I want to talk about the article I have linked here. This article questions whether the elimination of property taxes in Florida would be a benefit, and if so then to whom.
Let’s take a look.
– The Claims
“If property taxes were eliminated outright on owner-occupied homes in Florida, property values in the state would immediately jump by about 7% to 9%, according to a new analysis from the Realtor.com® economic research team.”
“”It would be a boon to existing property owners,” says Realtor.com senior economist Joel Berner, who conducted the analysis. “But this measure would disproportionately benefit wealthy Floridians at the expense of those who don’t own homes, and would make it even harder to break into homeownership because of the increased prices.””
– My Thoughts
First of all, that isn’t how home values work. Home values are derived primarily from recently sold comparables in a market, so the idea that they would jump 7% – 9% “immediately” is misleading. If the values were to rise that high, this would be in response to purchases in the marketplace – and considering that this plan to eliminate property taxes doesn’t exempt second home buyers, it is reasonable to assume that most of those sales would go to first-time buyers or primary buyers if they are in response to this new measure.
The second paragraph I cite here from the article is basically a conclusion being reached on the faulty premise of the first paragraph but with very interesting choice of words that I want to look at a bit further.
One particularly interesting language choice was conflating “wealthy Floridians” and “property-owning Floridians” – this is a distinct choice of words, but why? How many of my property-owning friends in PA would consider themselves “wealthy” also? Consider this: “The Median Networth Of All Florida Homeowners is $387,564” (https://www.windfall.com/…/what-it-takes-to-be-in-the…) – would you consider that “wealthy”?
Wealthy by its very definition is a vague term. He didn’t put any other qualifiers on that one to distinguish what percentile of income, or what net worth qualifies as “wealthy” – nothing. Just “wealthy” disproportionately benefit.
And then secondly, “at the expense of those who don’t own homes” – but this is also misleading. It’s actually at the expense of the government’s income via property tax by definition of the terms.
If you want to speculate that the “expense” here is more the creation of a larger obstacle to homeownership via higher prices, then you may have a point there. Though, to clarify, increase in home prices means increase in home values for homeowners – so it is a two-sided coin.
– Conclusion
First I want to be clear that I do think that something needs to be done about property tax burdens for property owners – so I do acknowledge my bias toward radical changes and property tax reforms.
That said, I think this article overall does a decent job of balancing a few of the perspectives without really committing to a side, though I think the headline could represent that a little better.
The language used in the conclusion from the REALTOR Research Team does leave me with some questions. The vague use of the term “wealthy” creates a lack of credibility in the language used in the research team’s conclusion. And the incomplete analysis of how home prices surge could indicate a less-than-thorough approach to this team’s analysis, or worse still – a worldview lens through which the research was filtered to come to a conclusion that meets biases halfway.
Living Pocono 