This year was less than three days old Tuesday when state economists nudged down their projections for Florida property tax values.
Overall, state economists expect statewide property values to drop 4.2 percent this year, a larger decrease than their initial fall estimate of 3.89 percent. Property values are also estimated to fall another 3.3 percent in 2013.
Dismal home sale and price values from the third quarter of 2011 -- which weren’t available for the fall estimate -- and continued fallout from the moratorium on foreclosures that some banks imposed for a few months in 2010 help account for lowered projections.
Foreclosures take more than two years to maneuver through the court system in Florida, and the discovery of the “robo-signing” controversy in October 2010 led some banks to impose temporary moratoriums on foreclosures and then delay them when they started foreclosing again.
The foreclosures create cheap housing, driving down prices and home values. The market must run through the backlog of foreclosures before the housing market starts to recover, something the economists don’t think will happen until 2014.
“It doesn’t seem to be clearing up as fast as we would like,” said Azhar Khan, an economist with the Office of Economic and Demographic Research. “Taking into account construction costs, it is cheaper to buy distressed properties than it is to do construction from scratch.”
Because economic woes continue to haunt the state and many homeowners remain underwater on their mortgages – they owe more on the property than it is worth – another round of foreclosures could be on the way.
“Fifty-one percent of the state is underwater right now, and those are the ones where you typically see the largest amount of delinquencies,” said Amy Baker, chief EDR economist.
The new projections are likely to have little effect on Florida’s estimated $2 billion budget shortfall.
Reporter Gray Rohrer can be reached at firstname.lastname@example.org.