But thats just another sign of inflation, the increased housing prices.

Besides which, one thing really has nothing to do with the other. Increasing home prices, even in a hyper hot real estate market, has nothing to do with increasing real estate taxes. Increasing real estate taxes has to do with the increasing cost of running municipal governments and shrinking federal support, especially in education. For most municipalities the cost of running the school system has skyrocketed as has the cost of providing the normal services.

The result is inflationary.

 

Regardless of the cause, the effect is inflation. Moreover, I'm not convinced all of the increase in energy prices was due to the hurricanes. I seem to remember, even way back in April 05 that gas prices were inching up.

None the less, the cost of living, that is the cost of purchasing the everyday goods and services that we purchase, is significantly higher than it was last year.

 

Rob is almost always correct but there are exceptions.

The owner of my new company owns an old rambling summer house near Lake Placid NY. Due to the increasing trendiness and popularity of the area, multi-million dollar houses are being constructed by celebrities/ CEO's/ etc (probably some of Rob's clients). Overall RE and property values are therefore escalating at a high rate....very little to do with inflation (unless you count the scarcity of lakefront/ lakeview property....just like Lake George to the south). According to Dan, this has led to general reassessments and much higher taxes....even THOUGH the big bucks folks are not putting kids into the schools....nor requiring infrastructure improvements by the local voters/ taxpayers (access roads and utilities are privately paid). His taxes exceed $10k per year....more than his large modern Chester County house in Peeay. Since the millage is not reduced, the taxes are going up and fattening the local coffers This may be an abberation in 'resort/ second home' communities.....since the affluent weekend residents do not VOTE there

I might paraphrase Rob's comment to read: "Increasing home prices, even in a hyper hot real estate market, should have nothing to do with increasing real estate taxes.

 

Jerry,

In weekend/resort communities where the locals are trying to get the weekenders to pay for everything, this sometimes happens. In general, in communities where people live, it doesn't (unless the increase in property values leads to a gentrification of the area and the new residents demand more services which in turn costs the municipality more to provide).

Just to spend a moment on your comments about weekenders vs. locals, it is a phenomenon that has always amazed me. When we owned our weekend/vacation home in Woodstock, NY we were always amazed a how the locals resented all of us weekenders. The weekenders were generally blamed for everything, yet the same locals who were hostile and resented us loved taking our money for their goods and services. I think this is the kind to thing your friend is experiencing.

 

Our state makes it's money on sales tax...no income tax here...our coffers are overflowing. Our schools get there money on a mill levy. The schools coffers are healthy. We put in maximum class sizes last year they thought they wouldn't have the funding, they do. Our countys raise money on a mill levy. Their coffers are overflowing.

We're pretty healthy down here right now. No unemployment rising wages and benefits in the private sector. It's partially driven by Wilma recovery but mostly by increased sales and values.

So far so good. I believe Rob as I listen to my cpa but I haven't seen the pain at all. If anything it's rosier than ever.


fltsfshr

 

flts,

I think there are always areas and industries that flurish no matter how tough the economy or how bad the inflation. And that your area is one of them is very good. Unfortunately for most of the country things are way different.

 

During our visit to the Sunshine State, there were articles in the press noting that Florida is 48th out of 50 states in per student funding for education. Our friends in Tampa (she is an elementary teacher) said that the senior taxpayers will not support the taxes required to increase the 48/50 standing.

When we visited friends in Gainesville (he is on the faculty at the University there), it was explained to us that G-ville was an exception because of the high percentage of academic folks....willing to approve higher taxes to support the quality that their 8 and 14 year olds enjoyed.

Grant, what's missing between your 'overflowing' story and theirs

 

That's true except housing has risen here expotentially. Everytime there is a house sale the house is reappraised and taxed at the same mil rate but the new value. The difference is where it's all coming from.

Because the majority of new owners are out of state residents, they can't even get a homestead break. Case in point, 2 years ago you could buy a lot on the beach for around 3 mil now it will cost you 15m. or more. The new levy rate applies the following year. We've had a road funding crisis too, now they have the money they can't find the workers.

I would tell you the school districts are in flux here. The've been mandated to have smaller classes yet they can't keep up with building new facilities to accomodate the large influx of new residents. They've been mandated to a pass/fail exam for students that is being very strictly adhered to. No more pass throughs.

I think they're making good progess in th schools in Florida. One of the statistical reasons it shows low is our migrant population. Most of those kids face language and culture issues as well. Every year Suz and I through our business provide shoes to kindergarteners and first graders who literally don't have any. Lots of these kids never make it through the system for one reason or another, many of which have nothing to do with the school district.


There's still a lot of room for improvement but it's getting better.

fltsfshr

 

What happened to the Economics 101 concept that inflation results from: one, the rise in wages; two, low unemployment, and third, the resulting higher demand vs. supply? Realistically, can there ever be an end to the insatiable and easy to get appetite for property taxes?

 

That proves my point exactly. If it now takes $15 million to buy what $3 million could buy 2 years ago, the value of money has fallen significantly and that is inflation.

I understand that your particular section of Florida is hot but that is a significant increase in price or decrease in the buying power of money.