Real Estate Blog

HIGH PROPERTY TAXES STIFLE MARKET RECOVERY

March 7th, 2009 5:40 AM by Sherry Lee

There is good news and bad news in the real estate market today.

The good news is, people are looking at houses again. There was a long dry spell in practically every price range. And when people did look at property, they would dash off to see the next one, never to be heard from again. Lost in a sea of distressed properties. So at least people are looking, and I attribute it to the precipitous decline in prices. 

The bad news is, no matter how low prices seem to go, property taxes remain stubbornly high and completely out of step with the market. Florida Tax Watch, Chambers of Commerce and dozens of grass roots organizations mounted an all out campaign to get local and state leaders to do something about their ballooning budgets and property taxes. And that was before the bubble burst. Now elected officials are still trying to hold onto ridiculous valuations as a way to prop up their inflated budgets as other sources of revenue slide. Last year, Palm Beach County Property Appraiser, Gary Nikolits, determined that property values fell only 8%. But anyone with a pulse can tell you that values were down in the 20-30% range last year. Now this year Mr. Nikolits is trying to tell us values have fallen 12%, which is being widely reported at closer to 40%.

Examples of over taxed properties are everywhere. Take 240 Almeria Road in El Cid. It last sold in the 600's and is currently listed for $260,000. It carries a whopper of a tax bill of $9179, which is more than twice what it should be. 933 30th Street is currently listed for $58,000 and the property taxes are $4210. That is more than 7% of the price of the house. 4825 Belvedere Road is currently listed for $170,000 and the taxes are $7706, or more than twice what they should be.  And then there is a house on 44th street listed for $36,900. Cheap right? But not the taxes. They are $1459, or more than twice what they should be. And just for the sake of comparison, I have a four bedroom, two story brick home built in 2002 just outside of Asheville, NC and the value is about $190,000. The property taxes are $1300 per year. How do they manage to still provide CLEAN drinking water, safe neighborhoods, good schools, garbage services and storm clean up when necessary? What is it about Florida that justifies this fleecing?

Sure our values spiked , but everyone knew they were overinflated and it wouldn't last. It was headline news almost every other day. So why did our elected officials decide to tax those artificially high values? Simple. So they could conduct a massive wealth and property grab and grow their budgets at the fastest pace in history. From 1996 to 2006, Palm Beach County commissioners TRIPLED their budget while population and incomes grew by only 25% for the same period. How ironic that they are also getting federal dollars to 'help with the foreclosure crisis'.

It occurs to thinking people that local and state governments, especially in South Florida boom markets, actually caused the crisis by overtaxing property to the point that people were FORCED TO SELL.  Perhaps if that $36,000 home still had $600 tax bill, the poor family who lost the home would still be in it today, as would thousands of others.  Perhaps the housing market crisis wasn't caused by greedy borrowers and careless lenders after all. Maybe it all started with overreaching politicians who ignored the state mandated 'rolled back' rule and voted year after year to keep the mil rate basically the same while higher values pumped billions in excess revenue into their coffers and eventually bled residents dry. 

The point is, if government really wanted to end the housing market crisis, they could by reducing property taxes. With a 4.5 BILLION dollar annual budget and only a little over a million residents, Palm Beach County could remove all 800 million it receives in annual property tax revenue and still operate. Can you imagine the market recovery we would have?  But don't hold your breath. Even though Palm Beach County and the 37 municipalities within the county all spent money like drunken sailors during the boom, they also horded piles of cash. And now they get millions more of our money to buy up our foreclosed homes -? 

It doesn't quite seem fair, does it? 

So as you wade back out into the scorched market place and begin to look for that investment property or first home or second home, remember that government is working at cross purposes with you. You want to believe that they are there to help you, and help the market recover. But this is the same government that is still spending tens of millions of dollars a year to provide affordable housing. Every affordable housing development they build puts another private homebuilder out of business. And every "affordable government house" they sell to a school teacher or firefighter is one more private home that sits on the market unsold. When did it become o.k. for government to start competing with us for our livelihoods?  

So open your mind. Open your eyes and start paying attention. If you are tempted to buy that overtaxed property anyway, be prepared for a fight. The property appraiser has already said he would not adjust values to include foreclosed properties until they are the predominance in the marketplace. 

Well guess what, Mr. Nikolits. That day has arrived. We have been overtaxed for far too long. It has brought our economy to the brink and forced thousands from their homes. It is time you reappraise every single parcel in Palm Beach County. Do something good for the economy and for the residents who pay your 25 million dollar annual budget. 

 

 

 

Posted in:General
Posted by Sherry Lee on March 7th, 2009 5:40 AM


You said what a lot of people are thinking but some are too afraid to believe. We all want to believe the government has our best interests at heart. Sadly, our county government has grown wildly out of control. They think they can ignore the wishes of the people and do what they think is best for us. I am thoroughly disgusted with the arrogance of our elected officials and wish we could clean house and start all over. Thanks for taking the time to explain a complicated situation in terms everyone can understand.
Posted by sharon on March 10th, 2009 7:02 PM


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