Property Value Growth Research Articles

Effects of property value assessment limit portability on migration outflows

AbstractThis study examines the impact of the 2008 portability provision of Florida's property value assessment limit, which permits homeowners to transfer the benefit of assessment limitations, on in‐state out‐migration. Leveraging IRS county‐to‐county migration data and quasi‐experimental designs, we find increased household and individual in‐state, county‐to‐county outflows following portability implementation in Florida relative to other states by 478 households (4.8%) and 675 individuals (3.5%). Our results suggest that natural amenities, rather than home‐ownership rates or property value growth, drive migration outflows. Robustness checks reveal heterogeneous responses across metro and nonmetro counties, suggesting that urbanization may accelerate after adopting the provision.

The Growing Intergenerational Housing Wealth Divide: Drivers And Interactions In Australia

ABSTRACT This paper unpacks the drivers of growing intergenerational housing wealth inequality in Australia. We also account for the multidimensional nature of housing wealth divides by examining the interaction between age and other divides. We find that the Australian intergenerational housing wealth gap widened from 161% in 1997–98 to 234% in 2017–18, favouring the older cohort. This was driven by lower rates of homeownership and lower property value growth among younger cohorts, with the relative lack of homeownership access the more significant driver. However, higher rates of couple formation and tertiary education amongst the young mitigated a further widening of the gap. The intergenerational housing wealth gap is exacerbated within specific population subgroups. The growing housing wealth gap between the income-poor young and income-rich old has been particularly alarming, climbing from 532% to 1230% over two decades. We discuss implications for policies seeking to alleviate intergenerational tensions in housing markets.

Immovable property taxation policy in Latvia

After the restoration of independence, Latvia took a path towards a market economy and private land ownership and which mentioned wide land privatization process and building an immovable property cadastre to collect information on immovable properties. Transition to private land ownership meant that immovable property taxation will start to tax privately owned assets not assets rented from the state, a model similar to other market economies. Initially, there were two laws on the taxation of the property – The law on land tax and the Law on Property Taxation to tax commercial assets and unfinished construction objects which were adopted in December of 1990 even before the starting of land reform and privatization. In 1997 new Law on immovable property tax was approved by the Latvian Parliament and it is still in force with numerous amendments which due to the rapid development of the immovable property sector have been approved until today. Before the global economic-financial crisis in 2008 prices of immovable property were increasing rapidly followed by contraction during the global economic crisis. Immovable property tax is often considered as taxing accumulated wealth however it may have distortions and disproportionate impact on those owners who did not contribute to immovable property value growth. Therefore, the aim of this research is to evaluate the development of the immovable property taxation system development in Latvia and to compare it with the systems of neighbouring countries. Therefore, to achieve this aim following objectives were set: to analyse legislative acts regulating immovable property taxation in Latvia, and practices of other countries and to draw research conclusions.

All Is Not LOST in Texas? An Outcome-Oriented Analysis of Local Option Sales Tax Choices on Measures of Economic Growth

Are municipal-level local option sales taxes (LOST) in Texas associated with long-term economic development outcomes? The Texas 4a and 4b LOST options fund economic development projects managed by a dedicated municipal-level economic development corporation (EDC). Instead of short-term outputs, we consider associations with three primary long-range outcomes: property value growth, population growth, and new home construction. Three regression analyses examine economic growth between 2011 and 2015 for Texas municipalities while controlling for county-level nesting effect, local capacity, and other contextual factors. The implementation of the 4a industrial development LOST shows a small significant positive association with population growth, albeit at the .10 level. The 4a LOST is also selected as part of the optimal model for property value growth despite not being significant. Implementation of the broader 4b community development LOST is not found significant nor included in any of the three outcome-based models. In each case, the county-level nesting effect is highly associated with economic development outcomes, while municipal-level capacity measures, such as property tax collected per capita, household median income, and the percentage of 4-year college graduates also show strong associations. Municipalities more dependent on the manufacturing sector show a significant negative association with all three economic development outcomes.

The Effects of Property Tax Abatements on School District Property Tax Bases and Rates

The authors analyze the effects of property tax abatement on the property tax base and rates of school districts within a municipality offering the abatement using data from Franklin County, Ohio, one of the most populous counties in the United States. An increase in a school district’s Community Reinvestment Area abatement intensity correlates with (a) a decrease in the mill rate for real property, (b) a decrease in effective residential and nonresidential property tax rates, and (c) an increase in total market value of property. While these effects are small, they indicate that a municipality’s decision to abate has generated enough growth in property values, either through improvements to physical property or positive capitalization for existing property values, to offset the negative effects of an abatement. The reason for this may be that the restrictions and oversight used in this abatement program are greater than in most other places.

