Prices of Homes Falling in Florida Neighborhoods with High Foreclosure Activity

Homeowners in some Florida neighborhoods that are experiencing an increased in foreclosure activity are aware that market prices of their properties are falling faster compared with those in stable neighborhoods.

Financial institutions are disposing distressed homes in the state at about 60% of their market value. The sale of these properties constitute over a third of deals performed by banks.

The current state of the housing market in Florida should be enough for property appraisers to consider selling foreclosed properties as they evaluate homes for tax purposes in 2009. This approach is considered to be fair to affected neighborhoods by Tampa Bay area property appraisers.

Mike Wells, a property appraiser of Pasco County, has started using foreclosure rate to determine taxable values of other homes in the affected neighborhood.

Florida’s 67 property appraisers, including that in Pinellas and Hillsborough counties, are expected to follow Pasco County’s approach to distressed sales.

The standard practice in the state, as promoted by revenue department guidelines, is to not give importance to distressed sales. This policy makes sense if the housing market is not in a crisis.

Last October, over a third of short sales were made. Short sale is where homeowners sell their houses for less than what they owe to the mortgage providers.

It is expected that using foreclosure rate to determine the tax value of a property will have a negative consequence to local governments in the form of low property tax revenues as a result of a change in calculating home market values.

However, it is the responsibility of a property appraiser to assess a property’s value as accurately as possible. And one way to achieve a fair and accurate assessment in the current housing marketing situation is to consider the damage that the crisis has caused and reflect it on value of the property.