Good News for Flagler Property Owners: Most Home Values Will Barely Fall; Some Will Rise

Flagler County’s worst crash in property values since the Great Depression appears to be over. Jay Gardner, the county’s property appraiser, says preliminary numbers for values to be set this year show yet another drop, but a very small one compared to the last three years, and some areas of the county, especially its wealthier neighborhoods, will see property values actually increase.

“Overall there’s going to be a drop, small. It’s been big each year. But it’s getting a little less. It’s going to be low single digits,” Gardner said. “I’m expecting it not to be more than 5 percent overall in drop, county-wide.” The previous year’s drop was almost 14 percent. The year before, about 20 percent. And the year before that, the drop was 16 percent. Values last went up in the county in 2007, by a little over 10 percent.

What will add up to the fifth year in a row of declines in property values has drastically affected home-owners’ and governments’ finances. More than half of Florida homeowners owe more money on their house than it’s worth (meaning they’re “under water”). Local governments have cut the budgets for their general obligations by up to 40 percent, spending less money repairing roads, bridges, parks and schools, laying off teachers and cops, or not hiring as many as they need, merging agencies and delaying big projects. Individual property owners who once treated their house as cash machines, borrowing against the rising values, have seen their assets plummet and their debts become difficult or impossible to finance, forcing an epidemic of foreclosures that continues. Flagler’s foreclosure rate was the highest in Florida in November. Even renters can be affected.

But the crisis has bottomed out, and its severity won’t be felt, by home-owners or local governments, nearly as much this year as families and governments work out their budget. “It’s still bad, but it’s very good if you think about it,” Gardner said, meaning that this is the trend homeowners, real estate agents and others involved in the housing industry have been craving for the last several years: the signs are more positive than negative. Starting in the middle of last year, real estate prognosticators were seeing a turn-around in sales. The trend intensified by year’s end, even though home prices were still falling.

For the majority of home-owners in Palm Coast’s various sections—the W’s, the P’s, the R’s, the B’s—there will be “a little bitty drop,” in land values especially, if not quite in houses, Gardner said. Lots are going for about $9,000 in the R section these days. The drop won’t be significant. A 5 percent drop on a $9,000 lot adds up to $450.

“When you think about it, when you buy a lot, you’ve got to go pay a builder to build your house on it, or speculate that you want to do that in the future. But if you buy a house, you can rent it and move into it, you can use it. You pay a builder right now, you’re paying for profit and stuff: he can’t lose money building your house. But you go buy a house that’s a short sale or foreclosure, below what it’s worth, very low prices.”

Some property owners may have higher tax bills. “There’s some areas that aren’t going to go down. There’s some areas that are going to have to go up. That’s not good,”  Gardner said. “I live in Flagler Beach. Flagler Beach is probably going up, so I need to move.” (Gardner was speaking in jest: he is usually the target of people’s ire when their property taxes go up.)

Gardner added: “The canals in Palm Coast aren’t really going to go down either. The vacant lots might a little bit, but the houses won’t.” If the canals do go down, “you won’t even be able to see it.” And they’re not necessarily staying flat. “It’s so preliminary you hate to get pinned on this stuff, but canal section, Grand Haven isn’t really looking like it’s going to go down anymore.  The lots on the ocean front in the gated communities, those have taken a beating. Those aren’t going to go down again. They look like they’ve leveled out.”

And Flagler Beach? “Flagler Beach looks like it needs to go up, even though there’s parts of the beach that need to go down still. A1A oceanfront lots, they have to come down. But yet Flagler Beach as a whole is going to go up.”

Rising values will be a problem for some in the coming year only in the sense that when the average property values drop overall, local governments will still raise the property tax to ensure that they still bring in roughly the same revenue. For most property owners, that doesn’t translate into a tax increase because the higher tax rate is offset by the lower property value on which the rate is calculated. But when there are pockets of property owners whose values are going up, they’re bound to get hit with higher tax bills.

“The values go up, the millage rate goes down, so your bill doesn’t go up when your property values goes up,” Gardner says. “But those first few people that went up and the rest went down, they’re going to be caught in a trap. Every one of them is going to be mad at me. It’s going to be my fault.”