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An economics commentary published Sept. 28 examines a tension in U.S. housing politics: homeowners want rising home values but lower property taxes. Drawing on a paper by David Schleicher, it says recent reforms can shift costs to commercial property, other taxes and state budgets, and may push home prices higher by lowering the cost of ownership.
A Sept. 28 commentary from Conversable Economist examines how property tax cuts could affect home prices and local budgets, drawing on a paper by legal scholar David Schleicher. The central tension is that homeowners may welcome rising values as a source of wealth while also opposing the higher tax bills that can accompany those values; reducing the tax burden, the commentary argues, may in turn make homes more expensive to own and buy.
Schleicher’s paper, “The Great American Property Tax Freak Out,” was posted online at SSRN on Sept. 1, 2026, according to the commentary. It says several states have substantially changed property tax systems over the past three years, giving large tax benefits to owner-occupied homes and shifting more of the cost of public services to commercial property owners, other local taxes and state funding.
The source names Florida, Ohio, North Dakota and Texas as states where policymakers have considered going further, including exempting owner-occupied homes from property taxes or eliminating the tax entirely. The commentary does not provide details on the status, scope or final outcomes of those proposals, so they should not be read as enacted policy.
According to the analysis, property values rose substantially in the post-COVID period, particularly in suburbs. Homeowners have reacted politically to the resulting tax burden, while commercial property owners in some areas have faced declining property values. The commentary says this combination can intensify pressure to shift taxes away from homeowners and onto commercial property, including rental apartment buildings.
How Tax Cuts Could Raise Home Costs
Property taxes fund services that residents rely on, though the balance varies by locality. The commentary describes them as a major source of revenue raised directly by local governments and, in turn, a main funding source for local schools. Many local governments also use them to support police services. A tax cut can therefore affect more than a homeowner’s annual bill: it can alter who pays for services and how reliably local governments can finance them.
The analysis argues that lower property taxes reduce the cost of owning a home and can be reflected in higher market prices. If buyers are willing to pay more for a home with a lower recurring tax bill, existing owners may benefit from both a tax reduction and an increase in the home’s value. That may make it harder for prospective buyers to enter the market, particularly if home prices rise faster than their incomes.
These effects are not guaranteed in every market. The source presents them as economic implications of tax changes, rather than measured outcomes for each state. It also says reforms could bring trade-offs, including greater state authority over local governments and less stable local funding, alongside less risk of tax foreclosure during recessions.
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Why Homeowners Want Both Outcomes
The commentary frames the issue as a conflict between individual financial interests. A homeowner can gain wealth when their own property appreciates, yet might prefer other homes to become cheaper if they plan to move. In the same way, owners may welcome rising home values while objecting to property taxes that reflect those values.
Property taxes are based on wealth held in property, not necessarily on cash income available to pay a bill. The commentary notes that a home’s value can increase without its owner receiving additional income. That tension can be especially sharp for older homeowners, who may have substantial home equity but lower current incomes. The source describes this group as politically influential in campaigns to reduce or end property taxes.
Tax systems differ widely across U.S. communities, and the commentary cautions against assuming the same funding mix or consequences everywhere. In general, however, local governments rely heavily on property taxes, while states may draw on income and sales taxes to support services or replace local revenue.
“These reforms shift the property tax from a tool homeowners use collectively to provide for locally-wanted services towards a more standard form of redistributive taxation, charging commercial property owners to pay for services for homeowners.”
— David Schleicher, in “The Great American Property Tax Freak Out,” as quoted by Conversable Economist
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Which Policies Will Take Effect
The source does not identify the precise legislation adopted in each state, the size of tax reductions, or the amount of revenue shifted to commercial property, state budgets or other local taxes. It also does not quantify how much any reform has changed home prices or local services. The named states are described as considering more extensive changes, not as having necessarily enacted them.
Actual effects will depend on local tax rules, housing supply, market conditions and how governments replace lost revenue. The commentary’s prediction that lower taxes can raise home values is an economic argument; the provided material does not establish a single price effect that applies across communities.
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State Choices and Local Budgets
The next developments to watch are whether state lawmakers advance proposals to exempt owner-occupied housing or eliminate property taxes, and how local governments respond to any limits on their taxing authority. Budget decisions will show whether reduced property tax revenue is replaced through state funding or other local taxes, or whether spending on schools, police and other services changes.
For housing markets, the relevant question is whether lower ownership costs feed into sale prices and how that affects prospective buyers. The source provides no timeline or forecast for those outcomes. Any assessment will require tracking enacted tax rules, local revenue and housing costs over time.
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Key Questions
Does the commentary say property taxes have been eliminated in the states it names?
No. It says Florida, Ohio, North Dakota and Texas have considered more extensive changes, including exemptions for owner-occupied homes or broader elimination. The source does not say those proposals have all become law.
Why can a homeowner’s tax bill rise when their home becomes more valuable?
Property taxes are tied to property value under local rules. When an assessed value rises, the tax bill may rise as well, although the precise effect depends on the jurisdiction’s rates, assessment process and any limits or exemptions.
How could property tax cuts make homes more expensive?
The analysis argues that a lower recurring tax bill reduces the cost of owning a home. Buyers may then be willing to pay more for the property. This is a projected market effect, not a guaranteed result for every area.
Who could pay more if homeowners receive property tax relief?
According to the commentary, reforms can shift costs to commercial property owners, including owners of rental apartment buildings, or to other local taxes and state funding. The actual distribution depends on the policy adopted.
Could lower property taxes affect local services?
They could affect local budgets because property taxes are a major revenue source for many local governments and help fund schools and, in many places, police. Whether services change depends on whether lost revenue is replaced and on local spending decisions.
Source: hn
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