Property Values Fall For 1st Time In 14 Years in Palm Coast and Flagler, Excluding New Construction, Posing Tax Dilemma

For the first time in 14 years, average taxable property values in Flagler County and its cities fell in 2026, outside of new construction. The decline, the clearest indication yet that the housing market has cooled sharply, will have significant revenue and tax policy consequences for local governments as they prepare their budgets for next year. 

One of those consequences is on the tax rate. The decline nullifies arguments among some elected officials to roll back taxes by adopting the so-called rolled-back tax rate since for the first time in a decade and a half, local governments would have to increase their tax rate to stay even: the rollback rate will be a roll-up rate. 

The decline affects every taxing authority in the county, including Palm Coast, Flagler Beach and the school district, with one exception: Beverly Beach, where average taxable values went up 2.86 percent, according to Flagler County Property Appraiser Jay Gardner’s calculations in figures obtained by FlaglerLive today. 

Average taxable values declined 1 percent in Palm Coast, compared to a 4 percent increase last year, a decline of 1 percent in Bunnell, 2 percent in Flagler Beach, 1.44 percent for the school district and 0.4 percent in the county. 

In each case, new construction, which is not counted in property tax rate calculations, is compensating enough to yield an overall average increase in property values and help government revenue at least hold the line. But it is still the lowest increase since 2013, and without new construction, the first decline since 2012. 

“Everybody wants to bitch about new construction,” Gardner says. “Well, there’s the net benefit of it right there. What is that, like a 4 percent swing?”

For example, while taxable values in Palm Coast fell 1 percent, new construction generated more than half a billion dollars in new value, about the same as last year, for a net increase of 3.81 percent in taxable values, compared to 9.3 percent last year. 

In its first year on the books, new construction tax revenue is like free money for local governments. It does not figure in tax rate  calculations, so it does not affect the rollback rate.

The rollback tax rate is the rate at which the government would collect the same amount of money this year as it did the previous year, excluding new construction. In other words–and putting it very simply, without accounting for homestead and other exemptions–if your house value increases by 3 percent, the tax rate must decrease by 3 percent to ensure that you do not pay more taxes than you did the previous year. 

Last year, chances are your property value did increase between 3 and 4 percent. You may have paid marginally higher taxes, but if you are homesteaded, you probably saw a negligible increase, if at all. It’s a different story for non-homesteaded properties like commercial tracts and rental properties, which bear a disproportionate share of property taxes. 

The tax rate Palm Coast adopted for the 2026 budget was 4.0893, or $4.0893 per $1,000 in taxable value. Under Florida law, it was a slight tax increase, because the rate still generates more revenue in 2026 than it had in 2025, outside of new construction. Projected revenue was $39.5 million for the general fund.  

Had Palm Coast voted for rollback, that rate would have been 3.9961. 

Here’s why the rollback rate would have to increase this year to stay even with current revenue: now that property values have fallen 1 percent, tax revenue will fall accordingly–by about $400,000. To stay even, the tax rate would have to go up to around 4.03606 next year to generate the same $39.5 million it generated in 2026. 

Doing so would not be a tax increase under Florida law. But to the general public, any increase in the tax rate is a tax increase, and any tax decrease in the rate is a tax cut. That exasperates Gardner, the property appraiser, who every year tries to inform the public that the rate itself is not indicative of tax increases or decreases. Only the total revenue the government is generating compared to the previous year is indicative–and whether the tax rate falls above or below rollback (or, in this case, the rolled-up) rate. 

For elected officials, especially elected officials in an election year, the numbers are grim news any way they take them, because even if they want to hold the line on revenue without a tax increase, they’ll be branded as tax-increasing politicians. If they cut the tax rate, they would be going well below rollback, when even staying at rollback would pose a challenge for governments trying to pay for police, fire, parks and the rest of it while maintaining reserves against an unsettled economic and political environment: the Legislature is at this moment deciding whether to place a measure on the November ballot that would severely reduce or scrap homesteaded property taxes.

Why the first decline in values in 14 years? 

“It’s just the economy. People are scared. The Covid buying spurt has ended,” Gardner said, recalling previous years when values shot up, pushing prices up. “The demand goes up, the value goes up, maybe it overshoots a little bit. Now the demand is down a little bit, maybe because they all already moved here or they’re scared to move because they don’t know what’s happening next or some of the economy stuff. I even wondered if the rich folks ain’t moving because they’re doing so good in the stock market, they don’t want to pull out. Who the hell knows. There’s a lot of moving parts and I don’t claim to understand it.” 

He added, “at the end of the day, what’s different? Well, the sale prices aren’t going up like they were. The demand has fallen some. If the interest rates were to go way down, we’d be having a totally different discussion right now.”