Property Taxes and Housing Prices in Urban and Rural Markets

Abstract

Housing wealth represents about half of the wealth held by US households (Iacoviello 2011) and is the primary asset for most households. Housing represents 80% of the wealth for the bottom half of the wealth distribution, two-thirds of the wealth for households between 50%–90% of the wealth distribution, but only a small fraction of the wealth of the top 10% of households (Kuhn et al. 2020). Consequently, households at the bottom of the wealth distribution are much more exposed to changes in housing values. During the run-up in housing values between 1971–2007, wealth rose fastest for the bottom half of the wealth distribution. While all assets fell in value during the Great Recession, the slow recovery of housing prices compared to stock prices contributed to rising wealth inequality in the United States.