Propelled by scorching demand, rising prices and a torrent of new construction, South Florida’s property values have escalated steeply, providing a boon to owners of homes and commercial and industrial real estate — but also raising the prospect of big tax hikes and a deeper housing affordability crunch.
Preliminary estimates of taxable property values just released by Miami-Dade and Broward counties show valuations for all types of property rose more than 10% overall in both counties as of the end of 2021 compared to the previous year. That’s faster than values had risen in many years.
In Miami-Dade, property values increased at an overall annual rate not seen in 15 years. Countywide, the taxable value of properties rose by $34 billion to a total of $372 billion, or a whopping 10.2% jump, between 2020 and 2021. New construction accounted for $5.292 billion of that increase.
Pedro J. Garcia, the Miami-Dade property appraiser, said in a statement the county last saw an overall double-digit increase in values in 2007. The 2021 growth rate nearly triples the level of increase recorded in 2020, when South Florida’s taxable property values rose significantly in spite of widespread economic impact from the start of the ongoing COVID-19 pandemic.
The biggest increase by far came in the small city of Sweetwater. Largely due to an annexation in late 2021, the city’s property values rose a head-spinning 56.3%. It also has seen a boom in high-rise residential construction catering to Florida International University, which sits across Southwest Eighth Street in west Miami-Dade.
Unusually, every single municipality and taxing district in Miami-Dade, as well as unincorporated areas, saw a substantial increase in taxable property values. That includes some, like the area covered by Miami’s Downtown Development Authority, a special tax district stretching from Brickell to Edgewater, that had seen a slight decline in values the previous year.
Miami-Dade County 2022 Estimated Taxable Values
Miami-Dade County Property Appraiser posted property values for all municipalities on June 1, based on 2021 data.
|MB Normandy Shores||20||248,856,254||298,000,000|
|North Miami Beach||11||3,665,481,696||4,050,000,000|
|Bay Harbor Islands||16||1,374,484,392||1,600,000,000|
|N. Bay Village||15||1,119,778,896||1,290,000,000|
|Sunny Isles Beach||8||12,635,842,686||13,600,000,000|
Meanwhile, Broward County saw taxable property values jump 10.6% overall, to about $244 billion last year, up from $220 billion in 2020, thanks in part to new development. The largest year-over-year increase came in a taxing district covering a new development called Plantation Gateway 7, with a 30.24% hike. Two other taxing authorities, Sunrise Key and Lauderhill Habitat Safe Neighborhoods, followed with increases of 23.57% and 20.43%, respectively.
The new numbers confirm the staggering scale of demand for South Florida real estate in the wake of the pandemic, which prompted professionals, remote workers and technology and finance companies from other major cities to flock to relatively lower-cost tax havens like Florida, where they’ve in many cases paid top dollar in the Miami area and driven up market prices by competing with locals for housing and office space.
Public officials and real estate experts said the explanation for this white hot real estate market lies in basic supply and demand. Housing inventory is especially low, one expert said.
“We’re seeing tremendous drops in supply and tremendous increase in demand,” said Ana Bozovic, founder and real estate market analyst at Analytics Miami.
Torrid as it is, local construction activity can’t add enough capacity for the existing supply of homes, offices and other commercial properties to meet exploding demand, most of it from newcomers, experts and area officials said. A spokesman at the Miami-Dade property appraiser’s office said the volume of real-estate transactions involving out-of-state buyers is way up in comparison to historic levels, suggesting outsiders are driving a big portion of the taxable value increases. Broward property appraiser Marty Kiar concurs.
Broward County 2022 Estimated Taxable Values
Broward County Property Appraiser posted property values for all municipalities on June 1, based on 2021 data.
|Lauderdale by the Sea||9||2,780,377,130||3,019,979,701|
|Sea Ranch Lakes||13||244,584,854||276,438,424|
|Fort Lauderdale DDA||9||2,037,353,890||2,211,914,549|
|Plantation Gateway 7||30||326,796,910||425,608,260|
|Lauderhill Habitat Safe Neighborhood||20||19,314,270||23,259,770|
|Lauderhill Isles of Inverrary Safe Neighborhood||14||8,118,780||9,219,350|
|Lauderhill Manors of Inverrary Safe Neighborhood||15||39,503,660||45,316,150|
“The one thing that is 100 percent certain is that Broward’s real estate is on fire,” Kiar said. “You have so many people moving into South Florida and making it their home. People are paying an enormous amount of money to live in South Florida, and that’s what’s led to the increase.”
