“A Familiar Story These Days” In Florida
The St Petersburg Times reports from Florida. “Nearly 50 buyers paid thousands of dollars apiece last year to reserve a condo at the Seaside Villas at Gulfport, a 121-unit complex along Boca Ciega Bay that was scheduled to be completed by August. So far, though, the only people living there have been squatters, who moved into the property after the last unpaid subcontractor pulled out several months ago.”
“Last month, lenders sued to foreclose on three waterfront projects that developer John Loder, architect Stephen Spencer and various partners allegedly defaulted on in Pinellas County.”
“The list of casualties is long. Among those allegedly owed money are dozens of subcontractors, condo buyers, secondary lenders and the county’s property tax collector. Hundreds of former tenants were removed to make way for the renovations.”
“‘I would have loved to buy my unit, but the price was twice what I felt it was really worth,’ said former Snell Isle Club resident Cheryl Harrison. The club’s new owners wanted more than $400,000 for her three-bedroom, $970-a-month apartment.”
“Fremont Investment & Loan - a Brea, Calif., bank, alleged that its loans went into default when Loder and his partners failed to pay subcontractors, property taxes, utility bills and certain insurance premiums. The partnership also missed promised completion dates and minimum sales targets. On-site sales offices and model condos were shuttered.”
“Earlier this month, Fremont alleged, the South Pasadena property was beset by trespassers, exposed wiring, broken windows, asbestos warnings, open or missing doors, dangerous balconies, and dozens of washer-dryers left sitting in a parking lot. ‘The project is in an abandoned state,’ Fremont wrote.”
The Herald Tribune. “In 2004 Kevin Ward bought a deteriorating hive of apartments near the Venice airport and converted them into 20 affordable condominiums, his first play in Florida real estate. Five sold in one day. In less than a year he flipped the entire building.”
“Ward doubled-down, pitching two more projects far more ambitious than the first, with some 3,000-square-foot units carrying $1.5 million price tags. Today, both are at a standstill.”
“‘We’ll probably be back this time next year with a new project,’ said Ward. ‘We think the world will be a little bit better then.’”
“It’s a familiar story these days. Building and planning officials across the region confirm they’re seeing growing numbers of plans like Ward’s being shelved or delayed.”
“For Ward, the market shift has pinned him between property owners who refuse to sell and a bank that’s reluctant to loan him money. Since the market downturn, appraisals of the six properties that make up the 1.5-acre Kelley’s Way site have come in about 25 percent below what the sellers are asking, Ward said. The bank refuses to lend any more than the appraisal.”
“‘I’m trying to say this nicely: We’re not proceeding forward based on what some of the sellers think they should be getting,’ Ward said. ‘Was that nice enough?’”
“Of his own hassles, Ward speaks gratefully, saying they forced him to do what so many of his competitors have done and slow down. ‘If I decided to build a year ago, I’d be in trouble,’ Ward said. ‘I’m grateful for my dumb luck.’”
The New York Times. “It was a simple pitch: Investors would put little to no money down and take out construction loans that a developer would use to build modest homes in a fast-growing stretch of Southwest Florida. When finished, the homes would be flipped for tidy profits of $30,000 to $40,000 apiece.”
“Work on the homes has come to a halt, leaving 482 investors with half-built houses and thousands of dollars in construction liens. Coast Financial Holdings, which owns the bank that made the loans, has disclosed that $110 million, or a fifth of its total loan portfolio, could be troubled.”
“‘It was strictly a passive investment,’ said Paul Matera, a retired contractor from West Islip, N.Y., who signed up for two houses and introduced dozens of others to the plan. ‘You didn’t pick out the model of the house. You didn’t pick out the exact location. Everybody signed papers without reading what they were signing.’”
“The case of a relatively small development in Southwest Florida illustrates the important role that real estate investors played. Like the day traders who drove up Internet stocks in the late 1990s, these investors, aided by cheap mortgages, helped drive a housing boom over the edge.”
“‘It was a groundswell,’ said Jerry Manning, who runs J. J. Manning Auctioneers, which sells homes in the Northeast and in South Florida. ‘Everybody thought that they were going to be a real estate mogul.’”
“‘You will have a correction, and the correction will make regional homeowners unhappy’ as property prices fall, said John Lonski, chief economist at Moody’s Investors Service. ‘Regional mortgage bankers will find their livelihoods threatened.’”
“Transeastern Homes, which builds homes in Florida, is in settlement talks with lenders who contend it is in default on debt totaling hundreds of millions of dollars. ‘We’re going to see much bigger builders and much bigger lenders facing bankruptcy because so much of the building has been on a speculative basis,’ said real estate consultant Jack McCabe.”
“Mr. Matera is paying $4,800 a month on four properties near Sarasota that he cannot sell and that do not collect enough in rent to cover their costs. Two properties, which are complete, are under his name and have tenants. His mother-in-law and his sister each own one of the two incomplete homes that cannot be finished because they have liens.”
“All together, about 100 of the nearly 500 investors are from the New York area, according to lawyers who are representing many buyers.”
“Seashore Resorts in South Carolina steered borrowers toward loans that start out as construction debt and convert into traditional mortgages when the house is built. ‘I’ve got my father stuck, my brother stuck, an ex-wife stuck,’ said Carl Cirinelli, a partner at Seashore. He says that he recruited 25 relatives and friends and has a $200,000 loan under his name.”
“Investors who signed on to buy the homes say the experience has been a painful reminder that real estate can be risky, but they insisted that the rewards can be great, too.”
“Alan and Linda Ellman, who live in Plainview, N.Y., put a $12,000 deposit on a $300,000 home in the spring of 2005 after hearing about the offer from Mr. Matera. Given their previous successful experience with investment properties, Mr. Ellman estimated that he would be able to sell the home for a $40,000 profit. ‘Nobody twisted our arms,’ he said.”
“Instead, the home now has liens totaling $17,000 from landscapers, painters, insulation companies and cabinet makers. They still have not seen the house, but a real estate broker there reports that the driveway is unpaved and the swimming pool is an empty shell.”
“In spite of the problems, Mr. Matera, for one, believes that real estate is a safer investment than stocks. ‘I would rather have a house that I can’t sell at the moment than a stock certificate,’ he said. ‘I still have a house. It’s not what an owner of Enron stock can say.’”
‘Like many businesses with exposure to the new home construction market, PGT Inc. took a hit during the latter part of 2006. The Venice-based maker of hurricane-resistant windows and doors reported a loss of nearly $2 million during the fourth quarter. Revenues during the fourth quarter of 2006 dropped 22.6 percent, from about $88 million to $68 million. ‘The building industry continues to see significant deterioration in new construction,’ said Rod Hershberger, PGT’s president.’
http://biz.yahoo.com/ap/070222/earns_toll_brothers.html?.v=4
Toll Brothers profit down , market still soft.
