Type of Document	Thesis
Author	Kincaid, Quenton Jacquelyn
URN	etd-07092007-182921
Title	The Effect of Save Our Homes on the Probability of Sale
Degree	Master of Science
Department	Economics, Department of
Advisory Committee	Advisor Name Title Stephan Norrbin Committee Chair David Macpherson Committee Member Don Schlagenhauf Committee Member
Keywords	Lock-In Effect Save Our Homes Housing Turnover Housing Sales Volume Property Tax Portability
Date of Defense	2007-06-22
Availability	unrestricted
Abstract This study quantifies the adverse results from the lock-in effect attributable to the passage of Save Our Homes Amendment 13. Originally intending to lessen homesteader tax burden, the system reduced economic efficiency by discouraging housing turnover. Our examination is unique in that little work has measured reduced turnover as a consequence of property tax limitations. Findings contradict work by O’ Sullivan, Sexton, and Sheffrin (1995, b) as they report a minimal burden from Proposition 13’s lock-in effect. The academics’ conclusion is a result of the amendment’s extremely low one percent cap on the millage rate. Implementing a probit model we estimate the rate of housing turnover in Florida’s most active counties: Broward, Dade, Duval, Hillsborough, Orange, Palm Beach, and Pinellas. Data provided by Florida’s Department of Revenue indicates the presence of a significant deterrent effect on the State’s homesteaders during the 2001 to 2005 years. As rapid appreciation has enlarged the SOH savings ratio over the past several years, politicians should address the issue if they have interest in encouraging real estate market activity. More specifically, analysis of homesteaders indicate owners of single family dwellings were more affected by increases in the SOH savings ratio than other property owners in Broward, Duval, Hillsborough, and Pinellas counties. In particular, when single family homesteaders realize a 5 percent increase in the SOH savings ratio, Dade and Broward Counties exhibited the greatest deterrent effect; a result translating into losses of 872 and 1,128 transactions respectively. In general, homes between 150,000 and 300,000 dollars in just value respond more drastically to the lock-in effect. Owners of properties under 150,000 dollars in value may be less reactive as they may possess little knowledge of SOH portability implications. Due to potential equity effects and lower turnover rates, owners of homes greater than 450,000 dollars in just value are also less responsive to increases in the SOH saving ratio. We conclude elimination of the lock-in effect will boost sales volume and market activity in all seven counties—a result of increased market efficiency.
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