Investigating Inequities in Appraised Residential Property Values for Dallas County, Texas, from 2004 – 2014: Using an Instrumental Variable Approach

Date

2019-05

Authors

Fell, John William

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Abstract

Research suggests that effective administration of property tax assessment is challenging under conditions of rapidly fluctuating house prices, lack of comparable sales, and use of informed guesses for value judgments. The literature catalogues tools for identifying inequities yet there is still debate over the appropriate approach. This research builds upon Cheng’s (1976) model specification to vertical inequity estimation by employing hedonic house price characteristics in the first stage of a two-stage least squares estimation. This specification generalizes into temporal and spatial models using indicator variables for sale years and market areas, respectively. Results find full expression using a graphical plot of inequity estimates in the original scale. Single-family, residential dwellings exhibit a mixture of progressive, equitable, and regressive patterns before, during, and after a period of volatile housing market dynamics in Dallas County, Texas

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Keywords

Property tax, Tax assessment, Housing—Prices, Instrumental variables (Statistics), Least squares, Regression analysis, Residential real estate

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©2019 John William Fell

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