Duh.. And duh…
Not insulting you at all cactus, just cracks me up that MSM keeps the “suprised” look on their face when reporting this news. No crap! Anyone with half a brain and a realistic outlook (ie, not involved in the RE market) could have predicted this will 100% clarity.
yea I know I saw this comming 2 years ago and I am not in the RE business. I kept hearing how homes are now built by corporations who have economists with sophisticated models so THIS TIME WILL BE DIFFERENT and no overbuilding. they will adjust inventory just right and not build until they get the house sold, etc. I just don’t don’t know if they are liars or stupid……….
“Last month, lenders sued to foreclose on three waterfront projects that developer John Loder, architect Stephen Spencer and various partners allegedly defaulted on in Pinellas County.”
Harbinger of things to come…I saw legions of who I considered very smart men, vis a vis engineers, lawyers, real estate pro’s, etc., get flushed right down the foreclosure rat-hole during the ‘90/’91 bust.
This debacle hasn’t even started yet.
“So far, though, the only people living there have been squatters, who moved into the property after the last unpaid subcontractor pulled out several months ago.”
Wow! Lots of folks here predicted the “squatter phenomenon” and here it is come to fruition. Any lottery numbers flashing through your heads? Texas lotto preferably.
All of the numbers we predict are down numbers.
Mr. Matera, you still have a house, all right. Of course, a group of strung-out meth addicts are cooking up a fresh batch in it right now, but BY GUM YOU STILL HAVE A HOUSE!
What is it with New Yorkers and their houses down here?
No state and local income tax. You move down there when you retire. You move back when you need Medicaid-financed nursing home care, paid for by others.
And that’s after you structure your affairs to pass on your wealth before you enter the nursing home. There is a substantial cottage industry (no pun) that help people do that.
Mr. Matera, for one, believes that real estate is a safer investment than stocks. ‘I would rather have a house that I can’t sell at the moment than a stock certificate,’ he said. ‘I still have a house. It’s not what an owner of Enron stock can say.’”
By Gum, you’re right. I bet Mr. EnronBagholder will really enjoy comparing CARRYING COSTS with you, too. A rare bright spot for him. And you can always live in it. even if it’s Section 8 Hell.
Me? I’m on the Mr. CashWillBeKing plan. Savings accounts paying 5+ percent??? It’s dreamy! Perhaps some Euros, short anything even vaguely RE-related as the PPT levees crumble before the hurricaine storm surge on Lake Ponziscam…maybe Neil will whip up popcorn for the Carnage. Who Knew the Big American Meltdown could be so, Entertaining? Like some freaky diapered astronautess!
I pity the Sheeple, though. They never had a chance. To wit:
http://tinyurl.com/2fdhoy
That explains a lot of elections.
Don’t forget those old NYers get to double vote every election with absentee ballots too.
The whole “real estate is a different and better investment than stock because at the end of the day the real estate will still be worth something” is the argument du jour of the real estate yahoos. Simply put, if you’re placing all your eggs in the Enron basket you’ll get killed, of course. Anyone with a half a brain diversifies though, so that destroys the whole Enron argument. With real estate, how do you diversify? By buying a house in 25 different cities? Even though there are distinctions in different markets, they in the aggregate go down and up with each other and all you’re money is in the real estate basket. Compare that to stocks, you can eggs in the tech, pharma, industrial, financial, food, etc, let’s just say you’re not losing everything if you diversify.
And over the long term, stocks have consistently received a much higher rate of return than real estate.
Not to mention stocks are extremely liquid compared to housing –and have far lower transaction costs. Anyone recall the last time a stock took 2 years to sell and cost 8-10% in transaction fees?
And most people buy stocks with real money but RE buyers use leveraged money.
If you own an underwater share of Enron stock, at least you aren’t forced to keep throwing thousands of fresh dollars at it every month.
And if you sell, you’ll just lose your initial investment - you won’t have to bring potentially hundreds of thousands of dollars to the table or declare bankruptcy.
‘I would rather have a house that I can’t sell at the moment than a stock certificate,’ he said. ‘I still have a house. It’s not what an owner of Enron stock can say.’”
Yes Mr. Matera, but you will be paying for things like property taxes, insurance, and maint. on that house(s) you cannot sell. That’s a Win/Win right?
“In spite of the problems, Mr. Matera, for one, believes that real estate is a safer investment than stocks. ‘I would rather have a house that I can’t sell at the moment than a stock certificate,’ he said. ‘I still have a house. It’s not what an owner of Enron stock can say.’”
What a f***ing idiot. And these people are breeding. Sad.
and of course, “stocks” means Enron, not Exxon Mobil or Broadcom or Microsoft.
Sometimes reading this junk just PISSES me off.
That’s why he’s in the mess he’s in and you’re not. There are a lot of stupid people in this world! I guess ignorance is bliss! He watched one too many late night informercials and still believes the crap even though he is screwed!
‘I would rather have a house that I can’t sell at the moment than a stock certificate,’
I cannot remember the last time I had to pay property taxes on my stocks, or cut their lawn, or insure them against wind damage, flooding, theft, etc.
And stock portfolios don’t require periodic painting.
Heck, my ‘folio of stocks even pays me a dang dividend! Imagine that…
I am sure no one on this blog would take seriously anything Mr. Matera would say, considering the position he has put himself in financially. “A wise man never invests borrowed money in a depreciating asset” nuf’ said!
And the other thing is that very few of these people actually own the house(s). They are buying them on ‘margin’. If they can’t carry and service the debt for years, they can be wiped out.
Yes. Unfortunately, it is unconstitutional to sterilize them involuntarily.
He doesn’t have a house. He has a mortgage. Only when he pays offthe mortgage will he have a house. Since he can’t sell the house, all he has is a DEBT.
Then why doesn’t his hair get wet when it rains?
Oh, he’s getting rained on all right.
I’m just tired of the assertion that you have no house if you have a mortgage. I have a mortgage and my hair doesn’t get wet when it rains. Nor is it raining on me right now.
If you lived in a rented apartment (that you didn’t own) would assert that “I own an apartment”? How about a rented house? The same principle basically applies to mortgage - you’re in essence renting the house from the bank until such time as it’s paid off.
Of course it’s not quite that simple - in reality you rent a % of the house and you own a % of the house, depending on your equity. If you have a house that’s worth 500k and you owe 250k, then you own 50% of the house, and you rent the other 50% from the bank. Problem is that many people currently have negative equity - thus they own either 0% of their house or in many cases negative N% of their house. So in cases like that, a person could not claim that they own their house.
That’s pretty funny - the negative ownership part.
I get the concept. The assertion is just way too broad for me.
