Oregon Property Tax Capitalization: Evidence from Portland

The passage of Measures 5 and 50 drastically changed the way property taxes were assessed in Oregon. The measures were intended to limit the ability of government to raise property taxes, while achieving other goals such as equalizing school funding across the state. The property tax system that resulted is complex and has introduced inequities into the system based on differing rates of changes between assessed value (AV) and real market value (RMV). The League of Oregon Cities (LOC) asked the Northwest Economic Research Center (NERC) to investigate the effect of the tax structure on residential sale prices as part of ongoing efforts to understand the impacts of Oregon’s property tax system on local governments. Specifically, we wanted to investigate the magnitude of property tax capitalization - if two houses are similar in all ways except for their property tax payments, do their sale prices differ as a result