Essays on homeownership and property transfer tax

This dissertation consists of three essays on homeownership with heterogeneous agents and with property and transfer taxation on real estate. The first essay examines the factors which explain differences between Asian-American homeownership rates and the US population as a whole. As previous studies have found, Asian-American rates lag behind those of white households, and immigration characteristics, the age of the household head and location are the primary reasons for this difference. Asian-American sample is further disaggregated into categories based on the heritage of the household head. Those who are of Japanese ancestry have the highest homeownership rates, and this is seen to be due to their greater average age, and earlier immigration dates, and in spite of the higher costs of homeownership where they reside, Japanese-American households have more than proportionate representation. The lowest ownership rates occur in those groups which are youngest and have immigrated to the US most recently.;The second essay investigates the impact of fiscal variables on the housing consumption behavior. Local tax might play a role not only in the generation of tax revenue, but also in the redistribution of wealth through the provision of public services. For this reason, transfer tax, property tax and the level of local public services are taken into consideration in our analysis of the housing price.;The overall conclusion for transfer tax is that housing prices fall more than an amount of the tax in the short run, and that tax expense is born by the sellers. Comparing property tax with transfer tax, we find that consumers are more sensitive to change in transfer tax, which is one-time tax than to changes in annual property tax. Our findings also show that the benefits of public services exceed tax payments to the extent that tax revenues are spent for those services.;The final essay looks at the implication of a transfer tax on home ownership rate. Even though the transfer tax is an important source of revenue among many local jurisdictions and one factor affecting tenure decisions, the study of this taxation has been very limited. We investigate the impact of transfer tax on tenure decisions and examine its relative potency vis-à-vis the impact of property tax.;Over all conclusion is that property tax and transfer tax reduce the homeownership and the transfer tax has a stronger impact on tenure decisions. One possible explanation comes from who pays for the benefit of public goods. That is, the property tax is charged to both owner and tenants for the use of public goods, while the transfer tax is charged only to owners (sellers/buyers). The other explanation comes through the mortgage market. Both taxes, the transfer tax and property tax, impact homeownership through the mortgage market. High transfer taxes reduce the wealth of households and high property taxes reduce family income. As studied by Linneman and Wachter (1989), the wealth constraint and income constraint reduce the homeownership rate but the wealth constraint has a larger effect on homeownership. Thus, the transfer tax has a stronger impact on tenure decisions. These two tax variables play significant roles in influencing tenure choices, along with the city dummy variable and the vacancy rate.