Despite gloomy predictions and continual press reports that South Florida property values are sinking into the ocean, South Florida single family homes are appear to be holding steady at prices that are 30 – 35% below their 2006 peak. It’s the taxable values that are declining.
However, South Florida property taxes have not yet matched the drop in perceived buyer value. In fact, despite the home price decreases, taxable South Florida property values, based on the tax assessor, are down less than 12% for the year.
According to the Miami Herald, tax rates on South Florida properties fell by only 10.8%, which was less than the state had predicted. But next year, south Florida property values – in taxable terms- may fall by up to 16%. That means less money in state coffers. Part of this drop will reflect the tax assessor’s office catching up with the drop in home prices. But part will be based on home owner appeals. Because, as prices for new homes drop along with their tax assessments, surrounding home owners who purchased during the boom years are very likely to complain about their higher tax rates.
From a real estate sales point of view, lower property valuations should mean declining home prices. Usually, the tax assessor evaluates property taxes by basing them on comparative prices of homes that are sold in an area. However, based on the Sun Sentinel’s estimate of next year’s even lower south Florida property values, the tax man is just starting to catch up with bottoming home prices. But by next year, South Florida property tax rates may also may have hit bottom.
But, beware: these declining South Florida property values will affect revenues that the state can collect, and everything government related --from public services to education -- is likely to take a hit, if it hasn’t already. Because of the decrease in revenues, the state will need to make up some of the shortfall. The Palm Beach county school district is discussing a minor increase in school taxes because it needs the money. The Sun Sentinel indicates that even though there will be a drop in student body numbers, and cuts in services, there may still be need for a millage increase.
In terms of sales appeal, lower South Florida property taxes should be helpful. After all, these lower valuations mean that new home owners will have lower tax bills. This helps decrease their monthly house carrying charges. This bodes well for sales of homes in the area. Of course, if South Florida property values (as in perceived value for home prices) begin to rise, the tax assessor is likely find ways to raise assessments.
Eventually, as the 10 month inventory of unsold homes begins to dwindle within the next year a half, and demand begins to catch up with supply, South Florida property tax values may begin to see a small uptick. After all, as more people move into the area, they require more services. Someone has to pay for those services, and largest source of revenue is taxes from the homeowners who require those services.
Written by Marc Jablon, Realty Associates
marcjablon@yahoo.com / 561 / 213 – 6139
www.marcjablonhomes.com/
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