda Alfaro
  • Dusan Paredes
  • Mark Skidmore

Abstract

This article evaluates the impacts of reductions in residential effective tax rates on homeownership in Detroit, Michigan. The decline in effective tax rates was driven by a citywide reassessment that significantly reduced effective tax rates. These estimates are used to infer the potential impacts of moving from a traditional property tax to a split-rate tax in which the tax rate applied to land is higher than the tax rate applied to structures. Using Detroit parcel-level data over the years 2012–2019, we find that tax reductions resulting from property reassessment generated a very small net decrease in homeownership. Our evaluation suggests that moving to a split rate tax would likely result in a minimal change in the homeownership rate in Detroit.

Suggested Citation

  • Fernanda Alfaro & Dusan Paredes & Mark Skidmore, 2022. "The Effect of Property Assessment Reductions on Homeownership: A Quasi-Dynamic Economic Analysis," Public Finance Review, , vol. 50(6), pages 704-731, November.
    • Handle: RePEc:sae:pubfin:v:50:y:2022:i:6:p:704-731
    DOI: 10.1177/10911421221129309
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