Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/301329 
Year of Publication: 
2024
Series/Report no.: 
CESifo Working Paper No. 11203
Publisher: 
CESifo GmbH, Munich
Abstract: 
Property taxes impact the housing distribution across generations. Low property taxes lead to concentrated ownership among elderly empty-nesters, limiting housing for financially constrained young families. Conversely, high property taxes act as a “forced mortgage,” reducing upfront downpayments and enabling greater homeownership among younger households. We show in an overlapping generations model that raising property taxes in low-tax California to match those in higher-tax Texas increases homeownership in California by 4.6% and among younger households by 7.4% in steady state. Asset taxes can reallocate housing to higher-valuation households in the presence of financial constraints, providing an independent rationale for property taxes.
Subjects: 
property taxes
housing affordability
housing inequality
JEL: 
H71
R21
H24
J11
Document Type: 
Working Paper
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