Florida Mortgage Brokers: Excited About Property Tax Reform

Within an hour after the State Legislature passed its tax bill Thursday evening, Mark Zilbert went to work. The South Beach Florida mortgage broker sent an e-mail blast to 50,000 potential buyers with the tax changes - and condominiums for sale.

Like most in the housing industry, Zilbert had been eagerly waiting for something to inject new life into a frozen Florida real estate market.

The Legislature’s tax rollback could spur a little action by giving home shoppers a bit more money and a psychological boost. However, the waiting is far from over: Many buyers are likely to sit on the sidelines until voters decide whether to approve a big property tax exemption in January.

”What buyer and seller are starving to see is something being done about taxes,” said Zilbert, who said he had 300 e-mail responses by Friday morning. “Not everyone is convinced they will see big changes. Yet this is finally being dealt with, and for many, that is all it takes.”

The reforms passed Thursday may prompt some Florida mortgage hopefuls to think harder about taking the plunge.

For more than a year, Adam Lubkin, a renter in Miami, has considered buying a home in Fort Lauderdale to be closer to his parents. He waited during the tax debate in Tallahassee and is still not sure, but he’s more positive than before.

”I think it will have to shake out a little bit,” said Lubkin, who is in real estate development. “But did Thursday’s decision move me in the direction to buy a house? Absolutely.”

Turning renters into buyers would be significant, said Ronald Shuffield, president of Esslinger-Wooten-Maxwell Realtors, which sells homes in Miami-Dade and Broward counties. He said that while sales have gone down, rentals through the multiple-listing service have actually increased 29 percent over the past year in the Miami-Dade housing market.

”That says to me we have a lot of people still here,” Shuffield said.

WAIT AND SEE
However, the wait-and-see attitude among some buyers is likely to continue until January, when voters decide whether to approve a system that offers the choice between Save Our Homes caps or a new super-sized tax exemption for homeowners.

”The real bad slump in the home resale market and the new home market will likely remain flat through the end of the year,” said real estate analyst Jack Winston of Goodkin Consulting in Miami.

If the proposal passes in January, the super-sized tax exemption may reduce the sticker shock that prompted many prospective buyers to walk away after tallying up the home price, insurance costs and taxes. The exemption of 75 percent on the first $200,000 and 15 percent on the next $300,000 may give first-time home buyers a better chance to get into the market. It also could budge some owners who were reluctant to move up before because of the prospect of a significantly higher tax bill.

But even if voters say yes in January, it’s unclear how far the changes to the market will go.

Peter Zalewski, a real estate advisor in Bal Harbour who offers buyers distressed property, said the super-sized exemption may bring a burst of activity, but not for long.

”Ultimately, there are too many units and not enough buyers, and not even a tax break will change that,” he said.

The broader market still faces a host of problems. There’s an affordability gap, with many buyers still priced out. Banks are tightening lending standards after giving out Florida mortgage loans too freely. Insurance rates remain high for many homeowners.

And there is still a mountain of homes on the market looking for a buyer. In the past year, the number of homes listed for sale in Miami-Dade and Broward counties increased from 50,000 to more than 75,000.

Meanwhile, the vacation- and second-home sector - a big part of South Florida’s housing market - were largely left out of the tax breaks passed by the Legislature. Florida is the largest vacation home market in the country, according to the U.S. Census.

NOT ENOUGH
Some say the reform package, even if the January vote passes, doesn’t go far enough.

”It’s not enough to impact our housing market,” said Silvio Cardoso, president of the Builders Association of South Florida, who favored a rollback in property taxes to 2001 levels. “I think the market will continue to be very dead for a while.”

But the industry is keeping its fingers crossed.

”This is a good start,” said Gus Rubio, who heads real estate brokerage Coldwell Banker in Miami-Dade. “We’ll see what happens.”

SOURCE: The Miami Herald