Property taxes and home affordability in Florida

An important factor in this Florida Real Estate is the home affordability problems. Many other issues and there can be used as part of normal market fluctuations. However, affordability is always the essential element.

Compare home prices and family income in 1980 and 2005

Let's median home price in Miami-Dade and Florida's median family income statistics for this purpose.
Median Home Price in 1980 - $ 75,000.

Median Home Price in 2005- $ 372,000.

1989 median family income in Florida = $ 21,355.

2005 median family income in Florida (estimated) = $ 60,000.

Increase in median family income in the same period = 181%.

Increase in the median home price from 1980 to 2006 = 396%.

Note: These figures have not yet been fully verified. They were from different sources, and some might misinterpret. They serve to declare a trend graph, and only in this context is they serve the purpose of this essay.

Average property tax for new buyers (including homestead exemption) in 1980: $ 850.

Average property tax for new buyers (including homestead exemption) in 2005: $ 5899th (Guidelines)

Homestead Exemption provides a $ 25,000 deduction on the home page estimate for homeowners, and register themselves with their community Referee qualify.

What is Save our Homes?

In 1992, Florida voters approved an amendment to the> Florida Constitution, which only in the amount of the value of a farm property could increase for the purposes of tax calculation.
The law limits assessment increases to 3% per cent, or an increase in the consumer price index - whichever is less.
Non-Homestead property is assessed annually, the full market value.

Home affordability than by FNMA guidelines considered

$ 36,588 minimum annual income, as per FNMA guidelines was needed to cover Median Home Purchase1980, assuming 90% APR financing@12.5%, 1% of insurance per year, (Piti = $ 854).

Note the very high interest rates in the 80s. (Piti = Principal + interest + taxes + insurance)

$ 134,086 minimum annual income to FNMA guidelines were needed to meet Median Home Purchase in 2005, adopting a 90% APR financing@6.5%, 1% insurance premiums (Piti = $ 3,152)

Around FNMA require basic guidelines that no more than 28% of the buyer's gross --Wages should be paid in order for its monthly Piti (principal + interest + taxes + insurance) to pay.

Noted is the declining affordability, despite the fact that mortgage interest rates in 2005 was half of what it in 1980.

Impact of property tax on median house values in the years 1980 and 2005 compared

Property tax for new buyers as part of the mean value in 1980 = 1,133%

Property tax for new buyers as part of the mean value in 2005 = 1.586%

Theare more exposed in part to the decline of the homestead exemption as a percentage of value at home.

The $ 25,000 exemption represented 33.3% of the average value in 1980.

It was a meager 6.7% in 2005.

Percentage of the median income for a family home property tax paid in 1980 = 4%

Percentage of the median income for a family home property tax paid in 2006 = 9.83%

However, this increase is valid only for new buyers in this market. The Save our Homes taxBreak
Unfairly burden new buyers, holiday home owners and investors, and Old Homestead protects the owner with the restriction to 3% per year in their property taxes.

Fact: Even if have median home values increased proportionally more than the median family incomes double, and substantially increased the tax base, counties and cities as recipients of property taxes) have their way in their mileage (or tax rate to increase further found whereby the costs for the owner toReal Estate in Florida.

Have we fully understand the message that these irrefutable facts to send to all concerned?

To old homeowners in Florida: Not always, always out of your house or condo. They will be punished by an unsustainable increase in property taxes, even if you downgrade to a smaller and more affordable home.
Do not try to add you to space, build or rebuild. Each square foot has to be the full market value will be taxed, because it will not be covered by theSave Our Homes exemption. They would, how much it could raise your tax bill be surprised.

Tripled For owners of second homes or vacation homes in Florida: Congratulations, your equity has in the past 10 years. Now, take your money and run. From now on you will be taken with taxes three or four times higher than it was 10 years, while not designed to take advantage of schools and other infrastructure for the permanent residents, you pay the highest bills. Conclusion:Sell

To investors who have held their property by more than 5 to 10 years. Congratulations, the time to take your profits and find a better investment. Your tax is 3 to 4 times what they were when you bought the property. You have tried to collect the rent increase to cover their rising costs, but you do not have to keep it updated in a position to control and associated costs increased. The fact is that tenants can not afford a pension, which would make sense for your investment to pay.