Packman - that’s not a very good metaphor. I own my house. I also own a loan for somewhat less than the value of my house. If I don’t pay the loan payments, then the bank can take steps to take ownership of my house, they can’t just evict me and hand the house to someone else. As long as I make the payments, though, I have all the rights and responsibilities associated with owning the house. If my home appreciates or depreciates in value, I benefit/lose, not the bank. The bank has no ownership rights, including the right to sell the house. I can even sell for less than the value of the house, or give the house away, as long as I clear the title by paying off the mortgage in the process. The bank has no right to approve/disapprove any actions I take related to this house. They can’t tell me when to sell it, or to whom. They can’t come into the house to inspect it. They can only take actions to protect their loan, such as requiring me to have homeowner’s insurance. If I rented, the landlord would own my home, and would have all rights/responsibilities associated with that ownership, including the right to sell it at any time, enter the house (with notice), or stop me from doing things I wanted to do in the house that were not covered by the law. For example - if I wanted to get a dog, I would need the landlord’s permission. The bank can’t tell me if I can have a dog in the house or not. Owners really aren’t renting the house from the bank. If they were, it wouldn’t matter to them if housing values dropped below what they owned - the bank would simply take the hit. As it is, the owner is responsible for the difference between what they owe and the value of the house, if the house is sold, and liable to the IRS if the bank chooses to forgive the difference.
If I rented, the landlord would own my home, and would have all rights/responsibilities associated with that ownership, including the right to sell it at any time, enter the house (with notice), or stop me from doing things I wanted to do in the house that were not covered by the law.
These days, a lot of people choose to buy places where they are still subject to arbitrary restrictions imposed by others. It may be called an HOA and not a landlord, but it amounts to the same thing.
In my opinion, only a damned fool would buy a house in the domain of an HOA. It’s like having all of the liabilities of ownership, but almost none of the advantages. Of course, there are a lot of damned fools in this country.
Diane,
just for the record, you dont actually own anything. As has been mentioned here before, just dont pay your taxes for a while and see how long to you are removed. Or better yet, wait until they want to invoke emminent domain, then see how far your ownership rights go.
Seriously though, I think pacman was just saying that in reality if you don’t own your home outright then you have very diminished owner rights. The bank probably has more rights than you, depending on the specific circumstances. And no I am not a jealous renter. I can buy now if I like, but I am waiting until the prices drop.
Renting is not better than owning and owning is not better than renting - it just depends on your individual circumstances.
is it rain or urine?
Yikes! This guy has obviously been as unsuccessful in picking stocks as in his real estate dealings. Coca Cola, Colgate-Palmolive, Procter & Gamble will all be around in 10, 20, 30 years, paying an ever increasing amount of dividends. Johnson & Johnson has increased their dividend by more than 10% in each of the last 10 years. I’d buy an investment property where you could increase the amount of rent (i.e., the dividend the property pays) each year by 10%, but I’m not sure that exists.
It’s the friggin get rich quick mentality that will kill these people every time.
Aside from carrying costs, let’s also not forget that stocks are extremely liquid compared to housing and have far lower transaction costs. Anyone recall the last time a stock took 2 years to sell and cost 8-10% in transaction fees? Me neither.
Real estate is a great investment when you invest in it not when you gamble on it.
Yeah, I’ve never seen the ability to put a “Stop Loss” on a house. I have, however, seen the ability to do it with a stock.
yeah, but with a vacant house you can take your neighbors wife there and bang her, u cant do that with a stock certificate
“Mr. Ellman estimated that he would be able to sell the home for a $40,000 profit. ‘Nobody twisted our arms,’ he said.”
Mr. Ellman gets a gold star for not blaming someone else for this and not whining.
Well, I guess he won’t be getting a phone call to join the class-action lawsuit…
I am soooo freakin’ glad we hightailed it out of FL. The state legislature is now trying to push legislation through that will “abolish” the property tax for homesteaded property (yeah, right! I’m sure it won’t be re-established later) while raising sales tax from 6% to 8.5% to supposedly make up for the shortfall. I’m sure that having the highest sales tax of any state in the US will help with Florida’s problem of overcrowding, though. That’s a bright spot.
TX sales tax is 8.25% + high property taxes.
As a renter and non-property owner, I buy as much as I can from out of state. Certainly all high dollar items.
The comment that got my attention was that Transeastern is in trouble.
They were really getting big in South Florida when I left in early 2006. I just looked at their website and noticed all but one of their developments in the Fort Myers area state “call for pricing”.
They must have set it up with Monte Hall.
Tallahassee, FL (AHN) - “The Senate revealed its plan Wednesday to eliminate property taxes for homeowners with homestead exemptions, making up for the difference by increasing sales tax.
State House Speaker Marco Rubio said under the plan, the state’s sales tax would increase from 6 percent to 8.5 percent, and property taxes will still be paid by those owning second homes and businesses. Lawmakers said a cap on the state’s revenues roll back the taxes on second homes and businesses by 20 percent.
Although changes to how homestead properties are taxed will need to be made by voters, lawmakers say they can raise the sales tax and create the revenue cap with going to a ballot.
Governor Charlie Crist said he would consider this plan, although he had other ideas on tax reform.
“If you free up that kind of money that you’re currently putting in your mortgage payment, you would have so much more disposable income, and it would grow the economy,” Senate Finance and Tax Committee Chairman Mike Haridopolos told the Palm Beach Post.
“Property taxes have been a significant strain on our citizens for a number of years now,” Crist said. “And what we all need to do is be willing to be open-minded about new ideas that may come forward. I certainly am.”
However, businesses, snowbirds, and landlords are expected to oppose the plan, saying they are already paying higher taxes to make up for the loss due to homesteading.
The Florida TaxWatch Center, who is asking to repeal the Save Our Homes amendment, a popular three-percent cap on homesteaded property owners? annual tax bills, said the proposal creates a special tax break for a specific group.
According to a report released in December by the center, the current system creates an inequity, where businesses and those with more than one home pay higher taxes. This in turn, increases housing costs for renters, new home buyers, and restricts the financial ability for some people to move to a different home.
Harvey Bennett, spokesman for Florida TaxWatch told the Palm Beach Post the plan will make this problem worse.
Details of the plan concerning how the additional sales tax will be distributed to the counties, school districts and cities were missing.
If the proposal passes, a constitutional amendment could go to voters either later this year or at the 2008 general election.”
Q:
Am I missing something, or is this not just an attempt to prop up the real estate market? By making the cost of ownership less, doesn’t this justify higher prices for the house? Sort of like instantly making the CAP rate higher; therefore the asset (house) has more value. If this goes through (hearing a lot of positive feedback) would’nt it keep the bubble prices up for an indfinite amount of time?
You have to be a resident to vote. Guess how this ends up.
No, you’re not missing anything. That’s exactly what this is intended to do. However, the average clueless Floridian doesn’t get that his property taxes went up 100% in five years and all the state is proposing is cutting out their side 20% and grabbing it back from people on the back end a tiny piece at a time at the cash register.
The people here are so dumb about virtually anything historical they would go for it in a heartbeat. The result: small business dies a fast death, unemployment and crime skyrocket.
thx
The trick here is to table the taxes until you up the sales tax and then several years down the road reinstate the prop taxes which are necessary for the infrastructure and safety member salaries.
