“You Can’t Ignore The Fact That Real Estate Is Tanking”
The Miami Herald reports from Florida. “From Plantation to Pinecrest, from Coral Springs to Coral Gables, the last few years have been boom times at city halls across South Florida. Thanks to the skyrocketing real estate market, city managers and commissioners have raked in hundreds of millions of dollars in new property-tax revenues.”
“Now, with the real estate market in the doldrums, officials are really going to have problems. ‘Are we worried about whether we’re going to have to raise taxes?’ Pembroke Pines Commissioner Angelo Castillo said. ‘You betcha.’”
“A rising real estate market basically allows officials to take in tons of money without having to increase the tax rate. ‘That’s the cheapest way to grow a government,’ said Robert Lang, director of the Metropolitan Institute at Virginia Tech in Alexandria, Va., which studies metropolitan growth and development. ‘It’s like found money.’”
“The trouble is, some cities made financial commitments during boom times that they may be hard-pressed to keep when times get tough.”
“‘You can’t ignore the fact that the real estate market is tanking,’ Hollywood Commissioner Peter Bober said. ‘And this is going to have implications for businesses, residents and municipalities. The way to react to that is to try to be more efficient.’”
“Without the homestead exemption, Pembroke Pines resident Douglas Gourley, who was a temporary Florida resident until he changed jobs this year, watched his tax bill rise 60 percent.”
“This year, Gourley’s tax bill was close to $12,500. A couple of years ago, it was less than $7,800. And that’s on top of the $6,000 a year he pays for homeowners insurance.” “So the prospect of rising tax rates is troubling for him. ‘When you get these kinds of increases, it really throws your financial planning into a tizzy,’ he said. ‘All these rising costs are putting burdens on people.’”
The News Press. “The slowdown in Southwest Florida’s housing market could have a positive impact on area road projects. Contractors who had more housing jobs than they could handle a year ago are now faced with residential developer layoffs.”
“At the same time, governments continue to struggle to build enough roads to catch up with that growth.”
“The Corkscrew project also brought in four new bidders. Don DeBerry, senior project manager with Lee Department of Transportation, said Corkscrew was the first job to have bids to come in after several major homebuilders shut down production. ‘They’re thinking it’s going to be two years before it comes back,’ DeBerry said.”
“Darin McMurray, regional VP for Lennar Family of Builders, said the housing slowdown has put people out of work. McMurray agreed now is the best time to get road projects under way.”
“‘This is really an opportunity to take advantage of a slow time,’ he said. ‘There’s not a problem with material. It’s sitting in the warehouses. There’s not a problem with workers. They’re standing in the street.’”
Even higher taxes, unemployment, unfunded infrastructure: who would have thought that a boom of historic proportions could have a downside?
One Florida broker has the answer:
‘Jhonson Napoleon Broker/owner Napoleon Real Estate Group
Miami, Fla. ‘How is your market? It’s kind of slow. Inventory is high — very, very high right now, actually. (I’m) Hoping pretty soon (it will) go down, because no hurricane came through this year.’
‘What’s happening with prices? ‘Prices still the same, actually. Prices, the owners don’t want to budge. I think we need more good press. The press doesn’t help at all. You guys need to start talking much more good things.’
‘What do you anticipate the market will be like next year? ‘My anticipation would be back to 2004 levels. If it does it would be very, very good for us.’
Sounds like that broker is a Rastaman. There are a lot of them in SoFla.
‘Are we worried about whether we’re going to have to raise taxes?’ Pembroke Pines Commissioner Angelo Castillo said. ‘You betcha.’”
What is this guy smoking? Raise taxes? Of course, it’s just the sort of thing idiot government would do. Whew, this statement just proves how much Florida is burnt toast, especially South Florida. This summer should prove even more interesting, if the spring turns out to be dismal for real estate and the summer brings hurricanes.
On second thought, I love this guy. Do it, Angelo. Why wait?Raise taxes, the sooner the better. Bring on the misery so we can get this charade over with faster. Steeper and cheaper, the new Florida mantra.
sofla property tax +insuarance is running ~4% of the value..market is poised to plunge.
Bring on the civil war is more like it.
Like we don’t pay 55% or more in taxes now. Fees, taxes, everywhere, on everything. Check out your cable bill, your phone bill, the gas pump, the ………
better get w your local tax group- my county is spending and hiring - raise galore
here’s our group http://www.fcta.org
Thanks, flatff. Looks like a great group.
IMO, resolutions are feel-good and worth nothing more than the piece of paper the occupy:
“[group du jour] passes resolution opposing higher taxes and fees for [cause du jour]”
What works is recall elections and charter amendments by citizen initiative, though the former usually is a lot faster. Like Alka-Seltzer vs. enteric-coated.
Resolu
They gonna get a tax revolt that’ll make Prop 13 look like tea party. Florida is packed with seniors, voting seniors who just plain old aren’t gonna put up with being forced to pay for the mess that ruined their retirement years.
FL will be in trouble long before the ‘cane makes landfall.
Prop 13, known as “Save our Homes Initiative” in Florida, is distorting property taxes and creating bizzare scenarios. But it won’t be seniors leading the revold as they, in general, get the most benefit from Prop 13 style tax plans.
No kidding. Why would seniors object to a taxation scheme that mostly transfers the tax burden from themselves to younger people? If anything, the revolt should come from the under-40 crowd. I doubt that it ever will, but this would make far more sense.
Sadly, most people my age have no clue how bad tax redistribution schemes like Prop. 13 (or the bubble) really is for them. They’re just hell-bent on “getting in on the action” at any cost and assume they’ll all make out like bandits too, because “it’s their turn”.
