Tax Limits and Housing Markets: Some Evidence at the State Level

William H. Hoyt, Paul A. Coomes, Amelia M. Biehl

Research output: Contribution to journalArticlepeer-review

12 Scopus citations

Abstract

Property tax limitations, as well as other tax and expenditure restrictions on state and local governments in the United States, date back to the late 19th century. A surge in property tax limitation legislation occurred in the late 1970s and early 1980s, and its effects on government revenue, school financing and educational quality have been studied extensively. However, there is surprisingly little literature on how property tax limits affect housing markets. For the first time, we examine the impacts of property tax limitations on housing growth, in addition to their impacts on housing prices. Using state-level data over 23 years, we find that property tax limits increase housing prices (indexes) by approximately 2%. Property tax limits appear to have little impact on the growth in the housing stock, but education spending limits reduce the number of building permits by over 6%. Our indirect evidence suggests that the number of housing units may grow when property tax limits are accompanied by increases in other own-source revenues to state government.

Original languageEnglish
Pages (from-to)97-132
Number of pages36
JournalReal Estate Economics
Volume39
Issue number1
DOIs
StatePublished - Mar 2011

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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