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How do assessed values affect the transaction prices of homes?
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DOI：10.1016/j.jbankfin.2025.107610.png)
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Abstract
En 中文
Property taxes are commonly levied as a percentage of a home’s assessed value (AV). AVs should affect home prices through opposing channels. An unexpected increase in AV implies higher tax payments, which should hurt a home’s selling price (tax channel). On the other hand, the increase should have a positive effect since AVs serve as reference prices (anchoring channel). In a quasi-experimental setting exploiting geographic variations in AV-publication dates and reassessment frequencies, we find that a higher AV leads to a lower transaction price, indicating that the tax channel prevails. Disentangling the aggregate effect, we document that empirically, the anchoring channel does not play a major role. Our results thus suggest an exacerbation of previously documented inequities caused by taxation.
Keywords:
G12
R38
H20
Assessed values
House prices
Transaction prices
Quasi-experiment
Property taxation
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