Property taxes and how Florida foreclosures affect them should be a subject of intense study by those people in the Sunshine State charged with making the best use of incoming revenues, reduced though they may be. This is because the increasing rate of foreclosure, which Florida had been able to duck for a while, has been leading to a commensurate drop in property taxes being paid.
The way to look at this problem, whether in Florida or any other state, is to keep in mind that someone walking away from a home or who has lost it in foreclosure will be under no obligation to pay any future taxes on the property. True, some are still on the hook for taxes owed, but lost revenues are sure to ensue and that fact could adversely impact many a municipality, especially when no great uptick in sales is anticipated for a while.
The problem with real estate — all over and not just in Florida — is that many people rode a very long-lasting rising tide of prices. Down in Florida, the state benefited more than many other areas in this rising tide for far longer. It was therefore able to duck a decline in property values as a result of foreclosures due to recession that it probably would have experienced sooner if it were any other state.
However, when the bottom falls out of a market, or when the inevitable bust finally follows the boom (as it has, not only in Florida but in most other states as well), such speculative investment can hurt more than might normally be the case. For example, consider the ocean of people who’d bought into homes they couldn’t afford with the expectation that they’d “trade up” after selling their old home for a handsome profit.
The calculation they made was that the real estate boom would continue for a long time and that they’d be able to buy into property and then sell it off at a profit before any mortgage notes readjusted in interest rate or the like. Sadly, the bottom fell out suddenly and many people were caught out sitting on properties that no longer were worth even up to half of what they had paid for them.
These days, many homes in the Sunshine State are being held by folks who are unable to meet the monthly payments due to mortgages that have adjusted and they may also have lost jobs during the recession as well. It’s kind of a fairly vicious cycle and there’s no area of the economy that goes untouched by it, including and most especially in the matter of property taxes and sales of homes.
With FL foreclosures continuing a steady climb, it’s just as sure that municipalities and even the state can expect a continuing drop in tax revenue collection. Property taxes are used to pay for a great many services a city or town or the state offers to its citizens, including schools and police or fire protection. Whether it was wise to rely so heavily on such a shifting base is a question for another day. The need at present is to deal with the reality.
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