Policing Gentrification: Stops and Low–Level Arrests during Demographic Change and Real Estate Reinvestment

Does low–level policing increase during gentrification? If so, are police responding to increased crime, increased demand by new residents, or are they attempting to “clean up” neighborhoods marked for economic redevelopment? To address these questions, I construct a longitudinal dataset of New York City neighborhoods from 2009 to 2015. I compile data on neighborhoods’ demographics, street stops, low–level arrests, crimes, 311 calls to the police, and—using a novel measure—property values. Maps, spatiotemporal modeling, and fixed effects regressions compare changes in stops and low–level arrests to changes in several measures of gentrification. I find, on average, calls to the police increased after a neighborhood's middle–class population grew. Calls did not translate into more stops or low–level arrests, however. Net of crime and spatial autocorrelation, police made more order–maintenance and proactive arrests following real estate market growth, suggesting development–directed policing. Property value growth in wealthy and already gentrified neighborhoods was not associated with an increase in arrests, underscoring policing's role in early–stage urban “renewal.” The article includes an analysis of three sources of property value data.

Tax Increment Financing in Chicago: The Perplexing Relationship Between Blight, Race, and Property Values

Cities use tax increment financing (TIF) to trigger growth in blighted communities. Critics argue that Chicago’s broad conceptualization of “blight” facilitates the designation of TIF districts that do not resemble conventional notions of blight, bolstering their natural ability to generate capital, thereby exacerbating the gap between wealthy and poor minority spaces. This study examines Chicago’s TIF districts to determine whether blight levels and percentage of non-White residents interact to reduce the effectiveness of TIFs measured as the change in the equalized assessed valuation (EAV) of properties. Using composite indices to measure physical and economic blight, the results of a quantile regression analysis indicate that economically blighted TIFs with predominantly non-White populations outperform other districts. These findings run counter to expectations given that TIFs report high rates of growth in property values, yet they remain substantially blighted. This suggests a need to reconsider change in equalized assessed valuation as the measure of TIF effectiveness given that the “growth” in TIFs does not seem to reflect a higher quality of life for residents.

Opportunities and risks of localised industrial policy: the case of “maker-entrepreneurial ecosystems” in the USA

AbstractEfforts in US cities to support the emergence of the “maker economy” could take urban-level industrial policy in a new direction. Optimistic projections about the potential of the maker economy for urban manufacturing revitalisation, however, downplay an enduring tension in local economic development between efforts to build endogenous capabilities and pressures to facilitate property value growth. Exploring maker industrial policy efforts in New York City and Portland, Oregon, we argue that local government actors often struggle to build network capacity and curb opportunism. District-based models hold promise, but the real estate-driven model of local development poses a persistent challenge.

Consumer Perceptions of Lawn Fertilizer Brands

Widespread urbanization in the United States has increased the number of lawns. A healthy lawn provides many benefits, including urban heat dissipation, water quality protection, erosion control, carbon sequestration, community safety, aesthetics, and property value growth. Many homeowners maintain their healthy lawns by applying fertilizers throughout the growing season, but excess fertilizer runoff and leaching have received much attention recently because of waterway pollution and algae blooms, leading many states to place restrictions on what chemicals can be used in lawn fertilizers. Consumers’ increased environmental awareness creates a niche opportunity for the fertilizer industry to promote environmentally friendly lawn fertilizers, but in order to effectively exploit it, industry stakeholders must understand consumer purchasing behavior before expending labor, time, and money creating products for sale. The following 3-page report covers research methodology and the existing brand awareness and selection of consumers in the lawn fertilizer industry. It also discusses homeowners’ preferences for certain fertilizer attributes. Consumer awareness, selection, and attribute preferences indicate existing behavior, and understanding existing behavior assists in the development of effective marketing programs, promotional strategies, and policies. Written by Hayk Khachatryan, Alicia Rihn, and Michael Dukes, and published by the Food and Resource Economics Department, March 2016.

CONSERVATION LAND AMENITIES AND REGIONAL ECONOMIES: A POSTMATCHING DIFFERENCE‐IN‐DIFFERENCES ANALYSIS OF THE NORTHWEST FOREST PLAN

ABSTRACTThe 1994 Northwest Forest Plan (NWFP) resulted in the protection of over 11 million acres of public forestland in the Pacific Northwest region of the United States. This paper quantifies the amenity effect arising from protected NWFP lands on long‐run community economic growth. Using community fixed effects and postmatching panel regression to control for many sources of bias, we find highly localized and positive amenity impacts on the growth in median income, population, and property values for small communities close to protected NWFP land, as compared to communities far from the NWFP. We find no effect on medium‐sized communities.

