Raising Property Taxes Lowers House Values

September 24, 2010 Leave a comment

The more the government taxes a house or other property, the less is it worth because a new buyer pays less (unless you are in a housing bubble and unless LeBron James is buying the house).

As local governments persist in increasing property taxes on residences as values are falling (they are still falling, by the way), the house value will fall even more.  Also, the more you raise property taxes the more everyone is hurt except the wealthy.

(Now let’s see, who are financing candidates for public office?)

Draw your own conclusions.

Filed under Property Values, Taxes and Fees

Commissioner Kerdyk is Right

September 15, 2010 Leave a comment

There is plenty to worry about in the prices of houses in Miami-Dade and Coral Gables.  Even if we live in Coral Gables, there is little chance that our house prices will coming bounding back or that the city will get in inflow of tax revenues from higher property values.  Forget that notion for several years.  I think that in these times higher millage rates discourage real estate sales for most buyers.

The slide in U.S. home prices may have another three years to go as sellers add as many as 12 million more properties to the market.

Shadow inventory — the supply of homes in default or foreclosure that may be offered for sale — is preventing prices from bottoming after a 28 percent plunge from 2006, according to analysts from Moody’s Analytics Inc., Fannie Mae, Morgan Stanley and Barclays Plc. Those properties are in addition to houses that are vacant or that may soon be put on the market by owners.

via U.S. Home Prices Face Three-Year Drop as Supply Gains (Update1) – Bloomberg.com.

Filed under Economy, Housing, Property Values

Higher Property Taxes in a Housing Recession

August 24, 2010 Leave a comment

This is not a good formula for Coral Gables’ taxpayers.  We need help from the City of Coral Gables.

Higher property taxes will drive housing prices even lower because buyers will be scared off by this city’s taxes and fees.

“Home sales were eye-wateringly weak in July,” said economist Paul Dales of Capital Economics. “It is becoming abundantly clear that the housing market is undermining the already faltering wider economic recovery. With an increasingly inevitable double-dip in housing prices yet to come, things could get a lot worse.”

via Double-dip in housing prices may be around the corner – Aug. 24, 2010.

Filed under Government, Housing, Property Values

More on the Coral Gables Budget: Property Taxes as an ATM Machine

August 13, 2010 Leave a comment

It is interesting to look at the historical budget and tax revenue data supplied by the city in the latest Estimated Budget, 2010-2011.

  • City property tax revenues rose from $29.5 million in 2000 to $66.4 million in 2009.  Let’s say that these property taxes had risen just by the inflation rate from 2000 to 2009.  How much would it have increased?  It would have increased from $29.5 million to $36.8 million in 2009, not $66.4 million.  In other words, property tax revenues have increased by more than 80% above the inflation rate.
  • Assessed values increased from $5.5 billion in 2000 to $13.0 billion in 2009.  The equivalent inflation rate would have seen values increasing from $5.5 billion to $6.85 billion.  Thus assessed values increased by 90% more than the inflation rate level.  That was the abnormal real estate value.
  • We can conclude that Coral Gables increased taxes as fast assessed values increased.
  • Like many families in Coral Gables, the city used its property taxes as an ATM machine–spending as fast as the money came in thinking that assessed values would keep rising.  Unfortunately, even today the city keeps increasing taxes as if property values were increasing just like the good old days instead of adjusting to the economic realities that may continue for years.

Filed under Budget, Coral Gables, Finance, Property Values, Taxes and Fees

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