Absolutely, this will keep the bubble prices up for far longer then most would expect.
However, although it will start the housing market right now, in the end it will be the deathblow to it. People will vacation elsewhere (we do not have a lock on warm, or even an exclusive contract with the mouse) and toursim numbers will continue to push downward.
Also, businesses will not fare well with this plan, especially big ticket items. You really expect to sell a supercar (or a car of any kind) in FL with a sales tax like that? No thanks, I think I will buy a trailer in DE and buy my Ferrari up there, register it to the trailer, and then drive it down, saving myself a cool 25-40K in the process (depending on price of said supercar, and the actual tax rate).
Shoot, why not just make the hotel room tax 1000 bucks a night. Or make people pay a 100 dollar entry fee at the border. Or, how about we CONTROL THE SPENDING and PAY OUR OWN WAY; rather then trying to find some poor sucker to pick up the bill for us. This behavior is just disgusting and I don’t want any part of it. I think the taxes are nuts now, but the “find the sucker” game has to stop. Control the spending and tax us all on a percentage of home value (not sale price).
I am actually embarrased to live in FL, and have been for the past week. I don’t care about all the other stupid stuff we do, but this just shows to total lack of moral behavior across a huge section of our state.
We live here, WE SHOULD PAY THE BILLS.
thx Michael
“We live here, WE SHOULD PAY THE BILLS.”
We do. We subsidize the developers, the illegals, Disney, etc. I am tired of paying their bills.
Try living in Taxachusetts. We have an excise tax on cars, boats, etc that amounts to an annual sales tax. The tax goes into the general fund and does get used directly for raod/bridge repairs. I’d argue that we have the worst roads in the country.
I’ve been there. Your roads are terrible
Absolutely, this will keep the bubble prices up for far longer then most would expect.
Are you sure it won’t just accelerate the decline? Since prices are set at the margin, those not getting the tax break would still drive the market.
Yes, it is a property price bailout. Rather than fix the underlying inequities in Florida’s taxing regime it seems these guys are going full tilt into the abyss. What happens when tourist refuse to pay the increased taxes and vacation elsewhere and everyone living within the state cut back on consumption?
USPS, UPS & Fedex would be busy. As much as I already buy online, everything I could possibly purchase online would be if this passes.
We have a large “snow bird” population who own homes and live here three months a year. This new tax law would help them a lot. Sure hope they do a lot of spending during those three months.
How can it be a homestead when you are only there 3 months. Most of the time you have to live in the home (certainly more than half the year) and it has to be your permanent residence. It is different in Florida? I didn’t understand it that way.
That’s why their taxes go up so much every year - they’re not residents.
Duh. Obviously distracted..
I think this is great. Disgraced millionaires and crooks already come to Florida to evade the income tax and civil court judgments. Now there will be even more of them.
Hopefully I will be out of the state in two years, heh heh.
I think the state government figured out that with real estate prices collapsing, state income from property taxes would soon follow. So they want to raise the sales tax instead, to keep the money flowing into state coffers.
Never underestimate the desire of government to help you…You’re probably right!
Good catch Uptown!
This might sound like a dumb question, but what’s a ‘homesteaded property’ in Florida?
“Seashore Resorts in (Bluffton) South Carolina… ‘I’ve got my father stuck, my brother stuck, an ex-wife stuck,’ said Carl Cirinelli, a partner at Seashore. He says that he recruited 25 relatives and friends and has a $200,000 loan under his name.”
Hmmm. I sent a link for the first article about Seashore Resorts that appeared on this site to our friends in Bluffton. I asked if they had ever heard of Seashore. No response, it’s like they never got the email. Makes me wonder, especially since the guy has always dabbled in “investment” real estate. He almost got stuck with a bunch of lots in Cape Coral but managed to sell all but one. Or so he says. Hmmm.
Would you trust your cash with these guys?
http://www.seashoreresorts.net/ourstaff.asp
Nope!
I think the tip off is the lawyer in the group, Darren Sheehan, has a Juris “Doctrine” degree.
Anything investment that involves an Italian NYCer who owns a Limousine business screams money laundering to me.
Looks like a bunch of “good ol’ boys” to me.
Seems a little bit sexist to have all the patners males and all the associates females.
they look like exconvict used car salesman, that play texas hold-em on the side to support their cigarettes and whiskey
For a second, I thought it was and ad from HBO for the new season of Sopranos.
The property tax debate in FL is truly reaching fever level. There are so many posts on the newspaper blogs on this subject that 2 of them crashed last night. People are beyond pissed off at the situation, and honestly believe that the “snowbirds” should pay our entire tax burden.
Raise the sales tax to 13% and pay no prop tax? Great idea, I am sure all the “border” stores to GA would LOVE that action. As will mail order business.
The greed is just disgusting. And the govt has people fighting among themselves so well they can’t focus their attention on the real problem. Taxes went up 100+% in 3-4 years. Where did all that MONEY GO?!?!
Like most tax debates, spending is the problem, not taxes.
Do you think that has any realistic chance of passage?
will this cause a bounce in Florida real estate?
will this continue to make prices sticky on the way down
could this level out the downward trend???
No, no, and no.
1. Insurance and cost of living are still overweight for what you’re buying. Also, real wages in this region haven’t budged for most of a decade.
2. Prices are overheated. Everybody knows it, the cheap money is disappearing from the market and properties are on the down.
3. The downward trend is baked in the cake. There are too many homes chasing too few potential homeowners. Call it the “grow house” factor: when you start to see grow houses sprout and thrive you know there are too many houses.
Never ever happen.
You’re right, but the dum-dums will think it’s their panacea and that “we missed a golden opportunity” by failing to pass it. Watch and see…
A lot of people insist that they can’t move due to high property taxes. They will vote for this. I don’t think taxes are the problem (many would disagree). I think it’s toxic mortgages that allowed speculators to inflate prices. If they would just leave things alone and let the market play out, everything would readjust.
See my post below about this BS argument. If you can’t move because of taxes, either
A) You can’t afford the new home
or
B) You HELOCed all the equity out of your current home
Either way, I don’t care. It’s the first time buyers that are truly screwed by this system, everyone else should have a huge equity cushion to absorb the tax increase.
double bingo
the dept,deputy in charge of wonderfulness really has to go
Yes, the greed is disgusting.
But would someone PLEASE answer me. If, IF this goes through (no prop tax, the homestead is exempted 100%) would’nt this justify the current prices on houses?
Never mind it’s a horrible idea, I know that.
I like the idea. I’d like to own a house outright without having a continual government lien. It would be great to be able to vote with my wallet by cutting back consumption. Oh, and the tax would not be 13% as Mike Fink exaggerates above. It would be 9-10%. It’s a wonderful idea.
Palmetto, the problem with “cutting back consumption” in South Florida, where you live, is that there are not enough viable ways for you to cut back. Gasoline is sales-taxed, services are sales-taxed, paper goods and cleaning supplies are sales-taxed, clothing is sales-taxed, retail goods are sales-taxed.