Do Industrial Tax Abatements Spur Property Value Growth?

AbstractDespite ongoing debate regarding the effectiveness of tax abatements, Michigan's Industrial Facilities Tax (IFT) abatement program has been widely and extensively used to boost local economic development. In this article, we estimate the effects of industrial property tax abatements on industrial, residential, and commercial property value growth in the context of regional competition for a panel of 152 communities in the five counties surrounding Detroit from 1983 through 2002. We find that: (1) offering tax abatements yields statistically significant positive impacts on industrial property value growth; (2) the impacts are larger in high tax than in low tax communities; (3) there are positive spillover effects of industrial tax abatements on residential and commercial property value growth; (4) tax abatements offered in competitor communities do not appear to influence own industrial property value growth; and (5) changes in the own as well as competitor property tax rates are important determinants of industrial property value growth. However, the fiscal benefits of tax abatements are quite small as compared with the costs of offering abatements even when spillover benefits to residential and commercial properties are considered.

Municipal Investment and Property Value Appreciation in Chicago’s Tax Increment Financing Districts

To determine whether Tax Increment Financing (TIF) triggers or captures growth, we examine the relationship between expenditures and property value change in Chicago’s TIF districts. A regression model relates spending type, which varies from infrastructure to developer subsidies, to a district’s property value growth between 2002 and 2012. Results show variation in the impact of spending, with subsidies for commercial development having the clearest positive relationship while infrastructure spending has a negative effect. Although trends are less clear over the long run, these differences underscore how the effectiveness of TIF cannot be surmised without accounting for variations in spending.

The Effects of Changes in Property Tax Rates and School Spending on Residential and Business Property Value Growth

In this article, we examine the effects of changes in property tax rates and school spending on residential and business property value growth in southeast Michigan. We use panel data for 152 communities in the five counties surrounding Detroit between the years 1983 and 2002, a period during which state government mandated major changes to school finance. Using the mandated changes to identify causality, we find that: (1) residential property values are more responsive to school spending changes than property tax rate changes; (2) business property values are more responsive to tax rate changes than school spending changes; and (3) business property values are more sensitive to changes in tax rates as compared to residential property. We also examine tax competition effects on property value growth, showing that tax competition plays an important role in property value growth in the southeast Michigan region.

Reprint of “Will They Stay or Will They Go: Predicting Subsidized Housing Opt-Outs”

Over the past 30years, the share of renters in the United States spending over 30% of their income on rent, and thereby qualifying as rent burdened, has increased. This trend has particularly affected low-income families. At the same time, owners of thousands of privately owned, publicly subsidized rental housing units have left, or “opted out,” of subsidy programs across the country. The efforts of local governments to preserve these properties as affordable housing are handicapped by a lack of understanding of the underlying factors that drive owners’ decisions to opt out. This paper employs a unique dataset on subsidized properties in New York City and uses hazard models to explore why property owners in the Mitchell-Lama program, a New York State affordable housing program, choose to opt out. Our results suggest that properties located in neighborhoods with high property value growth, those with for-profit owners, and those past the affordability restrictions on all subsidies, are more likely to opt out. While our study focuses on Mitchell-Lama properties, the findings have broader implications for properties around the country that receive supply-side rental subsidies.We thank Jingqiang Du, Amy Faust, Tyler Jaeckel, Ken Adler, and Samantha Wright for their research assistance on this project. We are grateful for the valuable feedback from Vicki Been, Ingrid Gould Ellen, Andrew Hayashi, and the rest of the staff at the Furman Center for Real Estate and Urban Policy. We would also like to acknowledge the support from the Furman Center, Herbert Z. Gold, and the MacArthur Foundation. The opinions expressed herein are those of the authors and do not represent the official positions of the Federal Reserve Bank of Boston.

