Florida foreclosures and how they affect property taxes down in the Sunshine State need to be studied by anybody in charge of handling tax revenues down there, no matter how reduced those revenues end up being. With an increasing number of foreclosures — and more on the horizon — Florida is coming to grips with the problem other states have had for a while and which it’s been able to duck for so long.
After all, once a person walks away from his mortgage he’s also walking away from any future tax obligation (though municipalities and counties, especially, are trying vigorously to capture any tax bills already owed), which can sting many a municipality badly. And with homes sitting unsold on the market for far longer than was once the case, the prospect of replacing that lost revenue seems dim at the moment.
The problems in real estate in general, and not just in Florida, is that there was a quite-lengthy boom. It helped to insulate Florida from the issue of a general decline in property values(and taxes on those properties) for longer than what was the the case in most states, fortunately for the Sunshine State.
Unfortunately, though, these busts in real estate and home values can effect states both large and small. And where rampant speculation has been allowed to go unchecked for so long (such as in Florida) the effects can be particularly acute in homes and with owners who expected that they’d be able to sell properties they really couldn’t afford, and at a tidy profit at that.
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.
Nowadays, many of these homes are being held by people who realistically can’t make their agreed-upon monthly payments once those adjustable-rate mortgages began to move upwards. They may have suffered job loss in the recession as well. It can be a vicious cycle and there is really no facet of economic activity that is immune from the cycle, including tax collection and sales.
It seems certain that the rate of FL foreclosures will continue to be a cause for concern at least until local and state government can work out ways to help people stay in their homes and avoid foreclosure, usually by taking advantage of certain federal programs. Until that occurs, though, the property tax revenues that funded many schools, police and fire services will be lower. Whether relying on property taxes was smart is a different question, though.
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