House Prices and City Revenues

William Doerner and Keith Ihlanfeldt

No wp2010_05_01, Working Papers from Department of Economics, Florida State University

Abstract: Very little is known about what impact recent large upward and downward swings in single-family home values have had on local government budgets. Using a unique 15-year panel of Florida cities that includes both detailed revenue and house price data, we investigate the pathways whereby a change in house price may affect city revenue per capita and test for symmetric effects during housing booms and busts. For the median-sized city, we find that while increases in house price raise revenues, decreases in price have no effect on revenues. In addition, the former impact is small in magnitude. While the strongest pathway is through assessed values, our results illustrate that a change in house price can also affect other sources of revenue besides ad valorem taxes. The overall conclusion is that movements in Florida housing markets are only weakly related to a city’s property taxes and total revenues per capita, which fails to support the argument portrayed in the popular press that house price changes strongly impact local budgets.

Keywords: house prices; city revenues; ad valorem (search for similar items in EconPapers)
JEL-codes: H20 H71 R20 (search for similar items in EconPapers)
Pages: 29
Date: 2010-05, Revised 2011-02
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Citations: View citations in EconPapers (8)

Published in Regional Science and Urban Economics

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Journal Article: House prices and city revenues (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:fsu:wpaper:wp2010_05_01

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DOI: 10.1016/j.regsciurbeco.2011.02.004

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