Remember… property taxes in Florida depend on whether or not you have a homestead exemption. In my hometown, the average 2006 tax bill for residences with a homestead exemption, was $4,506. For non-exempt residences, the tax bill was $7,787.
Essentially, the longer you’ve lived in one place, the better off you are tax-wise. Moreover, if you look at voting and political influence, it’s the old-timers who pull the levers of power.
Taking my home town as an example a 10% increase in taxes will lead to a tax hike of $450 for the old-timers, but $787 for the new-comers. Yet the benefits of the taxes are spread evenly. It’s a state sanctioned transfer of benefits from newcomers to old-timers.
In sum… no politically savvy florida politician will lower taxes. The old-timers know they’re getting a great deal and the new-comers have zero political clout.
The only solution to this problem is litigation. And I hate lawyers, trust me, it pains me to say that.
But your right, SOH will NEVER be voted out. All those who can vote (or 90% anyway) are getting a HUGE benefit from the law. Once again, much like the Boston Tea Party, they are collecting the benefits, and doing nothing to get them.
If you dump the tax burden on new buyers and out-of-staters, you will destroy the RE market on the margins. And the value of whose house goes down? Everybody’s
Schemes like Prop 13 and SOH only work in a rising market. Once it starts falling, they’re cement overshoes.
“Schemes like Prop 13 and SOH only work in a rising market. Once it starts falling, they’re cement overshoes.”
I have a much more upbeat view of Prop 13 in a falling market — I expect it to help return California affordability to levels not seen in years, and to reward patient future buyers with the same kind of low property tax basis enjoyed by those who were fortunate enough to enjoy the property tax rollback from its inception.
GetStucco ,
I wish this were so, but I grew up in CA and have lived here most of my adult life and I’ve seen little evidence it actually works that way. If anything, the housing credit cycles are getting even more severe (not less), and long-term, inflation-adjusted prices are far higher today than before Prop. 13, even when you discount the effects of the current bubble.
Remember, people who bought back in 1978 (when prop. 13 first went into effect) have a tax basis only marginally higher than 1978 prices. Even if house prices return to, say, 2001 levels (~50% haircut from peak –a huge nominal correction), you are still locked in at a 2001 tax basis. You will still be paying 1% property tax on your “cheap” $400,000 CA bungalow, or $4,000/year. OTH, your Boomer/Silent Gen neighbor will only be paying 1% of the 1978 price ($25K, $30K?) on an identical unit. Basically, tax-free housing for the old subsidized by you and your unfortunate young friends.
Oh, and ther’s no “Prop. 13″ for CA state income tax or sales tax. Which is mainly why both keep going up and up and up….
What’s happening with prices? ‘Prices still the same, actually. Prices, the owners don’t want to budge. I think we need more good press. The press doesn’t help at all. You guys need to start talking much more good things.’
This clown really needs to understand the simple economics of it all. There is just not enough people here who can afford homes at current price levels and the speculators are gone. In 2005 approximatly 25% of the homes sold were sold for investment purposes in my area lee county florida.
So you’re an “owner” if you bought a spec house/condo with 0% down, a lie about your income and primary residency, and a teaser rate IO loan to top it off?
well you are on the deed and on the hook for the credit. Foreclosures are going to be so common soon that if you have one on your credit report it will be considered nothing more than a slight ding by underwriters
From top to bottom, there seems to be a pervasive faith in the REIC that happy talk can save the day. Other than the likely effect of prolonging the crash, can anyone who reads here foresee how talking up a “soft landing” and that “there has never been a better time to buy” can fix the problems the housing market currently faces?
Only if my pay goes up a WHOLE lot.
Oh, I beg to differ! You can ignore it; most of the people I talk to are very happy ignoring it. You can ignore it right up until you need a HELOC or, GOD FORBID, need to sell your home. One thing I found very telling about this article (and something that I have been prediciting for a long time) is that they are starting to talk about the shortfalls in local govt tax rolls. I used to work for WPB local govt, and, let me tell you, their projections are totally nuts. They anticipate 1000’s of condos online in the next few years, many of which will never be built. Even those that are, they expect water/sewer bills that are not going to be there (because they are going to be empty, much of what is already there is empty!).
And the cry has not yet even started for reappraisals. People who bought at the peak are going to scream very soon to have taxes lowered for them (because taxes are based on sale price) as the prices drop.
I would call them once a month and ask for a reappraisal; seems like about 1-2% of value is lost per month now, so I could save a bit on taxes by being appraised every month.
Just wait until the values (for tax purposes) start to DROP. That’s not at all in their projections, I can promise you that!
….and while they are screaming at their local govt for lower taxes becasue of the decrease in value, they will be sreaming at me on the other line telling me how much their home is worth to get the money out.
You see lots of that in Dallas. I had a friend who bought a fixer for 200K, put 70K or so into it, got a reappraisal at 300K to get rid of the PMI, fought tooth and nail the city’s tax appraisal at 225K, and then listed and tried to sell it at 350K.
Still has it.
Same thing with income when i interview the self-employed.
me- how much income do you show on your taxes after all your deducts and expenses.
FB- “200k”
me- let me rephrase, if you show 200k in profit from your business that means you wrote a check for about 80-90k at tax time last year to the govt. Do you recall writing a check that big?
FB- OH, no, i write everything off.
me- ok back to my original question.
/ why is it that every single self employed borrower thinks their gross income matters, if you really want me to believe you make 200k, why on earth would you be calling me for a bill consolidation?
