The Effect of Proposed Tax Reforms on Metropolitan Housing Prices

Research Report

The Effect of Proposed Tax Reforms on Metropolitan Housing Prices

April 13, 2010

Abstract

This study simulates - for 23 metropolitan areas - the change in equilibrium housing prices due to the Obama Administration's recently-proposed tax reforms. While none of the President's proposed tax reforms are directed at changing the value of housing, it is clear that under certain assumptions, the proposals would have dramatic effects on housing prices. Simulated results show the combined price effects of the tax reform package range from -5.1 percent to -17.3 percent. Any proposal that would reduce home values could further weaken an already decimated housing sector.

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