Will they stay or will they go: Predicting subsidized housing opt-outs

Over the past 30years, the share of renters in the United States spending over 30% of their income on rent, and thereby qualifying as rent burdened, has increased. This trend has particularly affected low-income families. At the same time, owners of thousands of privately owned, publicly subsidized rental housing units have left, or “opted out,” of subsidy programs across the country. The efforts of local governments to preserve these properties as affordable housing are handicapped by a lack of understanding of the underlying factors that drive owners’ decisions to opt out. This paper employs a unique dataset on subsidized properties in New York City and uses hazard models to explore why property owners in the Mitchell-Lama program, a New York State affordable housing program, choose to opt out. Our results suggest that properties located in neighborhoods with high property value growth, those with for-profit owners, and those past the affordability restrictions on all subsidies, are more likely to opt out. While our study focuses on Mitchell-Lama properties, the findings have broader implications for properties around the country that receive supply-side rental subsidies.We thank Jingqiang Du, Amy Faust, Tyler Jaeckel, Ken Adler, and Samantha Wright for their research assistance on this project. We are grateful for the valuable feedback from Vicki Been, Ingrid Gould Ellen, Andrew Hayashi, and the rest of the staff at the Furman Center for Real Estate and Urban Policy. We would also like to acknowledge the support from the Furman Center, Herbert Z. Gold, and the MacArthur Foundation. The opinions expressed herein are those of the authors and do not represent the official positions of the Federal Reserve Bank of Boston.

How Effective Are Property Tax Abatements? The Case of Michigan

In this paper we examine the effects of industrial property tax abatements on industrial property value growth using data from a panel of 152 communities in the five counties surrounding Detroit in southeast Michigan over the period 1983 to 2002. We use a spatially lagged X model to account for potential fiscal spillover effects of competitor policy changes on one’s own industrial property value growth. We account for local government competition in the region by using migration patterns as a basis for determining competitor communities opposed to the traditional approaches that use distance or population size. We find that localities that offer tax abatements yield statistically significant positive impacts on industrial property value growth and the impacts are larger in high tax than in low tax communities. However, the benefits of tax abatements are quite small as compared to the cost of offering tax abatements. Also, tax abatements offered in competitor communities do not appear to influence own industrial property value growth. Finally, we find that changes in property tax rates are important for industrial property value growth.

The Effects of Changes in Property Tax Rates and School Spending on Residential and Business Property Value Growth

In this paper, we examine the effects of changes in property tax rates and school spending on residential and business property value growth in southeast Michigan. We use panel data for 152 communities in the five counties surrounding Detroit between the years 1983 and 2002, a period during which state government mandated major changes to school finance. Using the mandated changes to identify causality, we find that: 1) residential property values are more responsive to school spending changes than property tax rate changes; 2) business property values are more responsive to tax rate changes than school spending changes, and 3) business property values are more sensitive to changes in tax rates as compared to residential property. We also examine tax competition effects on property value growth, showing that tax competition plays an important role in property value growth in the southeast Michigan region.

Regional analysis of property taxation, education finance reform, and property value growth

In this article we examine the relationship between property tax rates and tax base growth in southeast Michigan using data for all 152 communities in the five counties surrounding Detroit over the 1983–2002 period. To address endogeneity, we exploit the adoption of Proposal A in 1994, which resulted in substantial exogenous and differential changes to property tax rates and school spending across all communities. This major state imposed intervention enables us to examine the tax rate–tax base relationship using appropriate instrumental variable techniques. We find that both tax rate and school spending changes have statistically significant effects on tax base growth. We also examine the effects of competitor community policies on own community tax base growth using a unique approach to define competitors. Specifically, competitor communities are determined by migration flows as opposed to the more traditional methods based on contiguity or population. We find significant regional competition effects; changes in tax rates and school spending relative to competitors are also important to tax base growth.

Beach Re-Nourishment and Property Value Growth: The Case of Folly Beach, South Carolina

Numerous studies using a variety of methods suggest that beach re-nourishment generates benefits to both recreational users and property owners. However, the only study to use a repeat sales index (Cordes, Gatlaff and Yezer, 2001) found no effect of re-nourishment on property values. We use a repeat sales index to investigate the effects of the Army Corps of Engineers’ re-nourishment of Folly Beach, South Carolina. We find that this re-nourishment has maintained property values’ rates of appreciation when compared with real estate values in a similar real estate market, the Isle of Palms, South Carolina.

Beach Renourishment and Property Value Growth: The Case of Folly Beach, South Carolina

Numerous studies using a variety of methods suggest that beach renourishment generates benefits to both recreational users and property owners. To date, however, only Cordes, Gatlaff and Yezer (2001) have used repeat sales data, and they found no effect of renourishment on property values. We use a repeat sales index to investigate the effects of the Army Corps of Engineers’ renourishment of Folly Beach, South Carolina. We find that beach renourishment has maintained property valueappreciation rates when contrasted against rates in a comparable real estate market—nearby Isle of Palms, South Carolina.