Is the way to “vote with your wallet” to stay home, naked, staring at the wall and have no toilet paper in the house?
There’s a reason people flock to the stores during sales-tax free weeks in the northeast and Florida. Taxes just kill people in general - no matter where they’re applied. Why isn’t anyone talking about cutting government spending instead of pushing the responsibility off on others in new and innovative ways?
First of all, Quirk, I DON’T live in South Florida. I used to, but I live in the Tampa Bay area and have for the past six years.
I agree with cutting back on government spending, starting with the Federal government. However, absent that happy event, the best form of tax is consumption, as opposed to income and property taxes. Tax in any form is penalty of sorts. If something has to be penalized, it might as well be consumption. Your comment Is the way to “vote with your wallet” to stay home, naked, staring at the wall and have no toilet paper in the house?” is cute, it’ll get a laugh, but maybe a consumption tax would put fewer Hummers on the road and fewer plasma screen TVs in the homes of hedge-fund wannabes.
Consumption taxes are the fairest, since they are the most immediate and noticeable (making people more responsible for their governments), tend to make people live within their means and under consumption taxes, criminals also pay their fair share, since they have to buy stuff too.
I like the idea of having fewer snowbirds, less development, etc. Sure, the businesses on the border would suffer, but it would drive the illegals out of the state and that’s fine by me.
criminals also pay their fair share, since they have to buy stuff too.
Criminals smuggle or steal what they need. In general, they don’t pay sales tax.
Not true Toast. Even the best criminals cannot steal EVERYTHING.
The point of a sales tax is widely understood by economists to help (not GUARANTEE) get those “outside” of the reportable income tax loop to pay SOME taxes on their unreported income.
Criminals don’t pay sales tax. That’s what the black market is for.
You’d be amazed what you can buy in the “hood”. All sales tax and business license free.
Personally, I’d love to see a sales tax experiment here. I don’t own RE here so I don’t have any “skin in the game”. So why not? Also, grocery items are not subject to sales tax and that’s the only item you really HAVE to buy. And one more thing–you get a standard deduction for state sales taxes on your income taxes, so if you spend less than others well … hehe.
Damn, I forgot I had a comment for Quirk.
I think people shop on those tax free days because they are dumb. I have never seen a good deal on tax free day. It’s just a bonanza for the stores. Say I usually wait to buy when something is 20% off. With tax, I might pay 85% of nominal price. On tax free day, suppose they have a 10% discount (usually there is no discount, but being generous here). Then I pay 90% of nominal. So… I’m “saving” 6% but paying 6% more than I would otherwise? What rot!
Maybe it’s different in New York, but I have _never_ seen a good deal on tax holidays in Massachusetts or Florida. They are simply a gimmick. (Also, the gov’t then has to find the lost revenue elsewhere … guess where.)
Sun Sentinel reports 13.5%
http://www.sun-sentinel.com/news/legislature/sfl-fproptax20feb20,0,5505369.story?track=mostemailedlink
Good clarification, thanks.
Palmetto,
I thought that I had seen 12-13% somewhere.
I think that the lesser tax (below 10%) included some other provisions to get back the revenue, but I don’t remember the details. The whole thing is so stupid it makes my head spin.
Mike, I respect most of your insights on Florida, particularly the area in which you live, but on the matter of taxes, it’s obvious we’ll just have to agree to disagree.
The tax situation in Florida sucks for sure and sets neighbor against neighbor, as evidenced by this blog. And that’s the idea, while the politicians, financiers, developers, illegals, etc. laugh at us all. None of them pay their fair share, not in this state. Politicians and government workers have health benefits most of us can only dream about and most of the time they have job security, one way or another. All these entities are parasitic on those who earn middle incomes and now they’ve come up with something to really get us fighting.
I’m all for coming up with a way to cap (in the case of government) and tax those entities I’ve named above, but people who are getting hosed the most just seem to want to fight with each other. And that’s the way it is gamed. And as long as we do not unite against those entities, we deserve what we get.
“government workers have health benefits most of us can only dream about ”
Thats where all my money is. I personally pay the health insurance bill for the bitch at the DMV who cant even f#*@ing smile when she telss me to get back in line for another hour.
Second That!!
Why is there some misconception that gov’t workers don’t pay for benefits. My annual benefits package costs my family $4,500 dollars a year. I make 40k and support a family of four so I would say that’s a pretty big chunk of change.
The truth is, that gov’t treats its workers the way corporations should. Its not gov’t workers fault that multinationals screw their employees out of their pensions and health benefits. Personally I favor a national healthcare system funded by a VAT, like they have in Europe.
Until the snowbirds (like me) stop coming. Unless I’m seeing something different than what is happening in the rest of the state, it is already down. You can actually get into restaurants and you don’t have to wait for 5 light changes to make a left turn. Please can (and will) go elsewhere. Cut the governmental expenditures and you will be able to cut taxes. Certainly smarter than increasing them and driving people away.
I think it’s a great idea, too. I accept any proposal that offers me more control over my money and keeps it away from the hands of politicians. Increase in sales tax doesn’t bother me either, because I buy when and where I want, usually online and tax-free. Don’t forget that food, medicine, and rent are tax-free in Florida. If the government tells me that I can keep my property taxes, hell I say yeah. Give it to me and I will invest more to lower my Adjusted Gross Income to keep even more money away from the government.
No it would not. This does nothing to halt the escalation in insurance and local property taxes! NOTHING! Nobody on those newspaper boards gets this elementary fact. They think ALL property taxes are going away! They’re so idiotic it’s beyond funny - it’s scary because I can’t vote more times because I read newspapers.
Plus, no one can crunch the numbers around here to make buying real estate at these prices viable - even if there were NO property taxes and NO insurance.
And, I’m thinking ’80s hairspray rock when I think of the summer: “Here I am…rock you like a HURRICANE!” There are folks around here who haven’t cleaned up after Wilma yet, and if another storm rages through there will be more taxes to pay to clean that up.
Florida is like a 20-something who spent his entire paycheck on a new car and now can’t afford to go to the doctor.
thx Quirk
Also liked “Is the way to “vote with your wallet” to stay home, naked, staring at the wall and have no toilet paper in the house?”
Harsh, but very, very funny.
Just called Marco Rubio and voiced my 200% support for the idea. If so many people are agin’ it, it must be good, considering that, in the matter of taxes, people hold out their hands for the golden handcuffs. No wonder the Boyz of Wall Street are having a good old time shearing the sheeple.
I’m just for it because it will be the most entertainment I’ve had in months.
what the hell have they spent all that money on?
Padding their own retirement pensions.
Well, it would help, that’s for sure (justify the prices). It is a horrible idea, that’s also for sure.
Honestly, this is such a radical change, I really don’t think any of us can even try to hazard a guess as to what would happen if this passed. It would cause a real upheavel in the system, and prices would get very “strange” on all kinds of stuff, all over the market. Would big ticket items drop 5% to make up the difference? What would happen to those paying the taxes (businesses)? Would companies pull out of the area?
