Cheap Houses in Miami Great for Buyers but not for County

by Peter Vernon on Foreclosures

Cheap houses in Miami are great opportunities for buyers but not for county officials who are trying to close the record budget gap. County commissioners said the budget gap could reach $360 million if total tax collections fall by 12 percent because of sharply reduced property values.

County appraisers said that property tax values have plunged further by 13.4 percent this year, after falling by 9.5 percent last year. The 13.4-percent dive was the biggest fall the county has experienced in 41 years. They said that the major factors for the plunge in property values are the lack of new construction and the record number of cheap houses, foreclosure sales and short sales.

Miami foreclosures are still dominating the market despite the drop in new default and foreclosure postings. In April, nearly 5,700 Miami-Dade homes were bought by bidders or repossessed by lenders through public auctions. Although the number represented double-digit drops from March and from April last year, the number was still high compared to units that became bank owned houses for sale in other metro areas.

Based on a report from the county chief appraiser, commercial and residential property values this year have fallen by $29 billion. The total value for single-family homes dropped by $10 billion and that of condos fell by $11 billion. Commercial properties, which include multi-family housing, shopping centers, office buildings and industrial properties, decreased in value by $8 billion.

Foreclosures in Florida have been pushing down property values since the start of the housing downturn. In Broward County, real estate values have fallen by 12.1 percent. Completed foreclosures in the state rose by more than 7 percent from March to 9,259 in April. Foreclosure postings reached a total of 48,384 filings during the month.

While cheap houses may be great news for buyers and may mean lower tax bills for homeowners and other property owners, they mean difficulties for cities and counties in delivering services to residents.

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