Vertical Equity in the Taxation of Single Family Homes

Vertical equity in ad valorem real property taxation is the concept that all properties within a taxing jurisdiction are assessed in equal proportion to their fair market value. This study examines the assessment of single family homes in Bellingham, Washington, utilizing a database of 1,118 home sales in the southern half of Bellingham that sold during the time period of January, 1990 through June, 1994. The results of several empirical tests suggest the presence of regressive vertical inequity. It appears that higher market value homes are assessed at a lower proportion of their value (sales price) than less expensive homes. These results suggest that property taxation at the local level magnifies the regessivity of Washington State's already highly regressive state tax system. Why does this apparent regressive vertical inequity exist? The authors offer several possibilities including the propensity of wealthy homeowners to challenge property tax assessments, the difficulty of valuing the amenities inside an upper-end home, the heterogeneity of the upper-end home market coupled with a small number of transactions, and the lack of ample staff and other resources at the County Assessor's office.

An Examination of Vertical Equity Over Two Reassessment Cycles

This article examines vertical equity in the assessment of single-family homes over two assessment cycles in Bellingham, Washington. The two assessment periods, which are four years apart, followed two differing property appreciation periods. The 1992 reassessment followed an explosion in home values, while the 1996 reassessment came after more moderate price appreciation. The assessed value/ market value ratio is the basic tool of this study with actual sales prices assumed to be market value. Utilizing a database of 721 home sales from January, 1990 to December, 1992, this study’s empirical analysis suggests regressive vertical inequity in 1992. This situation appears to have changed in 1996. Results from a second database consisting of 835 home sales from January, 1994 through December, 1996, suggest a substantial reduction in vertical inequity. Overall, it appears that the County Assessor’s office addressed the previous problem with positive results for the average property taxpayer of Whatcom County.

Canadian / U.S. Exchange Rates and Nonresident Investors: Their Influence on Residential Property Values

Factors external to a home’s characteristics may influence the sales price. This analysis focuses on Bellingham, Washington, because of several influences including the Canadian economy and nonresidents. First estimated is a constant-quality Bellingham housing price index, which is used as the dependent variable in a reduced-form model of market price to estimate the impact of the exchange rate. The analysis (1984-94) suggests that a 10% rise in the exchange rate leads to a 7.7% rise in Bellingham home prices. Additionally, in 1990, non-county buyers paid 4% to 6% more than county residents and non-county sellers received 6% to 8% less.

Environmental Determinants of Housing Prices: The Impact of Flood Zone Status

This study examines the valuation of homes located within 100-year flood plains. Utilizing a database of 29,887 property transactions in Alachua County, Florida, the results of this investigation suggest that comparable characteristic homes located within a flood zone sell, on average, for less than homes located outside flood zones. Interestingly, the price differential is less than the present value of future flood insurance premiums. In addition, the price differential is shown to have increased since passage of the National Flood Insurance Reform Act of 1994. Finally, it appears that property tax assessors have slightly over-assessed properties located in flood zones relative to those in other areas. The large database and the lengthy period of analysis (1980–1997) are much broader than that of previous research efforts.

Salinity Tolerances of Two Maryland Crayfishes

Author Institution: Chesapeake Biological Laboratory, Solomons, Marylan