ToInvestors who bought recently. Good luck. You have paid the high price. Your property taxes are high and relentless. Their rents barely cover your taxes, charges and a very small part of your monthly installments. The message: Limit sell your losses and run ... But that's the sticky situation of thousands of other "lucky" investors. As a last resort only to try to rent it to a monthly loss and hope for the best.

To New Home Buyers. Good luck. You pay thehighest prices. You pay the highest property taxes. Their expectations of a quick evaluation of your new home is waiting for better times. Meanwhile, the teeth bite together, take the hit and hold.

To tenants. You are already experiencing a strong pressure on rents and it will last for some time. Their American dream of homeownership is crushed and now is almost unattainable, but what you pay in rent is almost a bargain. But wait, progressive andinevitably raises.

And the message that Florida residents are increasingly sending:

To Local Governments: You have been running wild with our dollars. They are bold and rich, but you would not give up, stop wasting our money and always keep our taxes and you are now the only beneficiaries of the real estate mess that our country under threat. As instructed on some legislators, the spending limits?

Solve the problem:

Who qualifies as a beneficiaryThe Save our Homes tax should not be tolerated, neither the intention to take away this privilege. At least 3% cumulative annual growth (as the Save our Homes rules) is more than fair.

Cost of living is on average no more than this percentage in the last 10 or 15 years. So accept, why are taxed on hypothetical sales value of your property by greedy local government? We all know that county and city services do not justify in any way, three and four times betterLarger tax bills. Therefore, their costs at the same rate as the national inflation rate should be increased. Unless they choose to mask their inefficiency at the expense of taxpayers.

On the contrary, we can even say that the mushrooms have increased from the soil base their new developments already in a way that the common homeowner should have expected a reduction of tax rates.
The legislator should better consider new regulation on the transfer of these Save our Homes benefit ifChanging characteristics of the farm owner by lesser values. This would certainly be to reactivate the housing market.

There is no doubt that the current level of property taxes has a face that should be seriously considered in order to place them back to their historical levels, as a fair share of median family income to meet its nearly confiscatory levels. I'm talking about reducing the tax bills.

This housing recession is not complicated by orrandom factors. There are deep economic reasons that can and should be corrected. Affordability of homes is a part of our government's responsibility and should be treated accordingly.
Unfair and abusive property taxes are a known problem, and voters should put pressure on their representatives to correct it.

We are not talking about slow and timid measures. I heard about a movement among the Homestead Exemption from $ 25,000 increase to $ 50,000. This is not the solution. Itwould only be a symbolic and political step.

Why do a proper investigation of the effects which have contributed 25 years of inflation, lift the economic and social impact of this exemption? If we do not roll back to the same share of the basic values at home and in their original intent?
Would not that be a $ 100,000 exemption closer to reality? Would not that help first time home buyers achieve the American dream? Would not that be a real injection of reality in our homesMarket and our economy in general?

Affordable housing for Florida is an urgent necessity. No doubt that millions of U.S. dollars have houses and condos, our economy has helped, but it will leave any business, as working people can start, because the state is not sustainable values at home?

The "Save our Homes" law protected in some way a part of our homeowners. However, they are incomplete and unjust regime. A complete overhaul in order to obtain this protection, and alsoprotect new home buyers would increase house buyers and investors against unfair property tax, are welcome.

Of course, the property tax problem is not the only element in the home affordability. Interest and financing costs, inflation, wages, construction costs, land values, which are also decisive factors.

But property taxes are a cumulative burden on homeowners and they follow it year after year. It is time for local governments and the legislature at this addressIssue that is for the survival of our embattled middle class is crucial.

Disclaimer: This article represents the personal opinions of the author and not to a company, club or company with which the author reserves stand any kind of relationship.

Texas Tech