Real Estate Transfer Taxes and Housing Price Volatility in the United States

Abstract

Both parametric and nonparametric tests show that housing price volatility is lower in states that impose a real estate transfer tax on transaction values than those that impose no such tax in the United States. However, regression analyses show no difference in price volatility between the two tax regimes, after controlling for known economic and demographic factors, such as income, population growth, mortgage rates, property taxes, and jobless rates. Such a conclusion is robust because the fixed effect and the two-way clustering models are used to account for irregularities in the error structures.
 

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Keywords

Real Estate Transfer Taxes, Tobin Taxes, Housing Markets, Price Volatility, United States

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