Palm Beach County Housing Market Sparks Recession Fears
The “R” word seems to be on everyone’s lips these days, and we don’t mean “real estate.” We’re talking about recession.
The South Florida housing market slump is supposed to be what pushes the regional economy into recession, of course, and nationally, there are a great many worries of the same scenario.
“If the economy were the Apollo 13 moon trip, it would say, ‘Fed, we have a problem,’” said John Burford, V.P. of The International Bank of Miami.
“This is not a drill,” Burford added. “It is a red alert, and lower rates are needed to restart a stalling economy.”
Now for some good news.
Wayne Archer, director of the Bergstrom Center for Real Estate at the University of Florida, believes that the “underlying markets for Florida real estate are still in good shape.”
“Owner residential is the only area of real estate markets where there are problems at this time,” he said. “Apartments, retail, office, industrial and hospitality all remain stable and healthy.”
On the property taxes front - when millionaires start complaining about them, let’s just say there’s got to be a problem somewhere.
Peter Strauss, who owns an apartment in the Winthrop House at 100 Worth Ave. - admittedly one of the better addresses in Palm Beach - saw his property taxes go up more than 42 percent this year.
The taxable value of his 1,600-square-foot apartment rose to $1.3 million from $834,000 in 2006, according to the Palm Beach County appraiser.
Strauss’ apartment is not homesteaded, so he pays taxes on the full taxable value of his property. His taxes rose to $21,863 from $15,347.
His Winthrop House neighbors essentially the same two-bedroom apartment, but their taxes this year are $5,804, down from $6,099 last year.
They are homesteaders, so their taxable value is capped, rising this year to $340,332 after the $25,000 homestead exemption.
The fair market value? The same as Strauss’ apartment - $1.3 million.
“To take advantage and raise property taxes to that degree, no one understands,” Strauss said. “They just say, ‘Wow.’ “In five years this apartment could be worth $4 million. Taxes would be $50,000 on that formula. It would be ridiculous.”
Strauss also owns an apartment in New York, “in the city’s best ZIP code,” where he pays $15,000 a year in taxes on his two-bedroom apartment.
You might think it’s hard to feel very sorry for someone who can afford a million-dollar apartment and who doesn’t even need a Florida mortgage.
But Strauss says he intends to fight what many believe is an unequal tax policy, pitting “snowbirds” against full-time residents.
SOURCE: Palm Beach Post
