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You Can Take It With You: Transferability Of Proposition 13 Tax Benefits, Residential Mobility, And Willingness To Pay For Housing Amenities, Fernando V. Ferreira Oct 2010

You Can Take It With You: Transferability Of Proposition 13 Tax Benefits, Residential Mobility, And Willingness To Pay For Housing Amenities, Fernando V. Ferreira

Real Estate Papers

The endogeneity of prices has long been recognized as the main identification problem in the estimation of marginal willingness to pay (MWTP) for the characteristics of a given product. This issue is particularly important in the housing market, since a number of housing and neighborhood features are unobserved by the econometrician. This paper proposes the use of a well defined type of transaction costs–moving costs generated by property tax laws–to deal with this type of omitted variable bias. California's Proposition 13 property tax law is the source of variation in transaction costs used in the empirical analysis ...