Higher property tax bills could bring more financial pain during coronavirus pandemic

Construction workers frame a building at the Oak Tree development by Pulte Homes, Wednesday, April 8, 2020, in Oakland Park. In Broward County, property values increased an average of 6.1%, with some of it attributed to new construction.
Construction workers frame a building at the Oak Tree development by Pulte Homes, Wednesday, April 8, 2020, in Oakland Park. In Broward County, property values increased an average of 6.1%, with some of it attributed to new construction. (Michael Laughlin/South Florida Sun Sentinel)
 

A bigger-than-expected tax bill couldn’t come at a worse time for people facing a cash crisis because of the new coronavirus. Property values in South Florida did well overall in 2019, which could translate to higher property tax bills.

The economic fallout from the coronavirus already has resulted in historic unemployment numbers. How much it’ll hurt property values, if at all, won’t be known in the immediate future.

 
South Florida’s county property appraisers have released their estimated values, which cities use as a guide to know how much money they can expect to collect from homeowners and commercial property owners when they make their budgets to pay for everything from police salaries, park maintenance and street repairs.

The property appraisers say state law requires them to only judge the values from 2019, which means any fallout from the coronavirus can’t be taken into consideration. But experts aren’t sure there will be a decrease next year either.

 
 
In Broward County, values increased an average of 6.1%, with some of it attributed to new construction; the top three valued projects came from Fort Lauderdale. The city of West Park had the biggest jump at 10.2%.

Broward Property Appraiser Marty Kiar said the office handles paperwork for about 400 deed transactions a day, which include sales. But since the pandemic, that rate has been cut in half.

In Miami-Dade, the average increase is 4.6%; the city of West Miami, at 12%, had the biggest jump.

Palm Beach County taxable property values have increased 5.51% from 2019 to 2020. The newer city of Westlake, which has new home construction, had a triple-digit jump in values.

Palm Beach County Property Appraiser Dorothy Jacks said the county enjoyed the highest new construction levels in nine years.

“It was a healthy market in 2019, all sectors had some appreciation, and new construction is almost the icing on the cake,” she said. “The cake did well. That’s brand new money that’s never been taxed before.”

But will unemployed homeowners turn to short sales and foreclosures, which creates more houses for sale and dilutes the value?

“It’s probably a little too soon to go there,” she said. “What we do know is in the commercial sector, especially hotels and restaurants and non-essential retail, the fact they have had up to two months and sometimes longer of no income streams will impact their 2021 values.”

For residential property, the number of transactions did slow starting in late March and into May, she said, but “the prices did not take a dive, the prices held. Really, it’s going to take another couple months for us to know what that means. Was that a fluke, was it those sales already in the pipeline, or was that truly an indication our market is going to hold?”

Mike Pappas, the president and CEO of the Keyes Company, one of the country’s largest real estate companies, said property values are affected when there’s an oversupply of properties on the market with less demand for them. “It’s a supply-and-demand issue,” he said.

Foreclosures could be avoided because of the governments efforts, he said.

The federal agency that oversees 28 million government-backed home loans is reassuring its Fannie and Freddie home loan borrowers that they won’t be required to make a lump-sum payment if they opt to hit pause on their mortgage payments as allowed by coronvavirus relief measures enacted in March.

The impact of any foreclosures “isn’t going to happen for a few years, if at all,” Pappas said. “We’re seeing quite the contrary – the inventory of existing single-family homes has dropped from last year by 12%, but the buying trend is as strong as last year because of the low interest rates.

“So we’re not seeing prices drop. In fact, we’re seeing multiple offers, strong sales. It’s amazing. That’s in the last few weeks. Thirty days ago was a different story.”

And if jobs do return, employees might be forced to take a pay cut as employers say, “Do we really need this many employees? What are ways we can cut down?”

Those employees, while employed, still might not be able to afford to keep their homes.

“We’re not going to see it quickly, in my opinion, we’ll see it in 2021 because the lenders are going to hold off the foreclosures because government intervention is stopping them from moving forward,” Van Horn said. “I have clients we are filing motions to [postpone] the foreclosure proceedings until we get through this COVID-19.”

He said while he doesn’t expect the glut of foreclosures and short sale homes on the market like in the 2008 crash, he expects trouble as people to deal with multiple financial problems at once, including other debt.

“I think property values are going to take a hit,” he said.

 
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