Study Links Property-Tax Rules to Growing Housing Gap Between Generations

Economists from NYU and Baruch College say that low property taxes keep older owners in place, limiting homes for younger families, while higher taxes could prompt sales and lower prices.

A joint study by New York University and Baruch College economists finds that low property-tax rates for senior homeowners tend to discourage them from selling, thereby tightening the housing market for younger families. Conversely, higher taxes function like an additional mortgage payment, encouraging older owners to move and expanding supply, which can drive down prices and lower down-payment requirements for new buyers.

Researchers explain that the tax burden shifts benefits across generations: younger households often have lower wealth but higher current incomes, while older owners have more assets but limited cash flow. The paper cautions that proposals to reduce or abolish property taxes could inflate home values and hinder affordability for the next generation. Commentators also point to state policies such as Florida’s “Save Our Homes” amendment, which caps assessed-value growth for existing owners, creating a tax gap that disincentivizes downsizing. The findings arrive amid a broader bipartisan effort, including the 21st Century ROAD to Housing Act, to increase housing supply nationwide.