Oh and while we are on the topic, lets talk about perception of house values by homeowners. I have been doing loans for 10 years so what i am about to illustrate is not exclusive to the bubble years. When i ask customers the, value of their home so that i can work up a loan scenario and pass the guess along to the appraiser, here is typically what i get…..( iam making up percentages to illustrate the point)
5% of the appraisals that come back are for MORE than the customer guess. These tend to be little old ladies that just dont have a clue what is going on around them.
25% come back at the exact number the customer guessed (thank you for hitting the number mr appraiser).
70% come back lower than what the customer guessed. With a large percentage coming in 10%+ less than the guess, some as much as 40% lower.
If people were truly objective about value, wouldnt the spread be the same on one side v. the other? When people tell me that they have the nicest home on the whole block, i think to my self, “then you bought wrong.”
Thanks for the frequent insights, MDMORTGAGEGUY (although they scare me to death!)
Well, people DO tend to think of deductions as a way to “game” their taxes, not as expenses that constrain their spending.
And of course if you REALLY net 200k and can’t manage to live within your means, I think you’re a bad credit risk.
MDMORTGAGEGUY –
Have you checked out that GAO report on subprime lending (see top of today’s bits bucket)? If not, I strongly recommend you do so, as it will provide great perspective on what you apparently see daily on the front lines.
i started to read it this morning when you posted it, thanks for reminding me to finish
“Just wait until the values (for tax purposes) start to DROP. That’s not at all in their projections, I can promise you that!”
Nailed that one, Michael. It’s great to have someone on this blog with an insight into local Florida government. Priceless. I’m actually wiping tears of laughter out of my eyes over the idiot statement from the Pembroke Pines goon. They ought to publish that one in the Wall Street Journal. Now that would put the kibosh on Florida for sure.
The government buildings are now more plush than upscale private offices. The spending is extravagant. No one talks cuts in spending. This is one hell of a show to watch. After reading this blog for a few days I’m convinced the great depression has met its match. I have been monitoring the news for reevaluations for taxes.
Getting ready to relocate from NYC to Ormond Beach this Feb. I am waiting for prices to drop lower before buying. I have cash, and will rent until then. Also taxes and insurance are a new factor in my buying equation. I did not consider them important until I began to read this blog about a year ago. SOH is totally insane. Insurance is almost as bad. Who really expects boomers to retire to a state where they are financially penalized for relocating there in their senior years? SOH must change to more evenly distribute the new tax burden.
SOH must change…
Ugh, here’s an idea.
Get rid of it!
How’s that for a change? Give us a flat 1% (or whatever it takes) tax.
A BB looking to retire here would have to be insane to buy with this system in place. Your neighbor is likely going to pay 1/2 to 1/3 the tax you do, not just today, but for the REST OF YOUR LIVES.
It’s nuts, I cannot believe a system like this has not been declared unconstituational. I expect more challanges to this law in the near future, perhaps actually by the RE industry who is being most killed by it.
Soh is crazy. My dad lives in Boynton Beach. His basis is 124,000
His new neighbors basis for the same unit is 315,000. With the three percent cap increase dads taxes go up 75 bucks the neighbors goes up 189 per year. So they are already paying triple and their bill goes up way more as well. Totally insane.
As a renter right now, SOH doesn’t really matter much to me, one way or the other. However, when I owned, I liked it. It’s one of the few tax breaks I ever got. SOH is really not the problem, nobody complained about it prior to the boom/bust. SOH was designed for events like this. And what is wrong with people paying higher taxes as a penalty for paying inflated prices? Let the prices fall and the tax issue will fizzle away.
Palmetto, everyone likes a tax break they personally benefit from (and don’t have to pay for in other ways). This doesn’t automatically make it good policy or a plus for everyone else.
I don’t understand why I should be “penalized” for having been born too late. I’m not a speculator. I’m not a HELOC-addicted credit addict. Is it really my fault I can’t buy a home at a 1980 or 1990 tax-basis? This is what’s fundamentally wrong about schemes like Prop. 13 & SOH. It penalizes the young for being young and rewards the old for being old.
AMEN, Palmetto!!!! We never complained about the SOH when homes appreciated at a normal rate! When homes increase 100% over two years, of course there’s a price to pay. I’m with you, people who bought homes with overinflated prices should deal with the tax burden! If they did their homework they’d know they were buying a piece of crap that was worth much less a year before. If they had half a brain, they’d know simple rules of economics! They bought the hype, helped it grow for a while, basked in it’s glory, and now are whining!
When looking at homes two years ago, the hype was unbelievable! I kept asking the sales people what do people do for a living that they can afford these homes. I never knew there were so many high paying jobs(in Tampa). Each time I heard these three answers: 1. they are professionals, doctors….
2. They are moving down from New York and selling their homes, paying cash here.
3. They are buying now so they won’t be priced out forever.
None of these answers enticed me to buy. 1. I was looking for a middle class family neighborhood not a wealthy enclave.
2. I didn’t particularly want to live in a neighborhood full of New Yorkers.
3. I certainly wasn’t afraid of being priced out forever!
When prices come back to a realistic place(2000-2001 prices), I will gladly buy and gladly pay my share of the taxes! It certainly wouldn’t be fair to me if I purchased my home in 1999 and had to pay taxes based on the ridiculous boom values! Florida homeowners didn’t ask Northerners to move here because it is so much cheaper, they didn’t ask speculators to line up in line to buy homes to flip….. Quit blaming the SOH! Get prices back in line with incomes and taxes won’t be an issue!
