Can Property Taxes Reduce House Price Volatility? Evidence from U.S. Regions

November 10, 2016

Preview Citation

Format: Chicago

Tigran Poghosyan. Can Property Taxes Reduce House Price Volatility? Evidence from U.S. Regions, (USA: International Monetary Fund, 2016) accessed December 22, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

We use a novel dataset on effective property tax rates in U.S. states and metropolitan statistical areas (MSAs) over the 2005–2014 period to analyze the relationship between property tax rates and house price volatility. We find that property tax rates have a negative impact on house price volatility. The impact is causal, with increases in property tax rates leading to a reduction in house price volatility. The results are robust to different measures of house price volatility, estimation methodologies, and additional controls for housing demand and supply. The outcomes of the analysis have important policy implications and suggest that property taxation could be used as an important tool to dampen house price volatility.

Subject: Econometric analysis, Effective tax rate, Estimation techniques, Housing, Housing prices, National accounts, Prices, Property tax, Tax policy, Taxes

Keywords: Effective tax rate, Estimation techniques, Global, House price volatility, Housing, Housing prices, Price, Price sensitivity, Property tax, Property tax rate change, Property tax rate impact, Property tax tax rate, Property taxes, WP

Publication Details

Pages:

26
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2016/216
Stock No:

WPIEA2016216
ISBN:

9781475552799
ISSN:

1018-5941

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