The Connection Between House Price Appreciation and Property Tax Revenues

Lutz, Byron F.

doi:10.17016/feds.2008.48

Cited by 35 publications

(81 citation statements)

References 17 publications

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“…In an analysis of school districts in Georgia, Alm et al () demonstrate that rising assessed values tend to be associated with increases in district spending and Georgia school districts tend to engage in some limited offset of effective property tax rates as a result of rising assessed values. These results are supportive of the findings of Lutz (). Finally, Mikesell and Liu () find a positive relationship between house prices and assessed value in a sample of large cities in US with a fairly stable elasticity of 0.4.…”

Section: Previous Literaturesupporting

confidence: 92%

“…For years three and four, the elasticity can be distinguished from both zero and one indicating that local policymakers decreased effective tax rates (and property tax burdens), but not by the full amount of the reduction in house values. Previous results would indicate that reductions in house prices are more than offset by increases in effective tax rates (Lutz, ) leading to fairly stable property tax collections. During the Great Recession, local policy makers allowed property tax collections to decline, but not to the extent of house values declines.…”

Section: Small Area Analysismentioning

confidence: 95%

“…Following Lutz (), the estimating equation for this analysis is.

Δ ln R_{i, t} = α + {false\sum}_{j = 1}^{4} β_{i} Δ ln V_{i, t - j} + {false\sum}_{j = 1}^{4} β_{small, i} Δ ln V_{i, t - j} \times (small) + {false\sum}_{j = 1}^{4} β_{large, i} Δ ln V_{i, t - j} \times (large) + {false\sum}_{j = 1}^{4} β_{decrease, i} Δ ln V_{i, t - j} \times (decrease) + δ Δ X + \in_{i, t}

…”

Section: Small Area Analysismentioning

confidence: 99%

“…However, through the recent financial crisis, the once stable property tax has been tested by rapidly appreciating and then declining house prices. Recent research has brought to light the connection between changes in house prices and changes in property tax revenue at the national as well as the local level (Lutz, ). This research suggests that house price appreciation is not 100% incorporated into property tax revenues because of reductions in effective tax rates.…”

Section: Introductionmentioning

confidence: 99%

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

Goodman

2018

Growth and Change

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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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Section: Previous Literaturesupporting

confidence: 92%

Section: Small Area Analysismentioning

confidence: 95%

“…Following Lutz (), the estimating equation for this analysis is.

Δ ln R_{i, t} = α + {false\sum}_{j = 1}^{4} β_{i} Δ ln V_{i, t - j} + {false\sum}_{j = 1}^{4} β_{small, i} Δ ln V_{i, t - j} \times (small) + {false\sum}_{j = 1}^{4} β_{large, i} Δ ln V_{i, t - j} \times (large) + {false\sum}_{j = 1}^{4} β_{decrease, i} Δ ln V_{i, t - j} \times (decrease) + δ Δ X + \in_{i, t}

…”

Section: Small Area Analysismentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

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

Goodman

2018

Growth and Change

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“…7 Recent research demonstrates a statistical relationship between changes in housing prices and property tax revenues, with changes in tax revenue lagging changes in housing prices by about three years. i,8,9,10 These results are consistent with national level data, which show that housing prices peaked in the first quarter of 2007. 11 …”

Section: The Impact Of the Recession On The Financing Of State And Losupporting

confidence: 86%

Forecasting the Revenues of Local Public Health Departments in the Shadows of the “Great Recession”

Reschovsky

Zahner²

2016

Journal of Public Health Management and Practice

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Context The ability of local health departments (LHD) to provide core public health services depends on a reliable stream of revenue from federal, state, and local governments. This study investigates the impact of the “Great Recession” on major sources of LHD revenues and develops a fiscal forecasting model to predict revenues to LHDs in one state over the period 2012 to 2014. Economic forecasting offers a new financial planning tool for LHD administrators and local government policy-makers. This study represents a novel research application for these econometric methods. Methods Detailed data on revenues by source for each LHD in Wisconsin were taken from annual surveys conducted by the Wisconsin Department of Health Services over an eight year period (2002-2009). A forecasting strategy appropriate for each revenue source was developed resulting in “base case” estimates. An analysis of the sensitivity of these revenue forecasts to a set of alternative fiscal policies by the federal, state, and local governments was carried out. Findings The model forecasts total LHD revenues in 2012 of $170.5 million (in 2010 dollars). By 2014 inflation-adjusted revenues will decline by $8 million, a reduction of 4.7 percent. Because of population growth, per capita real revenues of LHDs are forecast to decline by 6.6 percent between 2012 and 2014. There is a great deal of uncertainty about the future of federal funding in support of local public health. A doubling of the reductions in federal grants scheduled under current law would result in an additional $4.4 million decline in LHD revenues in 2014. Conclusions The impact of the Great Recession continues to haunt LHDs. Multi-year revenue forecasting offers a new financial tool to help LHDs better plan for an environment of declining resources. New revenue sources are needed if sharp drops in public health service delivery are to be avoided.

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How do financial cycles affect public debt cycles?

Poghosyan

2017

Empir Econ

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The Connection Between House Price Appreciation and Property Tax Revenues

Cited by 35 publications

References 17 publications

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

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

Forecasting the Revenues of Local Public Health Departments in the Shadows of the “Great Recession”

How do financial cycles affect public debt cycles?

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