Just like Prop. 13 in CA, which drove me away.
I totally disagree. I think Save Our Homes was a great idea.
It was meant to help retirees and natives who live here from getting nailed by NYC speculators driving up the prices of houses and sticking us with every increasing costs for our homes.
When you retire here, you get the SOH exemption that limits tax increases to 3% a year. That is basically in-line with traditional home inflation.
The problem is not SOH. The problem is SPECULATION by yankee invaders who saw Florida properties as “undervalued”.
PAY LESS for the house and the taxes will be less.
The house inflation of speculators has driven insurance and taxes too high. Get back to 2000-2001 prices, and all this crap resolves itself. The old-timers get a break for their fixed-income retirement homes, and the new folks set the new price. You bid it up high through mortgage fraud, and the taxes go with it.
Drive the price down, the taxes will decline, too.
Unfortunately, the govt. agencies have gotten use to their inflated appraisals and the resulting tax increases. They need to be taught to budget again.
I’m sure all you migrants will be glad to teach us how you “do it up North”.
SOH is a bad bad idea..if all residents enjoy same county benefits, they better pay same amount of taxes. Just like some states do. May be the retired a/ low net worth could be exceptions.
Not to be callous..
But, if your retired with a low net income.. FL is not the place for you. No exceptions, exceptions create inequity. If your on welfare you don’t pay taxes anyway, so no exception needs to be made here.
And frankly, I don’t give a rats a** if low income/net worth retirees can’t move here. Since when is it a god given right to move to S. FL and get tax breaks paid for by me?
In all seriousness, it’s not necessary to move to S. FL when your elderly, and I don’t want to subsize these people moving here. I moved here at 25 and work my ass off to afford it. I am sorry that others can’t move here, but don’t tax me to get “undesirables” to move into my area.
I moved here at 25 and work my ass off to afford it. I am sorry that others can’t move here, but don’t tax me to get “undesirables” to move into my area
Michael, I normally enjoy reading your posts from Palm Beach. This is an exception. Just because a person doesn’t make a lot of money doesn’t make him/her undesirable. Shame on you.
Michael Fink,
If you have been here since 25, why are you whining about the SOH taxes. Did you never buy a home or did you buy a home at the peak? If you bought at the peak, then yes you are subsidizing others. Too bad! There’s a price to pay when you join the feeding frenzy. I don’t mind paying more taxes than others if I pay a fair value for my home! Someone who pays $100k for a home isn’t paying the same taxes as someone who pays $500k. So, should the $100k homeowner be entitled to only 1/4 of the services provided by taxes?
If you make so much money then you shouldn’t be worried about the SOH taxes.
I for one love Florida for what it was and I hope it to remain. A wonderful place to live for people of all economic backgrounds. And yes a place for the snowbirds to get away from the cold winters of the north. It’s good for their arthritis, you know! Compassion Michael is a good thing! The elderly did not cause the bubble! Greedy, young people not willing to work hard to make a buck did!
diogenes, I am FIRMLY in your camp on SOH. Good summary. One of the few tax breaks for middle and lower income people who want to stay put. As usual, the outcry comes from developers who are anxious to sell and higher income people and they cry “no fair” and then well meaning people from the group that has the most to lose get on board.
SOH has trapped a lot of local Floridians in their homes. They might have been able to sell and realize a good profit, yet when they look to move up in RE the get nailed with huge property tax increases.
“SOH has trapped a lot of local Floridians in their homes.”
By any chance are you a developer? Because this is the propaganda line being used to sell the reversal of SOH to the masses. Not buyin’ it.
fatsacca,
Greedy developers, flippers, investors have trapped people in their homes. This was not an issue prior to the artificail run up in prices of homes here in Florida!!!! If homes had increased at a traditional rate, people could handle the tax burden when they go to sell. Little old ladies wouldn’t be living in homes that are five times what they paid for them!
I disagree, and I will try to explain it.
What would have happened in the past 4-5 years without SOH? Would everyone’s taxes have doubled? I don’t think so! People would have screamed to have the tax rate changed, and it would have been adjusted as property values soared.
SOH was invented, IMHO, to remove people from the budgeting process in govt. People could not care LESS about what govt spends now, they know they are capped, their taxes cannot increase beyond a certain percentage. So, now that they are not paying for it anymore, seems like a great idea to hire 100 new police officers, build a new city hall, pave the streets in gold, and to top it off, sprinkle some diamonds on the curb for poor people to find.
I am taking this to an extreme, but those who can vote in this area, always want MORE govt services. Of course, because they are not paying for them. SOH was a great way to grow govt to a huge size, and to totally remove those who can vote from the budgeting process. Everyone wants MORE taxes who can vote, because they know they will not be the one’s footing the bill.
I do agree, pay less for the house and your taxes will drop. That’s why you would have to be the biggest idiot alive to take an “incentive” in FL! Drop the price, I don’t need to pay property tax for the rest of my life on that new BMW.
The solution is to change the millage rate. Houses doubled in value? Cut the millage in half. Very simple, easy, no litagation needed. Now we have a system where prices double, millage stays the same, and no one who lives here gives a crap.
Up north, we let the taxable value float. Not a huge leap of faith, it’s just not that difficult, and does not need a 100 pages of law to fix.
Oh, and one final thing. The speculators have a solution too. That’s what impact fees are for. Sure, you can put a 3000 unit condo in WPB, but YOU have to pay the infrasturcture costs to make it happen.
