In a sign that Florida’s housing market may be on the road to recovery, the state’s top economist expects an increase in school property tax rolls next year of 1.3 percent, reports Lilly Rockwell of NSF.
Though that is actually a slight decrease from the original forecast of 2 percent, it is one of the most promising signs yet that Florida’s ailing and hard-hit housing market is on the mend after four years of plunging values.
Florida’s housing market was one of the hardest hit in the nation, the victim of an overwrought housing bubble, loose mortgage standards and a tourism-based economy.
The state’s housing woes have become fodder for national newspaper and magazine articles spotlighting the housing glut, examining over-developed South Florida subdivisions with plummeting home values.
But now Realtors, economists and property appraisers say they see signs of a housing market recovery.
“We turned the corner,” said state economist Amy Baker, though she cautioned the economic recovery is still fragile. Her forecast was part of a discussion Wednesday of adjusting estimated property tax revenue this year.
“The correction from the housing boom was severe and very dramatic on the (tax) rolls,” Baker said. “Now most of that correction is behind us, but we are still not back to the growth we typically see.” She said that property tax rolls are going to stabilize after four years of decreases, with drops over 10 percent in tax rolls in 2009 and 2010.
The forecast of school property tax rolls is a big indicator of the health of the housing market. When home values go down, school districts typically collect less money. When home values go up, then property tax rolls swell.
But is Baker’s forecast too optimistic? After all, Florida’s median home values are still sinking.
The latest real estate data shows that the median home price in Florida slipped 2 percent in June to $138,000, and that home sales fell by 4 percent in June from the same period last year.
Sean Snaith, an economics professor at the University of Central Florida, called Baker’s forecast “reasonable.”
The state’s tenuous economic recovery is heavily dependent on hiring, Snaith said.
“The states of the housing market and labor market are intertwined going forward,” Snaith said. “As we see better job creation numbers and a falling unemployment rate, that will help the housing market.” But while Florida’s unemployment rate has inched lower, it still stands at 10. 6 percent in June.
Snaith said an increase in what a school collects in property taxes could come from home value appreciation, or a combination of that and an increase in the number of people or homes in Florida next year.
Property appraisers said they are already seeing signs of an improved housing market.
Pedro Garcia, the property appraiser for Miami-Dade County, said in the downtown area, populated by high-rise condominiums, home values jumped 12.1 percent this year over last year.
In high-income areas, such as Coral Gables, property tax values have begun to inch upwards from last year, Garcia said. “It’s getting better, it’s definitely getting better,” Garcia said.
In Lee County, Property Appraiser Kenneth Wilkinson said tax rolls have improved from a 25 percent decrease three years ago to a mere 3.46 percent decrease this year.
“I wouldn’t be surprised if statewide we have a very slight increase,” Wilkinson said. “I wouldn’t disagree with Amy’s numbers. It sounds reasonable to me. What we are seeing is residential has bottomed out.”
But property appraisers said while homes and condos appear poised for a comeback, commercial properties are lagging behind. “Commercial property will always follow what is happening in residential,” Wilkinson said. “Commercial went down in double digits this year.”
Realtors and property appraisers say the recovery could still be unhinged by a significant increase in foreclosures, and a so-called “shadow inventory” of homes that are waiting to be put in the market.
The forced slowdown in foreclosures due to investigations into foreclosure fraud last year have helped home values in some areas by stalling the number of foreclosed homes, which often bring down the value of homes overall.
Florida Realtors President Patricia Fitzgerald said there are signs of increased housing activity in some parts of the state, but she said recovery is uneven, with some subdivisions seeing robust sales while others aren’t.
“We do see more activity, in the lower price ranges,” Fitzgerald said. “In the St. Lucie market, (homes) are selling like hot cakes,” Fitzgerald said.
Some of this activity is from investors, who sense the market may have reached its bottom, she said.
Some homes in St. Lucie are selling from $40,000 to $100,000 and many investors are snatching them up, she said, turning them into rental properties or fixing up foreclosed homes for a profit, Fitzgerald said.
“For the most part, you are seeing a big influx of investors coming into our marketplace,” Fitzgerald said. “A lot of those investors are local investors and are using cash.”