If anything, the counties’ property value estimates likely understate the rise in local real estate prices. That’s because the taxable valuations for primary residences, those with so-called homestead exemptions, reflect not market prices but the lower valuations used to calculate those homeowners’ property tax bills. State law caps the amount taxable values for homesteaded properties can grow each year at the inflation rate, up to 3%.
In Miami-Dade, the estimates came with a public warning and a plea from Garcia, the veteran elected property appraiser. He noted the higher tax values could mean a massive revenue windfall for local governments, if tax rates remain unchanged.
A memo by the County Commission’s budget office, for instance, estimates the higher property values would generate an extra $154 million in 2023 under existing rates for the four property taxes that fund county services. But the estimated 10.2% growth rate for Miami-Dade property values was significantly higher than the 3% growth forecast in Miami-Dade’s budget, prompting calls for a cut in tax rates for 2023.
If tax rates are not rolled back, Garcia said in a memo to Miami-Dade Mayor Daniella Levine Cava and county commissioners, the sharp rise in taxable property values could mean a significantly higher tax liability for all homeowners. Those with a homestead exemption could see taxes rise the maximum of 3% since inflation is now more than double that rate, still a significantly increased tax bill for many. Garcia said the 3% cap applies to about 400,000 households with primary residences in Miami-Dade, properties granted homestead tax protections.
That could exacerbate an affordability crisis in which many county residents already have trouble paying housing and other costs, Garcia said in urging elected officials across the county and the school board to use the extra property-tax revenue from higher values for a tax-rate cut.
“With the high rate of inflation, many families are struggling,” Garcia wrote. “A 3 percent reduction in the countywide millage rate would prevent a county tax increase for these homeowners, while also providing tax relief to non-homestead property owners. The 3% cut can make the difference between a tax increase and no increase for homeowners.”
Jose “Pepe” Diaz, the chairman of the county commission, said Wednesday he was receptive to lowering tax rates for the 2023 budget year that begins Oct. 1 in hopes of easing pressure on soaring housing prices and residential rents.
“I’m open to a rate cut,” Diaz said, “to help stop the housing cost increases.”
Broward’s Kiar said the rising values make it especially hard for prospective first-time home buyers.
“It is so difficult for them to afford a home in South Florida,” Kiar said.
The June 1 estimate from county property appraisers in Florida is provided to local taxing authorities to assist them with their budget preparations. However, the values released on June 1 are only estimates, which are subject to change. The official certification date for the 2022 tax assessment roll is on July 1. Homeowners can expect to receive their property tax valuation sometime in August.
As residents fan out across the county in search of affordable housing, Miami-Dade’s majority-Black cities saw some of the largest increases in property values, led by Florida City at 29.1%. Three others — Miami Gardens (15.3%), North Miami (13.1%) and perennially troubled Opa-locka (15.3%) — were clustered tightly together. Miami Gardens also benefited from an annexation. The taxable property value increases are tied to the sales volume and median sales price increases, according to the county appraiser’s office.
Even those municipalities at the bottom of the range experienced increases that in any other year would be notable. That includes Surfside at 6.3% and Miami Springs at 6.2%.
Some cities and towns long seen as havens of housing affordability are rapidly become less so, the figures show. For example, Homestead saw values go up 13.9%, Hialeah 11.2% and Hialeah Gardens 9.0%, while unincorporated Miami-Dade experienced an 8.7% rise in property values.
Places that had seen a dip in values in 2020 rebounded. That includes some cities and towns that have seen a boost in luxury housing development, like Bal Harbour at 8.3% growth in values, Bay Harbor Islands at 16.4%, and Miami Beach at 9.2%.
Source: Miami Herald