Homes

Florida Property Values Face Unprecedented Decline

Property values have dropped more than $150-billion in a year

TALLAHASSEE (CBS4) ― Florida property values dropped more than $150-billion during the last year and are expected to continue their decline in 2009, according to state officials.

That's an unprecedented 6 percent decline in the value of businesses and homes. Market values are expected to drop another 5 percent next year, CBS4 News partner the Miami Herald reported in its Wednesday editions.

The annual decline is double the figure economists had projected last year. It would have been worse if not for more than $50 billion in new construction.

Even new construction, however, is expected to decline almost 35 percent next year.

Next year, state property values are expected to drop another 4.92 percent. However, economists expect the situation to slowly improve after the slump.

Amy Baker, the Legislature's chief economist, told the paper the state is seeing more "fire sales" with homes sold at rock-bottom prices. She said it's better than the homes not selling at all.

"It's not a terrible thing," she said. "You want to see that."

Foreclosures are up across the country, but certain states, including Florida, have been particularly hard hit. Metropolitan areas in California and Florida made up 16 of the top 20 metro foreclosure rates in the second quarter, according to RealtyTrac Inc., a company that monitors default notices, auction sale notices and bank repossessions.

The real estate decline puts local governments and schools in a squeeze. They will see a 0.3 percent decrease in taxable value this year and 1.5 percent for schools in 2009. For schools, that adds up to $140 million lost statewide unless the Legislature increases the tax rate.

New construction that helps offset some of last year's decline is projected to decrease by almost 35 percent, or about $36.4 billion, for the 2009 tax rolls.

One measure being proposed on the Nov. 4 ballot would slash property taxes raised for schools in exchange for other new revenue. However, opinions are divided on how the proposal would affect the homebuilding industry. Some argue it will boost home sales while others contend they will end up paying more taxes on materials and services.

(© 2007 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. CBS4 news partner The Miami Herald contributed material for this report)

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