SOH is not the answer. Again, I will refer to the Boston Tea Party. Taxation w/o representation is not a good idea. We are not going to have a revolt. Our values are just going to crash and burn; which will, in a way, resolve the problem itself (as you correctly pointed out).
Not to beat this to death, but impact fees are for ANY new construction. I had to pay them when I built my new house. They were sold to us as a fee to make the new-comers pay for the infrastructure needs. Well, that wasn’t exactly true, either.
I paid them, and they go into the cost of every new house. It’s just more taxes for govt. to waste, because the infrastructures of almost all the cities are under-developed.
Let’s see, and the LOTTERY for school would support all the new needs for education. All wasted money. More money doesn’t get you better education, but I digress.
It is not I that wants more services, it is the new guys.
Key West used to be an all-night party town for fishermen and vacationers. The “new money” decided they didn’t want all that noise near their new luxury condos. Result: Start closing the bars, at least for several hours. It’s not the Natives that want all the changes, it’s the New Yorkers that want to live like its NYC, when it’s a sub -tropical, mosquitoe infested swamp. I didn’t want an NFL team, and didn’t want a new stadium for the Buccaneers.
The better solution would be to eliminate the property taxes altogether in favor of a sales tax, but that is another topic.
I agree that New York invaders are the problem here, not the locals. Why should locals who’ve been here decades have to pay outrageously inflated taxes because New Yorkers and speculators have driven up the property values to ridiculous levels? The properties aren’t worth a fraction of what they’re buying them for, but they don’t care. They’re showing off to everyone back home: BIG FISH in little ponds. They’ve destroyed Florida, so let them pay the stupid taxes, most of which are wasted on crap for them and their children, who clog up the school system.
Where I live, these fools pay a million dollars for a junky townhouse without batting an eye, and tool around in their giant luxury SUVS making sure everyone sees them. In the supermarket, they are absolutely nauseating, and they constantly trash everyone from the South, though nobody from the South, except the lowest of the low, would behave or speak in public as they do. If the South is so backward compared to New York, why are they here? They’re here because in New York they were nobodies, but here they can pretend to be important.
As for Key West, it really should break away from the country, and throw all the Yankees out. After seeing what they’ve done to Miami, Boca Raton, Naples, and Tampa, I think we should start referring to them as a predator species.
AMEN AGAIN Incredulous! Couldn’t have said it better!!!!!!
I’m in favor of most laws that limit the ability of governments to relieve citizen’s of their hard earned money. Prop 13 here in CA is a good law (thank you Howard Jarvis) which keeps people from being taxed out of there homes. I grew up in Hawaii and watched as many people were taxed out of their homes when the Japanese specuvestors drove prices to obscene heights. If you don’t have some sort of governor like Prop 13 or SOH in place, ownership is just an illusion and you might as well be renting your house from the government.
I am also in favor of laws that limit the ability of govt to spend money. But SOH has had the opposite effect! What most people don’t realize is that govt down here is swimming in money (or, at least, was). They were leaving millage rates unchanged while housing DOUBLED in value. True, SOH people did not pay the increase. But anyone who bought at that 2X number is now paying it.
Here’s what needs to be done to fix it (and to truly limit govt spending). Right now, SOH is written so that the max increase the homeowner gets is 3% per year. One tiny change.
The max tax increase (increase in the amount of funds that can be taken in by any taxing authority) is 3% per year. Everyone is taxed at current value.
Done, fixed, move along..
That controls the spending, and keeps people from being taxed out of their homes. Its SO EASY, and yet will NEVER happen. Becaue then, my god, taxes really would be capped (execept for the 20K new condos coming online, etc, etc).
I would support that law. But SOH.. Its a joke, I used to work for govt… They are all snickering about this. Going on TV and talking about tax cuts when their revenues are up 20-40% YOY. It’s an illusion, taxes are skyrocketing in FL; those with SOH just are not paying it. Wait until you want to move though.
Michael, I also think that you would have to adjust for 1.) population. If the population goes up 10%, a 3% increase won’t help much. 2.) inflation 3% works well these days because that’s about the current inflation level. If, however we see a return of the double digit inflation that dominated the late 70s 3% would be insufficient to make up for it. I would suggest using the PPI (rather than CPI) as an inflator.
Jim,
You don’t need to adjust for population. If more people come, they have to live somewhere, and therefore will be paying into the tax rolls, one way or another.
I agree with you on inflation, you need to adjust this number correctly for inflation (and maybe add .5-1%, however I would argue against this; any additional spending should pass as a proposition).
I do agree that there is argument as to what the numbers should be. However, this system would be SO much better then what we currently have! Its a step in the right direction; unfortunately, a step we will never take.
Michael Fink -
I agree with your conclusion that tax laws like SOH and Prop. 13 only serve to take citizens out of the taxing and spending loop and let local gov’t run amok. Folks should spend time at city and county council meetings asking questions and demanding responsible budgeting. As you said, as assessed values go up, gov’t should be dropping the millage rate for everyone.
The IRS is unconstitutional.
The Federal Reserve is unconstitutional.
So if the elite can get away with that heist, likely a few retired worker bees can scam it. NOTHING is distributed fairly. The whole idea of distribution is anathema to our founding fathers. It’s socialist. BTW. Why should a married couple with one working spouse get the deductions of two working people? Single people are subsidizing that one. On and on ………..
Get used to SOH, prop 13 in CA goes WAY FURTHER than SOH and it survived many numerous legal challenges including supreme court since 1978.
The only way to deal with SOH is wait for dip in prices and then buy your dreamhome/retirement home/also close to anywhere you are ever likely to work home.
