Tax Inaction Leaves Home Sales In Flux
As the Florida Legislature spends the next month and a half grappling with the property tax crisis, the real estate industry fidgets on the sidelines, watching sales figures fall and growing more anxious by the minute.
Their fear: Already-lagging Florida mortgage activity and the state’s languishing housing market will sink further with buyers waiting until legislators decide the future of property taxes.
“It’s not a perfect storm. More like a perfect calm,” said Jim Knetsch, owner of RE/MAX Realty Associates Inc. in Carrollwood, of the legislative uncertainty.
The Legislature will tackle property taxes in a special session June 12-22, but it could be weeks or months before the full effect of the legislation is known.
The timing couldn’t be worse as the real estate market begins its busiest time of the year. Over the past seven years, May and June have been the strongest months for home sales in the Tampa Bay area.
As of last month, a record 30, 000-plus single-family homes were listed for sale in the Tampa Bay area, and for the first time in three years, the median sale price in Pinellas County dipped below $200,000.
Realtor Nancy Baird doesn’t mince words when asked about having to hang on another six weeks or longer.
“It’s a huge problem because so many people are waiting to see what happens,” Baird, a sales agent for Baird Realty Group in St. Pete Beach, said Thursday.
“They’re scared they won’t be able to take their Save Our Homes cap with them. I have a customer who’s selling her condo and renting instead of buying because it’s cheaper.”
And if losing the cap doesn’t stop buyers, Baird said, the sheer amount of the taxes will. Baird recently sold a home in St. Petersburg that had an assessed value of $230,000. Because the home had been on the market 18 months, it sold for the discounted price of $180,000.
But the property taxes are $5,600 a year, and when insurance is added on, the two costs total more than the principal and interest on the Florida home loan.
“The buyers had no choice,” Baird explained, “because the house they were living in was sold. Why? Because the taxes and insurance were so high.”
Sen. Daniel Webster, R-Winter Garden, said he’s doubtful taxpayers would see changes this year.
“Within the tax structure there’s not a whole lot you could do immediately because of the budget years and the tax rolls that get set,” he said.
Other lawmakers are hopeful that taxpayers could get relief as early as this year through a rollback. But solutions, such as allowing home owners to take their Save Our Homes cap with them when they buy a new house, or doubling the homestead exemption, require statewide approval.
That would delay implementation. Another problem, say those in the industry, is that property taxes aren’t the only roadblock.
Nancy Riley, president of the Florida Association of Realtors, met Thursday with House Speaker Marco Rubio and has been in close contact with Senate President Ken Pruitt and Gov. Charlie Crist. “There are three reasons the market has stopped,” Riley said. “Taxes, insurance and the press.
“The fact the Legislature moved the issue back six weeks probably makes sense so decisions are not made that would have severe ramifications.”
Riley said that speculation by investors led to inflated home prices and that Florida’s core market remains strong.
“If it were just one thing, it’d be easy,” said Knetsch of RE/MAX Realty Associates. “But people are waiting not only for more clarity with property taxes, they’re also waiting for any impact from insurance law changes, they’re looking at interest rates, the problems with sub-prime [Florida mortgage lender] institutions and at the national economy.”
Knetsch said that if even one was resolved, it could ease much of the uncertainly.
“We need something to stir things up in a positive direction.”
SOURCE: St. Petersburg Times
