5 takeaways:
➀ Local property tax assessments are subjective — and worth investigating. Carlos Avenancio-León of the University of California, San Diego, said that Black and Hispanic residents face a 10-13% higher tax burden than whites because of the way property taxes are assessed. In a massive analysis that included more than 100 million properties nationwide and their annual property tax assessments, Avenancio-León detailed how the property tax assessment system introduces inequalities that favor whites and harm Black and Hispanic homeowners because the assessed value of their homes tends to be higher than the actual market value. He measured this by comparing the ratio of the property’s assessed value to its realized market value and found that the average assessment ratio for a Black resident was 12.7% higher than for a white resident. For Black or Hispanic residents combined, the average assessment gap was 9.8%. Maps of Cook Country, Illinois, and Philadelphia show this pattern, he said. There’s also a big spread in which states have the widest “assessment gaps,” led by Illinois, Missouri, Ohio and Alabama. Reporters can use that as a jumping-off point to explore the issue in their home markets.
➁ Although people can appeal their assessments, Black and Hispanic homeowners are less likely to do so. “Even when they do appeal, they are less likely to win the appeal,” Avenancio-León said. “When they win the appeal, they get a smaller reduction.” While the data work underlying the analysis is complicated, it gets at a very simple truth: Black and Hispanic residents end up writing bigger property tax checks than they would if the system were truly equitable. But assessors do not and should not take race into account when assessing home prices, he said.
➂ Home price growth data is widely available. Visit the Census and Economic Information Center’s website to see the growth of housing prices from March 1992 to March 2021. The Federal Housing Finance Agency has a house price index that is the nation’s only collection of public, freely available house price indexes that measure changes in single-family home values based on data from all 50 states and over 400 American cities since the mid-1970s.
➃ For Avenancio-León’s analysis, three data sets were crucial. The American Community Survey is managed by the U.S. Census Bureau and provided the minority share in each neighborhood. That survey also provided characteristics of neighborhoods, from employment rate to homeowner percentage rate. The Home Mortgage Disclosure Act of 1975 requires certain financial institutions to provide mortgage data to the public. “HDMA specifically required that race was recorded and made available because there were concerns about inequality in lending,” Avenancio-León said. The data can be used to get information about the race and income of homeowners. Finally, ATTOM is a vendor that compiles property tax records across the U.S., even on a county level. There’s also information provided about transaction prices.
➄ Reporters should start with their county tax assessor. “We have worked with many of these assessors in Cook County, Atlanta and Wisconsin many times,” Avenancio-León said. Journalists might need to file FOIA requests, and they are likely to face unresponsive county assessors or have trouble finding a statistician who can help combine American Community Survey and Home Mortgage Disclosure Act data. Avenancio-León and his colleagues are working on developing an interactive map that would show two components: the inequality in each county, as well the decomposition of the inequalities on a neighborhood and homeowner level. Avenancio-León hopes that such an interactive map would reduce the grunt work of finding and compiling key data.
Speaker:
Carlos Fernando Avenancio-León, Assistant Professor of Finance, Rady School of Management, University of California, San Diego
This program was funded by the Evelyn Y. Davis Foundation. NPF is solely responsible for the content.