Then stay there forever, move in an throw away the key cuz SOH will imprison you in the house just like prop 13 ‘tax prisoners’ in CA.
Anyone here a ‘prop 13 tax prisoner’ in CA? Speak up!
Literally half the population of the state of CA is a tax prisoner!! No exaggeration.
tinfoil, I agree prop 13 and SOH will be with us forever. Prop 13 IMO drives the roller coaster of CA RE prices, and with SOH Fla will be the same. Just as there are no longer any “one-decision” common stocks, a house in an area that doesn’t have real winter can no longer be a “one-decision” investment.
That’s why… when they sell…they usually move out of state.
My In-laws, age 77 & 75, are “prisoners” in a good home and a good community, close to a great hospital, just in case. Still have lots of friends and things to do…not really interested in moving. Live in the same town for 40 years, bought their house in 1971 for $31,000 in the O.C.
Now about the youth of America….that’s another sit-U-ation.
It was my impression that Prop 13 (or 17?) in California goes a step further — it protects the tax on a house even if it is not the principal residence of the owner. My daughter lives in one such. In Florida, if you rent out your property, it cannot qualify for SOH during that period and is periodically reassessed. Apparently in California, not even that happens.
Interesting that we are just beginning to see information about loss of jobs and employment slowdown, even in Florida. I’m surprised how long it has taken to see job losses, and guess that it forbodes a long slow unwinding of this bubble.
yes, the last job report was “hot”
are all the workers illegals off the books ?
For the most part the construction industry was popolated by illegals and they don’t get reported.
I spoke to a gal who drives one of those trucks to job sites and sells food. She is the last truck on the road out of 15. The rest are gone.
LOL
one of those trucks, you mean a Roach Coach?
Save our Homes ain’t gonna change come hell or high water. The truth is Floridians hope retirees go to Az or anywhere else for that matter. Boomers can pound sand for all we care.
Reversion to days of old suits us fine. Gee whiz, no new fast food joints, shopping centers, road construction, less traffic. Sounds terrible. Start sending 1500 a week out and we will be happy.
The busiest people here will be the demolition groups imploding empty highrise condos.
Ah, dimedropped, a Floridian after me own heart. Reversion to the days of old and demolition groups imploding empty highrise condos. Heaven!!!
Just as an aside, dimedropped, I’m also wondering what will happen to the housing developments inland. Something tells me these could become the slums of the future. Imagine some poor FB who bought in one of those housing developments for hundreds of thousands of dollars, watching the homes around him get sold off for pennies on the dollar, or even just abandoned. It could happen.
Oh palmetto, it is happening now my friend. Drive through these subs and you see grown over yards, dead yards, no oil stains in the driveway, vanilla blinds in every window and drawn tight. It is glorious.
My funny for the day last week was going to review an appraisal on a flippers home in a subdivision in Kissimmee. This is a gated community and I had to get permission from the sales manager, what a laugh, to go in unescorted.
I drive through the imperious gates to see mile after mile of the same house and no cars. None in the driveways, on the streets, anywhere.
I began to notice that every singe house had a FSBO sign in the window, the type you buy at a hardware store. Bada bing it hit me that the place is gated and there are nothing but FSBO signs. Then I realized the deal. The developer is the only one who can let you in. They grab you and sell you a new unit they own or they send you to the construction office. Noone can get in to see your FSBO sign.
How could all these people be so stupid. I got back to the office and pulled the sub and guess what? Not a single Floridian owns in there. Another funny thing is they are all homestead exempt. Ghost inhabitants.
I called some friends who live in the area and it turns out the whole place sold to Brits and South Americans with virtually none of them seeing their unit in the project. They don’t even know the developer turns all lookers away.
The smart guy on the block is the one who is the so called manager of 175 units who put FSBO signs in the windows and is collecting the management fee forever.
dimedropped, that is one of the most amazing Florida bubble stories I’ve heard. REALLY interesting that these foreigners have homestead exemptions. How the hell do they get away with that?
Oh wait buddy till the coffers start to dry up and you will have to supply three months utility bills with cancelled checks from a local bank to keep it.
Another route is to have tax returns produced showing you are a resident, or matching up water and sewage usage by neighborhood. You can fool them on electricity with a thermostat but not the water and sewer bill unless you pay your neighbor to flush the johns at 3 and 5 in the morning.
And don’t forget that the property appraiser has right of access to any property at any time. Signs of normal wear and tear are easy to spot or not.
If you sign the affidavit as to residency and are found to have lied it is possible for them to impute all past taxes and interest plus a penalty. The states attorney can file criminal charges for defrauding the government.
This is only worst case scenario, say when the government is running short on money to pay the enforcers. Hmmmmmm!
Dimedropped - I sure hope you drop a dime on these owners at the Osceola County Tax Assessor’s office. I hate taxes, but I pay what I have to, so I hate tax cheaters even more.
I’ll buy when the develope agrees to sell me all 10 or 20 homes in an abandoned sub-division for half the bubble price of one of the homes AND agrees to remove all the other houses and their foundations at no cost.
While, as a native Floridian, I totally agree with the sentiments, I think we will loose in the end.
Florida has been an inbound State for most of it’s existence, and the rising population of “newcomers” has always tempered the political scene. I’ve got Mayors/governors/city and county commissions filled with people from other places and they all want to do it like they did back home.
Do you remember when their we NO CONDOS on Florida Beaches. I do. They started building in the 70’s. Look now.
The population of Florida in the 60’s was about 7 million.
