Florida Property Values Face Unprecedented Decline

TALLAHASSEE (AP) - The values of homes, businesses and other properties across Florida declined $153 billion during the last year, and the murky economic picture isn't expected to improve until sometime in 2009, state officials said.

Total property values dropped an unprecedented 6 percent, double the figure economists had projected last year. The decline would have been worse if not for $55.6 billion spent on new construction, according to data reported by The Miami Herald in its Wednesday editions.

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.