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Portability fails to heat housing market

Gov. Charlie Crist stood before hundreds of Realtors in Orlando last summer and predicted fantastic things about the property tax cuts on the January ballot.

"Florida's going to have a sonic boom when this happens," he said, using rhetoric he would repeat again and again over the next several months. "You're going to be busier than you've been in your life. Get ready, get your rest, make sure your license is up to date."

Five months after the vote, Florida is still waiting for the sonic boom.

Sales data, interviews and anecdotal evidence all suggest Amendment 1 has fallen far short of the systemic cure Crist predicted.

For sure, the plan has modestly cut taxes for all homeowners by increasing the standard homestead exemption. But its more controversial provision — portability — has proven no match for Florida's housing bust and credit crunch.

Portability allows longtime homeowners to transfer tax savings from Save Our Homes to a new house. It was aimed at homeowners who said they felt trapped in their homes because they would pay higher taxes when they moved. (Save Our Homes caps increases in assessment values for property taxes at 3 percent each year.)

To fully benefit, however, homeowners need to be able to sell the home they are leaving.

"Frankly I just don't see it setting fire to the market," said Tim Wilmath, director of valuation for the Hillsborough County Property Appraiser's Office.

Tens of thousands of Floridians, including more than 6,000 in the Tampa Bay area, will benefit from portability this year, because the ballot measure grandfathered in house swappers who bought and sold homes in 2007 and established a new homestead by Jan. 1 this year — before the policy was put to voters.

How much they saved varies, based on the difference between their old home's assessed value and its market value. But in Pinellas County, on average, home swappers were able to take about $72,000 off their new home's market value, for a new assessed value that saved them roughly $1,440 in annual taxes.

Now that homeowners know they can count on tax savings, coming months will provide a better picture of how portability affects the market. So far, just over 500 people have applied for portability for the coming year in Hillsborough, Pinellas, Pasco and Hernando counties combined. That's not a lot, but with half a year left, many more are expected.

"I think we should all stay tuned," Crist said this month. "The signs that I see are encouraging."

But experts say portability's effect represents a blip in a market glutted with homes. "To take advantage of portability, homeowners have to jump into a saturated market," Wilmath said. "In that sense, they are adding to the problem."

In April 2005, 4,254 residential properties were on the market, according to the Greater Tampa Association of Realtors. This April, there were 21,033.

Realtors, who contributed $1-million to pass Amendment 1, say the market is improving and inventory is falling. "I think we've bottomed out and now we're in recovery mode," said Deborah Farmer, president of the Realtors association.

But Farmer's opinion isn't universal. Many suspect thousands more bank-owned homes could still pour into the market because of the mortgage crisis, further bloating inventory.

Statewide, single-family home sales were up 12.3 percent from February to March and 20 percent from March to April, according to the Realtor group.

Farmer thinks it is too early to judge the stimulus capability of Amendment 1, but acknowledged it is muted because some buyers cannot sell the homes they leave behind.

Case in point: John and Melanie Scharch, who moved to Hernando County last year from the Keys.

The couple carried $235,557 in accrued Save Our Homes benefit from their old home, reducing the assessed value of their new home to $93,336.

Without portability, the tax bill would be about $5,100 on the new home. With it, they will pay about $1,000 this year.

"It's great," said John Scharch, 57, who loves the convenience of being more centrally located. "But until I sell my other house, I'm not saving anything.

"I've had three people look at it and they really like it, but they say, 'I have to sell my house first before I can buy yours.' "

Scharch's new county is equally bleak. In May, Hernando saw 195 sales of all types of property except vacant land. That's down from 377 sales a year earlier, 610 in 2006 and 778 in 2005.

"I haven't seen any impact of portability," said Paulette Stearns, director of public service and exemptions for the Hernando County property appraiser.

Kyle Schaneville, who moved this year to St. Petersburg from Brandon, faces the same problem as Scharch. His home in Brandon has been on the market for more than a year. Now he's renting it. A 36-year-old physical therapist, he said that portability did not play a role in his decision to move and that he carried only minor savings to St. Petersburg.

Despite Crist's rhetoric and Realtors' optimism, some experts never thought portability would be much of a factor.

University of Florida economist David Denslow estimated it would increase sales by 10 percent, though in a normal market. That's what California saw under a similar law for homeowners 55 and older.

"We doubted quite seriously it was going to be a large stimulus," he said.

Portability savings so far

Amendment 1 allows homeowners to transfer their tax savings under Save Our Homes to a new house. Here's a look at how many home-owners qualified through mid June and how much they were able to subtract from their new home's assessed value.

County Number Average amount off

of homeowners new homes' value

Hillsborough 2,199 $65,523

Pinellas 1,887 $72,000

Pasco 1,366 $59,297

Hernando 552 $55,800

Portability fails to heat housing market 06/22/08 [Last modified: Wednesday, June 25, 2008 11:11am]
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