In
response to growing concerns over housing affordability and the rise of vacant investment properties, cities like Oakland, California have adopted Vacant Property Taxes (VPTs) to discourage property speculation and increase housing availability. By incentivizing occupancy and reducing artificial scarcity, these policies aim to increase supply and, in turn, put downward pressure on home prices. To evaluate this hypothesized relationship, I use a difference-in-differences (DiD) approach to study the effects of Oakland’s Measure W on residential property prices, comparing changes in Oakland to those in nearby cities where a similar tax has not been implemented. Contrary to expectations, I find a statistically significant 7.66 percentage point increase in property prices—approximately $97,205 relative to the pre-policy average—following the tax’s implementation. This result, however, is sensitive to model specification. No
evidence suggests a short-term decrease in prices, and effects are more pronounced among lower-value properties. These results challenge prevailing assumptions about VPTs as a straightforward affordability tool. Rather than lowering prices, the policy may have contributed to increased housing prices, highlighting the potential for unintended consequences depending on tax design and market dynamics.