It’s way too large a change to really try to see the implications of it, and there are far too many variables. It’s like chaos theory, and there is no real way to determine the outcome of it.
It is a truly horrible idea, and I do believe, in the short term, will put some life back in the RE market. Long term, it will have some dramtic, horrible, unintended consequences.
Michael, I feel so alone in the world sometimes until I read your comments. You are right. That’s exactly how it will go down.
Florida’s larger crisis is its reputation. The Boomers, whom they’ve been preparing for over this decade, aren’t going to bring the proceeds of highly appreciated homes to this region because they can’t get young, overtaxed professionals to pay their prices. As a result, they’re taking what they can get and plopping themselves down in greener warm-weather pastures, and when retirees move to an area they stay until death. No possibility of them relocating *again* to Florida.
No state with a high sales tax is prosperous. Does anybody ever think of that?
Tennessee’s is over 9%, and they’re a poor state overall.
Louisiana is second at 8.7% - ’nuff said.
Washington is third - mostly rural, few large cities.
New York’s infrastructure is crumbling, and they’re 4th.
Oklahoma is fifth - and they’re not exactly building alabaster towers there.
Alabama is sixth - Oh Lordy.
Arkansas is seventh - Lordy, Lordy.
California is eighth - and you folks are getting it back in spades.
Texas is ninth at almost 8% - the only exception.
And Florida wants to blow past all of them. How, in their stupidly arrogant minds, do they somehow think they can buck the national reality?
WELL, Oregon has ZERO sales tax and you should look at the prices of some of the property there! I get your assertion that high taxes are bad for business, but other factors have a big impact. Is this a chicken-egg conundrum?
But, the fact is, this initiative will FAIL.
Those of you who have been here for sometime probably remember the overcrowding issues some 15 years back. Too many cars crowding the highway. Not enough taxes for new roads.
Solution: Tax out-of-staters $300 fee for new vehicles registrations, In-state residents: $100.
The Bill passed, the tax-collectors did their job, the Florida Courts got involved………something about Equal Treatment under the law and Interstate Commerce, I believe. Bottom Line:
Florida Refunded hundreds of thousands of dollars to “new residents” who brought their car here. We all now pay $100 new registration fee.
The homestead exemption has compelling reason for it’s existance. It was established to keep retirees from being taxed out of their houses. It was originally $5000, back when the avg. price was bout $12k. It was increased to 25k when avg. price was bout 70k. Assessments tended to trail “market values”, so people who simply lived here would not be burdened with rising costs beyond the COL allowances. The courts allowed this, like allowing senior housing, which is basically age discrimination, but has a compelling reason.
Passing the taxes onto non-residents will probably be stopped very quickly, even if a Bill were to get through the house/senate.
Texas is ninth at almost 8% - the only exception.
Are you opining that Texas and Florida are prosperous but California and New York are not? By what yardstick are you measuring prosperity??
I agree and thx Michael Fink
Would big ticket items drop 5% to make up the difference?
I live in PA 5 mins. from the DE border. Some PA border merchants have attempted to reduce prices by 6% to capture pennsylvanians crossing the border to shop in DE. It usually doesn’t work.
Now Fast Eddie is proposing a sales tax increase as part of a property tax relief measure. Pennsylvanians routinely cross the border to purchase big ticket items. If our sales tax increases, those of us close to the state line will do all our drugstore shopping, etc. in DE.
I don’t understand Rendell’s reasoning on this one. A significant portion of the state’s population is concentrated in the Phila. metro region, which is within striking distance of the DE border.
Phillygal’s right on the money. I spent a good part of my growing up years in eastern PA. To this day, my parents shop in DE at least once a month.
And so do a lot of other Pennsylvanians.
In fact, I can recall a drive down to DE on 202. this was in 2004 or 2005. As soon as this highway entered DE, we were greeted by a huge welcome sign proclaiming DE as the home of tax-free shopping.
DE as the home of tax-free shopping.
Isn’t this technically felony tax fraud, for those who still care about such things?
If it is a felony no one is making any attempt to enforce the law.
In the past there were half-hearted attempts by police to search cars coming over the state line from DE - for liquor. (Because PA is on the state liquor store system.) There’s some kind of limit to how much liquor you can bring into the state from another state, but honestly, lately nobody gives a rat’s behind. The only checkpoints the cops do periodically are for DUI.
If shopping in DE to avoid sales taxes on computers and appliances is a felony, most of the border counties should be wearing ankle bracelets.
The answer is yes — at least short-term, a disappearing property tax will put upward pressure on home prices. It’s simple - the buyer’s monthly nut gets smaller, so he’s willing to pay a little bigger mortgage. All else being equal, abolishing property tax makes prices go up.
Two valid arguments can be (and are being) made: one, the FL market is in such bad shape already, the boost will not be enough to overcome the downward momentum; and two, the added sales tax will gradually diminish Florida’s tourist and small-business economy, thereby reducing the amount of money that Floridians have to pay for housing.
So it’s probably a dumb law, and maybe even bad for real estate values long-term, but it would certainly have the intended effect of softening the crash over the next couple years.
I know it’s an oversimplification, but the reality is that regardless of the method of tax collection, if the amount collected is the same, the macroeconomic impact will be relatively unchanged. There are probably a thousand different arguments for a thousand different taxation methods (income, sales, wealth, property, flat, progressive, etc…), and the different methods have very different effects on subsegments of the economy, but the summation of these different methods is minutia on the grand scale (unless you are a diehard supply-sider ;-). The big thing with this change is that you are moving it from homesteaded homeowners to everyone who purchases anything in FLA. I would think this would be worse for the state though, because property values have historically not fallen much, but consumption can decline very rapidly during a recession. The are already forcasting a $billion decline from forecast in revenue for 2007, with the majority of it being from declining sales taxes.
Personally, with a tourism dependent job, I will be pulling very hard against this.
“Taxes went up 100+% in 3-4 years.”
A substantial portion of Florida residents are insulated from this tax increase until they sell and buy anew OR improve their homes. As a result, they don’t care.
It’s crazy we still had a bubble under these adverse new-buyer tax conditions. It leads me to conclude there is a lot more short-term speculating in Florida housing than most Realtors are willing to admit.
Unfortunately, a substantial portion of Florida residents felt wealthier and HELOC’d their homes thinking that because of Save Our Homes they’d never face the music of higher taxes someday. Even those people are struggling now! There are people who HELOC’d to pay their insurance bills and repair their homes after Wilma. Car insurance exploded, and gas prices here doubled in less than five years.
And even at a 3% cap in taxes there are people who can’t pay their property taxes this year because wages haven’t increased. You can look it up.