Life was simple. Property was relatively cheap (so were wages). Crime was non-existant.
My home has be over-run by foreigners who have sought to re-make the State to their image. That’s democracy. Change the demographics, and you change the homeland.
If we get enough new disenfranchised or angry buyers, they will try to roll-back SOH to pass the burden from them to us.
“If we get enough new disenfranchised or angry buyers, they will try to roll-back SOH to pass the burden from them to us.”
And that’s where the rubber will meet the road, diogenes. That’s when we’ll find out how much of the population here really turned over during the boom.
Ditto. I grew up 30 miles from Silicon Valley, when San Jose was a cow town and there were orchards for miles in every direction.
LOL
…hot hell and high water are a staple to Florida life.
LOL
…hot hell and high water are staples to Florida life.
these guys are
.1 % drag from housing ?
most components for a home are made here
industrial output would decelerate to a growth rate of 2.8 percent, or slightly below the 2.9 percent rate of expansion it expects for the overall economy.
Sign at the Florida border: Abandon Hope, All Ye Who Enter Here.
Who would have thunk a state with no job base other than tourism and health care with a traditionally low wage would have a New York or California or even Massachusetts size tax problem?
Palmetto-What else besides real estate skyrocketed in orlando over the past three years? MURDER RATE!
Exactly, but don’t tell Charlie Crist of the sympathetic moist brown eyes. He gets VERY offended when the rise in violent crime in Florida is brought up, preferring instead to point to how other crime declined. Sheesh. And don’t get me started on the possible reasons for the murder rate rising.
When we sold here in the Tampa Bay area, we briefly relocated to Sanford. Looks charming on the outside, but what a scene! I hope I’m not offending you or any other Orlando area posters, this is not aimed at you, but after living for two months in the Orlando area, I felt like taking a poke at someone myself. There was just a general nastiness that prevailed when dealing with people. The things I encountered in two short months I never came near to encountering in the six years I lived in the Tampa area. One day I was in one of the antique shops in Sanford and the owner answered the phone and started shouting “Oh My God! Are you OK?”. Turned out, a friend of theirs had just been mugged in downtown Orlando during the day on a Saturday. I couldn’t wait to move back here, and that’s exactly what I did.
Sanford is not the best Suburb to live in the Orlando area. The downtown Orlando area is not the best place to live either.
Anyone watch that show DEXTER on showtime? Palm beach seems like a perfect place to be serial murderer.
Speaking of property taxes, the County of Los Angeles should be SWIMMING in money. For the past two bubble years, simple little homes in middle class neighborhoods have been selling for 750K to 1M. So, they’re raking in anywhere from $8000 to $13000 in annual property taxes from these poor suckers. Even crappy homes in the hood have been selling for 450K. Can you imagine the pain those people are enduring to pay that tax bill? And still the gov’t cries at each election about needing money for “infrastructure” “education” etc. etc. G-damned thieves.
so, the other floridians, waterfront, will it be hurt more or less during the “crash/correction’?
Florida water front is extremely vulnerable to a crash. The “Save our Homes” law results in a new buyer facing sobering property taxes. In Naples, there are old timers that purchased property for $100,000. and now without a blink assume they’ll get $3,000,000. Perhaps the property tax for the oldster has risen to $5,000. but the new buyer is looking at $40,000. in property tax.
Flippers were happy to buy some of these homes and support the price level for they expected to sell them off in two years to a greater fool. They’d avoid most of the property tax increase and pocket the $500,000. for a tax free gain. Now that the flippers have no one to sell to, they want out. Sorry boys, no flippers will buy. There are not a whole lot of buyers that will rush to pay $40,000. a year in property tax, particularly if it is not a good “investment” anymore.
“Florida is operating on a whole new economic model”.
dont ya just love it in florida listings when they list last years property taxes. It is funny because it has no bearing on what you will be paying.
“it has no bearing on what you will be paying.”
I’m appalled that the Florida Association of Realtors does not require any caveat or disclosure about this in MLS listing sheets, in the portion viewable by buyers, including on realtor.com. Taxes on a property that was owned by one SOH owner for 10-20 years or more could easily increase by five times.
“This year, Gourley’s tax bill was close to $12,500… And that’s on top of the $6,000 a year he pays for homeowners insurance.”
… $1500/month just for Taxes/Ins…Sounds like a perfect scenario for retirees on fixed income wanting to move to Fl. to me.
—————-
1920’s Fl crash:…lest we actually have to learn from history
” With thousands of sellers and very few buyers, prices came down with a sickening thud, twitched a bit, and then crawled down even lower”
http://tinyurl.com/7megy
I just retired and live in Michigan, $3,500 in taxes, $900 in insurance. A $14,000 premium for nicer weather does not fit my risk / reward ratio. However, I will probably rent a place in Florida for a month or so each year.
You can stay in the Breakers on Palm Beach for a month with the money your “saving” by not living here.
Actually, you can rent the condo I used to live in for the entire YEAR with your savings. You can rent beachfront for a small premium on that number (figure 15-20K/yr) with your savings, again, just in taxes and insurance. Forget about the actual price of the home!
Right, on a recent trip to Fla, a relative tried to rent me a house (belonging to someone else) at a price that doesn’t cover the prop tax and insurance, never mind any debt service or return on capital invested.
This is great point and it would not surprise me to see Florida become a state of seasonal rentals even inland. Why buy something when you can go from place to place and rent and vary the scenery.
