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Impacts of property taxation on residential real estate development

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  • England, Richard W.
  • Zhao, Min Qiang
  • Huang, Ju-Chin

Abstract

Decisions about residential lot size and square footage are influenced by a variety of determinants ranging from zoning regulations to neighborhood characteristics. Our theoretical analysis suggests that the property tax rate could also affect residential lot sizes and the sizes of newly constructed houses. Using descriptions for over 36 thousand houses built in New Hampshire between 1985 and 2006, we find empirical evidence that higher property taxes are indeed associated with both smaller lots and smaller houses. On average, higher property tax rates are associated with more additional living space per newly developed acre. These effects are modest in magnitude, however.

Suggested Citation

  • England, Richard W. & Zhao, Min Qiang & Huang, Ju-Chin, 2013. "Impacts of property taxation on residential real estate development," Journal of Housing Economics, Elsevier, vol. 22(1), pages 45-53.
  • Handle: RePEc:eee:jhouse:v:22:y:2013:i:1:p:45-53
    DOI: 10.1016/j.jhe.2012.11.002
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    References listed on IDEAS

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    1. Zodrow, George R., 2001. "The Property Tax as a Capital Tax: A Room With Three Views," National Tax Journal, National Tax Association;National Tax Journal, vol. 54(1), pages 139-156, March.
    2. Zodrow, George R., 2001. "The Property Tax as a Capital Tax: A Room with Three Views," National Tax Journal, National Tax Association, vol. 54(n. 1), pages 139-56, March.
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    7. Oates, Wallace E, 1969. "The Effects of Property Taxes and Local Public Spending on Property Values: An Empirical Study of Tax Capitalization and the Tiebout Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 77(6), pages 957-971, Nov./Dec..
    8. Seong-Hoon Cho & Christopher D. Clark & William M. Park & Seung Gyu Kim, 2009. "Spatial and Temporal Variation in the Housing Market Values of Lot Size and Open Space," Land Economics, University of Wisconsin Press, vol. 85(1), pages 51-73.
    9. Richard W England & Mohan Ravichandran, 2010. "Property Taxation and Density of Land Development: A Simple Model with Numerical Simulations," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 36(2), pages 229-238, Spring.
    10. Capozza, Dennis R. & Helsley, Robert W., 1989. "The fundamentals of land prices and urban growth," Journal of Urban Economics, Elsevier, vol. 26(3), pages 295-306, November.
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    Cited by:

    1. Elvia J. Meléndez-Ackerman & Christopher J. Nytch & Luis E. Santiago-Acevedo & Julio C. Verdejo-Ortiz & Raúl Santiago-Bartolomei & Luis E. Ramos-Santiago & Tischa A. Muñoz-Erickson, 2016. "Synthesis of Household Yard Area Dynamics in the City of San Juan Using Multi-Scalar Social-Ecological Perspectives," Sustainability, MDPI, Open Access Journal, vol. 8(5), pages 1-21, May.
    2. repec:gam:jsusta:v:8:y:2016:i:5:p:481:d:70298 is not listed on IDEAS

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