Now, those folks say they’re “trapped in their homes” because of the tax impact of moving. Well, they’re wrong about one thing: they’re trapped not because they’d lose Save Our Homes but because they blasted through their home equity trying to survive a tropical powder keg of runaway government spending and overdevelopment. No redistribution of taxation is going to save that.
i would like to see a few of them “trapped in their homes” by the next hurricane
Where did that money go? Well, some of it’s going to health insurance, since the kind of jobs people have down here don’t offer coverage.
Health care costs have been rising faster than inflation for years. This is a problem in every state, not just FL.
But in Gainesville we also have the city government falling over itself to be “homeless friendly”. Instead of trying to reduce homelessness at the source–access to housing–they’d prefer to make it easier for winos to live in the woods. (Well, the landlords do run Gainesville, so this is not surprising.)
Every year more people blow into town from Jersey, spend one mild winter here and never go back.
People just want to bitch, bitch, bitch about the snowbirds. And it’s always been that way in Florida. Maybe because people feel like their “invading my turf.”
According to the property appraiser of Palm Beach Cnty, snowbirds represent just over 2% of the total units in PBC. (They figure it out by the tax bills that are sent to up north).
Truth is, snowbirds are going to gradually decrease in the coming decades and Floridians are going to have to pay their fair share. I think that most are still in DENIAL mode though and believe we are overwhelmed by people who come for a few months a year, don’t have kids in the school system and pay much higher taxes than the full-time residents.
From the bottom of the SPT article, “Despite the apparent financial squeeze, another company led by Loder has recently purchased several luxury cars. Over the past 18 months, Lay Z Girl LLC - a company for which Loder is listed as managing member - acquired a Bentley, Hummer, Lexus and Range Rover, according to public records.”
Do not feel sorry for these developers. They are laughing all the way to the bank. Insulation protects more than buildings.
“‘We’ll probably be back this time next year with a new project,’ said Ward. ‘We think the world will be a little bit better then.’”
My little pony, My little pony
“My little pony, My little pony”
LOL. I swear, this blog has the BEST lines anywhere.
I just crack up. Either with the inane stories from the MSM and their brethen, the NAR or the hilarious comments here….
thanks RJ, I’m still laughing. You summed it up perfectly.
I think the plastic stable was built better than some of the new construction going up.
“Earlier this month, Fremont alleged, the South Pasadena property was beset by trespassers, exposed wiring, broken windows, asbestos warnings, open or missing doors, dangerous balconies, and dozens of washer-dryers left sitting in a parking lot. ‘The project is in an abandoned state,’ Fremont wrote.
Washer-dryers? Damn, that’s right down the road from me.
Gee mom, these 15 washer-dryers … like … um …. they followed me home. Can I keep ‘um? Puh-lease?
You know what? I am calling BS on the whole “trapped in their homes” arguement. Please forgive me, I am working the numbers out now, but here goes.
Lets say you bought in 1998 for 150K.
150K = ~3000/yr taxes (forget the 3% a year, I don’t think I even need it to make my point).
Sell in 07 for 400K (you could probably get much more, but again, I don’t even need it).
You should walk from this deal, after all the fees, with about 200K in cash.
Buy another home for 500K, put 100K down. You now still have 100K in cash. Put that 100K into a reasonable investment and you can expect somewhere between 5-10% YOY interest income.
The tax will on your new home is 10K. You are making between 5 and 10K a YEAR off your investment income. That will pretty much keep your “out of pocket” taxes either nearly identical, or actually LESS then the home you moved out of!
I think that my numbers are erring of the side of crazy conservative, but the point remains. Nobody is trapped in their homes who bought before the boom! The only way that could happen is if you spent all the equity on the way up. And, guess what, I have no sympathy at all for you; that’s like being “trapped” in your MasterCard/Visa bill.
The point is, the only people who are truly screwed by this system are the first time buyers, and those who bought in at bubble prices. Anyone who has a ton of equity can move; they just need to be able to AFFORD the place they are moving into (crazy concept, I know). The tax bill can be totally paid by the interest income on the money you made coming out of the last home.
What a total crock.
My numbers could be wrong, let me know what you guys think.
They’re trapped because they HELOC’d their existing homes to the hilt to meet basic expenses and “live the Florida lifestyle.” They also don’t want to buy a falling knife.
The “trapped in our homes” argument means “I can’t possibly meet my expenses and continue to live life the way I want - with a low mortgage, low taxes and enough money to lease a Mercedes S Class sedan. I would have to live life like the scum I swerve to avoid every day on the Turnpike.”
The argument is partly financial, sometimes arrogance, always about entitlement.
You’re suggesting someone who has a 150K or so mortgage on a house bought in 1998 cash in the equity and take a 400K mortgage on a 500K house?
No thanks. If they feel trapped in the homes they should be happy about it.
trapped by too much much cash- sounds like a new victim class to me
why not move out of FL to a low tax state
You are assuming these dolts don’t blow the $100K. You and I wouldn’t but the bulk of the idiots would. I agree, first time homebuyers are screwed. It is amazing the speculation got this out of control with the goofy tax laws. Greed is very powerful.
I disagree with your conclusion that “trapped in their homes” is a BS argument. Moreover, your agrument does not mention selling costs, the interest cost difference on 150k and 400k, and the opportunity costs of placing 100k into an annuity simply to pay taxes. In short, there is no property tax advantage to realizing a gain, moving next door, and increasing your tax basis threefold.
IOW, it is more advantageous to stay in your home with a lower tax basis and pay-off your mortgage OR sell and move to a state with a more equitable property tax collection metric than to move next door.
I agree Maven. Why should a person pay 3 times more in property taxes than the neighbor with the exactly same house next door? That even hurts more if the new buyer doesn’t have any children and ends up paying for the school of others, including illegals. Besides expensive insurance rates caused by continuous natural disasters and fraud, out-of-control immigration is another major problem that consumes lots of new infrastructure without paying enough taxes for them. Keep in mind that immigrants usually send most of their cash back home, instead of investing back into our economy and infrastructure. Given the choice, why anyone would be willing to let the gov keep their property taxes, to spend mostly in pork and cronies, is beyond me. Some people are worried about the poor. Well, all the concerned people could give the average $6k to $12k they pay annually in property taxes directly to the poor, if they fell like. As you know, food, medicine, and rent are tax-free. Another benefit is that the gov would get smaller since there won’t be any need for appraisers. Also, I don’t think that this measure would create or perpetuate the housing bubble because we all know that the current bubble was created by fraud and relaxed underwriting. As soon as the bankers get screwed and issues tougher underwriting, the majority of buyers will only buy homes they can afford, regardless of property tax costs. For those who complain about loosing the property tax deduction, they can invest the property tax money into Munis, IRAs, 401(k) to lower their AGI and increase tax-savings (much more than itemizing).
‘I’ve got my father stuck, my brother stuck, an ex-wife stuck,’
LMAO, I wonder how the relationship with the ex is going…
I wonder when she became an ex wife…
Florida is being squeezed by several things.
It has no state income tax. Property taxes may be high as a share of income for those without breaks, but the overall tax burden is not.