Another aspect of taxation is the fact that right along with the market, assessments are going to tank. If a house drops 30% in value the property appraiser has litle choice unless they want open warfare. A whole new genre’ is opening up for ad valorem tax representation. Florida was historically so underassessed that there was little call for it. Now I am not so sure. Property appraisers are elected officials here and many are squirming about the future. It won’t be a lot of fun for sure.
They will catch hell if the tax base devalues by 30% and they then raise the millage rate to offset the loss. Heads will roll and encumbents will be blown out of office. I can see a case for a cleansing at all levels of county and municipal governments. Better get all the relatives off the payroll.
You could rent all year long just on the savings in property tax and insurance.
If you really want to read about Florida in the ’20’s, look at the University of Virginia’s History Project. Link is below - click on the chapter entitled “Home Sweet Florida.” It records a lot of rhetoric you might find eerily familiar….
http://xroads.virginia.edu/~hyper/Allen/Contents.html
Dc-Too, Many thanks! I’ve never read that one. If you changed the dates it almost reads verbatim to what is happening now. Uneasy, but certain it will end the same…and if the market follows course just after, it will be history as a mirror rather than a rhyme.
Besides sales people and hedge fund managers, who isn’t on a “fixed income”?
MSM
storms slowing sales ?
snowed in denver after shopping season
WTF ?
http://news.yahoo.com/s/nm/20061226/bs_nm/usa_retail_dc
Yes, bad weather kept shoppers away this year, unlike other years in which Christmas did not occur in the winter.
And the article goes on to complain that all the warm weather prevented sales of winter coats.
The weather is too bad and the weather is too good. Poor retailers, unable to sell in the North American climate.
Funny, isn’t it, how the weather has become such a big obstruction to consumers? It seems like just over a year ago we were reading June Fletcher’s account of braving the tailwinds of Florida hurricanes to buy residential property…
I can’t stand to shop unless I absolutely have to try something on, or it’s a gun or a car. My wife is efficient and got all the family shopping done early. But my buddy, an inveterate shopper here in Orlando, said that he and his wife were all over the malls on Saturday and Sunday and that it was weird how relatively few shoppers they saw. The bad weather did not happen until Monday.
Here’s a nice little scam. The seller has bought 11 e-books for less than a dollar each to create his “feedback.”
http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&Item=130060202729&Category=46689
There is only 47 State Territories Remaining! Better act fast, to get in on this ground floor, once in a lifetime chance to make millions in RE. All you need is a half assed car and a walkie-talkie!
Not only is he selling franchises to this scam… He is selling the scam itself: http://www.tanicidal.com/
unbelievable!!
I notice that none of the examples have actually closed. Either purchasing with a “counter offer” or “Seller’s Market Value
Being Concedered [sic]“
Mark my words…
SOH will never be eliminated; that would be too controversial. However, the differential between homesteaded and non-homesteaded will slowly be phased out by a planned increase of allowable tax rate caps for homesteaded properties.
The legislature will design a complicated formula which will establish different rate caps. The formulas will be based on the demographics of each homesteaded property and its owner. These formulas will have built-in increases that gradually raise the allowable percentage caps. At first, it will look like homesteaded properties are unaffected, going up only a few tenths of a point. However, over time, the gap between the two homesteaded categories will be brought much closer together, if not equalized.
Um, why should the Florida legislature do that? Most non-homesteaders are not Florida residents. They can’t vote in Florida.
Businesses and other commercial interests are not eligible for homestead; and they have a strong influence on the state legislature. Also there will come a point in time when the differentials between the two residential homestead categories is just too large to ignore.
Mr. Market will not ignore it. What will happen is that nobody will buy a house until the property tax inequity ends. And that won’t end until the market value crashes down to the average value locked in by SOH.
And then there won’t be any high-valued properties to dump the tax burden on.
When you kill the mobility of capital, you kill the value of capital.
Bill in Carolina,
They can vote. Absentee ballot. This has been going on for years!!! Have a friend who no longer owns in Florida, but was able to renew his license! As long as you own property in Florida, you can vote.
Here’s a good tax story for you. A couple I know recently had a $2400 tax bill come due. They didn’t have enough money in the bank so the wife signs up for a new credit card and she paid the taxes with that. Unfreakinbelievable. And…they are not young or brand-new homeowners - they’ve been in their house for at least 10 years. No one’s lost a job, no major bills have cropped up. They are both just THAT financially stupid. God help them.
Hold up a second!! What happened to all the socialists here? All of a sudden high taxes is problematic? I agree 100%, I’m simply surprised that you agree as well.
That’s because you are suffering from a misapprehension regarding what the nature and definition of socialism, and consequently you are mistaken in your belief that people here are socialists. Hence your surprise.
oops…should be “regarding the nature”…ignore the “what”
If you were a real capitalist, you would believe that identical capital holdings (including real estate) should pay the same amount of tax.
As others have pointed out, SOH actually encourages runaway local government spending by dumping property tax increases on non-voters. Well that party is going to end, real soon now. You want lower taxes? Elect a government that spends less money. What a concept.
As others have pointed out, SOH actually encourages runaway local government spending by dumping property tax increases on non-voters.
Very concise description of exactly what SOH does. Well put.
Michael — your own description of the cause and effect was the best, IMO.
When we were a republic, it was illegal to tax a person’s house and it was illegal for the government to tax or confiscate someone’s house to pay a tax burden, of which there were few at the time.
Dayum — I believe our new poster just might be libertarian. Philosophically, there are a surprising number of us on the board, but I think that few other than me are actually registered party members. Recommend you sit it out when the Rep/Dem taunts start, as happens periodically.
Well boys and girls… can you say “State Income Tax?”