Retirees are a great cash cow at age 65, but not when they need nursing home care.
All the other migrants require schools, roads, water, sewer and, in some cases health care. Growth has costs and benefits. The benefits came in first.
With the state expanding rapidly, it can underfund public employee pensions, expecting there will be more future residents to pay the bills, but if growth slows, the bills get expensive.
The homestead exemption screws snowbirds and business owners, but the lack of a state income tax helps them. That’s why they left NY, NJ, and PA. The locals are poorer, and would pay less for a progressive income tax.
YES the lack of state income tax here in FL does help them. I have long thought that there should be a state income tax. Moving to Florida is for many people a tax shelter, you only have to live here for 6 months out of the year to calim residancy. If you taxed income i feel this would be more equatable to every one. You make low wages you pay lower taxes but if you are realizing a large income related to investment income you pay taxes on that. People move down here to avoid paying taxes on this money that they would otherwise have to pay in the state they came from. I have a suspicion that there are a number of people down here that own property (mosty condos) that are doing this and not spending any where close to 6 months out of the year down here. Looking at the license plates on cars here I would suspect that many of these people come from Michigan and NY state. Coincidently states that have alot of tax on income. They show up in November and are gone by april so based on the license plate survey it seems that they fall short a couple of months. If you don’t live here or have been down here durring these months, you can not imagine the scale of the seasonal residents. Getting around down here durring said months is a royal pain. Summer is hot but at least the commute to just about anywhere around town is reduced by half. SERIOUSLY!
Interesting.
http://www.itulip.com/forums/showthread.php?t=979
Like many businesses with exposure to the new home construction market, PGT Inc. took a hit during the latter part of 2006.
so, how many here have NO exposure to housing ?
hint: if you’re not a fed worker- bend over
Florida already has the 2nd most regressive tax system in the nation. The bottom 20% of income earners pay an average of 14% of their income to state and local taxes. The top 1% of income earners pay just 3% of their income to state and local taxes.
Relying more on sales tax will make the tax system more regresive and raise the percentage of income that lower and middle income earners pay to state and local taxes.
Many permanent residents will still have to pay property taxes as rental properties would still pay. This widens the gap even further between homestead and non-homesteaded. Think of all the lost property tax revenue from the mansions on the beach that are homesteaded.
http://www.itepnet.org/wp2000/fl%20pr.pdf
I had similar thoughts. Our recent political culture has been that every crisis is leveraged as an opportunity to implement ideological positions dressed up at a “think tank” to look like scholarship. Guess what group of people tend to benefit disproportionately from those?
Not too long ago there was a faction in the Florida legislature, led by now ex-speaker Johnnie Byrd, that favored complete abolition of public schools, calling them “government schools.” Whether you agree with that goal or not, the fact remains that schools here are funded with property taxes and the lottery. I liked Mike’s post about us not having any real idea how this might turn out if it comes to pass. Once our social contract is broken your house won’t be worth a damn.
“Everybody signed papers without reading what they were signing.”
ISS (industrial strength stupid)
Impossible to pass a law like that. I large majority of real estate taxes go to the local municipality, not to the state to then be redistributed. There’s no way in hell they can say “whops, no more real estate tax” and expect local infrastructures (schools, fire dept, police dept, road services, etc…) to continue functioning. The entire state would come to a gridlock. Not only is it a stupid idea, it’s totally unfeasible. The effect would be like freezing all bank accounts on the spot.
Never say “impossible”. FL voters already passed the “Save Our Homes” initiative (modeled after CA’s Boomer-friendly Prop. 13). People always want something for nothing, and the majority are too stupid to understand that this is logically impossible. The fact it is impossible, however, won’t stop them on their quest for a free lunch –f**king up everything for the rest of us in the process.
What they realy need to do is find out where all the extra money that was collected over the past five years went to. House prices doubled in five years, but even based on the 1,000 people a day mantra, population only went up 10%. The state ran fine on the money it used to collect and isn’t operating any better on the increased revenue, so where’d the money go. Not only that, but if they’re more people and they’re paying taxes too to cover their share, why did taxes need to increase at all? Answer, they didn’t need to increase taxes. They just figured it’d be a great way to charge more for the privilege of allegedly owning your home, or as someone here eloquently put it, a permanent governement lein on your property.
“Not only that, but if they’re more people and they’re paying taxes too to cover their share, why did taxes need to increase at all?”
This one’s a no-brainer: the amount of taxes paid by the new residents is insufficient to cover the costs the local gov’t incurs from the influx of new residents. That’s one of the primary reasons why long-term residents oppose new development in their areas. Not only does quality of life go down from the effects of overcrowding (pollution, increased traffic and crime, less open space), but now they’re forced to pay higher taxes to subsidize the needs of all the new residents who came in and reduced the old-timers’ quality of life.
This is the fight going on in my community and neighboring communities where the local gov’t is in bed with developers. They’re *telling* us we’ll be paying more taxes to cover costs for these new developments, and throwing the ‘NIMBY’, ‘racist’, and other accusations at us when we protest seeing our community get raped and being handed the bill for it.
The main force causing the run up and the crash is bad loans. Tax law changes will not help.
I wonder what is going to happen to those potential Million dollar trailers in FL?
will those people win the housing lottery or…is that gone in the wind?
The sales tax will kill you. It hurts every county in Ohio that has 1/2 or 1% more than another surrounding county. If you go across a border to buy or purchase on the internet, pretty soon the businesses you do have will be closing or moving to a more tax friendly state. Along with that will be lots of unemployed people who won’t be buying real estate or anything else for that matter. There is no way that situation is going to help prices in an already overpriced market. If anything more houses will be on the market, because all the people without jobs can’t afford them. No one will want to live in a state that normal consumption costs an arm and a leg every week. As one writer said there’s lots of places with sunshine. Our state has a state income tax and most of our schools have an income tax instead of more property taxes. It’s a much fairer tax than property taxes. Everyone pays it, but if you don’t make as much you pay less and if you make a lot, you pay more. If your income goes down, so does your tax burden. There’s very few writeoffs for high income people to avoid paying their fair share. The people who rent but make good money also have to pay. A sales tax is regressive, because someone who makes $15,000 a year pays the same percentage as someone who makes $200,000 a year. I think Florida residents need to get it in their head that their home prices are way, way overinflated and the ride is over for the big profits and the out of control government spending. They’ve literally priced themselves out of the market.
Florida doesn’t have many borders as other states (like Ohio), mostly is ocean, and the area that do have borders are not so populated by big spenders. Do the math: Food, medicine, and rent are tax free; even if you spend $500 more in disposable income for sales-taxed items, the increase on the household budget will be only $11. I rather trade $11 / month for the average property tax of $300 / month. Isn’t that better? Now, let’s say you want to buy an used car that costs $20k: that’ will only cost $420 more because of the proposed sale tax increase of 2.2%. How often do people trade cars? How often do people pay expensive property taxes?