Insurance and Taxes are Merely Scapegoats

From time to time, I go to open houses just to see what is selling in the market. When I go, I usually end up talking to the Realtors® about the South Florida real estate market. Months ago, the Realtors® would explain that housing market would rebound as soon as the state legislator and governor fix the property insurance problems.

The Florida Association of Realtors® (FAR) argued the same point back in July 2006:

“Florida's recent housing sales slowdown is in fact partly caused by ‘the lack of affordable or available homeowners' insurance,’ the association contends. The group's research division examined Florida's housing market and concluded that the downturn in home sales since last year can't be fully explained by rising interest rates and the normal cycle.”

“The study was completed during the spring, but Florida's decline in sales has continued, adding to the argument that the insurance crisis is having a negative effect, association representatives said this week.”

When the governor and legislator failed to implement any meaningful insurance reform, Florida’s unfair property tax system became the Realtors® next scapegoat. Now, the proposed super exception is being touted as the latest savior for housing.

Realtor® Glen Ginsburg explains:

“The real estate tax reform amendment goes before voters in January. The amendment does two things to jumpstart the state’s sluggish home sales market: It provides substantial tax breaks for most first-time homebuyers, and it begins to address the ‘locked-in’ effect felt by long-term homeowners who cannot afford to move – even to downsize – because they would be forced to pay substantially higher property taxes. But it also protects long-time homeowners by giving them the option to keep their Save Our Homes protection.”

In some way, Realtors® are correct; Florida’s insurance and property tax rates are onerous and need reform. Thankfully, the Realtor® lobby has been invaluable in fighting for this critical reform.

However, Realtors have made insurance and taxes the scapegoat of current housing downturn even thoug the current conditions have little to do with them. The principal reason for the current woes in the housing market is price – price that was artificially inflated by ridiculously easy credit.

In my option, even if taxes were eliminated and insurance was heavily subsidized, we’d still be facing a housing downturn here in Florida. Why? Because the bubble is bursting everywhere in the United States, even in states that don’t have onerous taxes and insurance.

Regardless of the claim that “all real estate is local,” the current woes stretch far beyond Florida’s borders – far into states that are not hampered by high taxes and insurance rates. Every single state in the Union is affected. What proof?

Provide the following list to any Realtor that claims that “all real estate is local” or tries to scapegoat insurance and taxes:


Alabama: Home-buying firms see no end of eager sellers
Alaska: Residential real estate demand cools
Arizona: Many homeowners facing foreclosure now turning to short sale
Arkansas: Foreclosure Rates Still High
California: Foreclosures Skyrocket In Contra Costa County
Colorado: Lien times for SW Denver
Connecticut: Payments skyrocket as values decrease
Delaware: Foreclosures Rates Soar In First State
Florida: Divorcing in a down market
Georgia: Increasing Rate of Foreclosures Upsets Atlanta
Hawaii: Realtors Predict Home Prices Plateau
Idaho: Ada home sales lag behind 2006 numbers
Illinois: Foreclosure auctions go silent
Indiana: KB Home is leaving Indianapolis market
Iowa: D.M. area weathers housing's ebb, flow
Kansas: Housing industry is in for a long struggle
Kentucky: Kentucky foreclosures up 10.4 percent in June
Louisiana: New Orleans home sellers struggle
Maine: Southern Maine Is Hit Hardest With Housing Costs
Maryland: Low appraisals hurt subprime borrowers
Massachusetts: Mass. housing slump continues
Michigan: Buyers' market prevails in region
Minnesota: Shakopee home sales down 23.7%
Mississippi: County foreclosures spike
Missouri: One in 26 homes in St. Charles County face foreclosure
Montana: Housing boom in Big Sky hits slow down
Nebraska: Housing Market Challenges
Nevada: Again in June, foreclosures hit Nevada harder than any other state
New Hampshire: Rising foreclosures bad economic signal
New Jersey: Residential glass half-empty
New Mexico: NM subprime: Bad, but not as bad as it could be
New York: LI, Queens housing sales still cool
North Carolina: Rebound wears off for home sales
North Dakota: FBI wary of new mortgage scams
Ohio: Number losing homes up 300%
Oklahoma: Enid builders, Realtors say fraud figures are puzzling
Oregon: County sees jump in homes for sale
Pennsylvania: Sale listings for midstate homes rise
Rhode Island: The impact of speculation on R.I. real estate prices
South Carolina: Charleston area awash with condos for sale
South Dakota: Maxed-Out Mortgages Cause More Foreclosures
Tennessee: Foreclosures up locally
Texas: Area home deals fall for second month as subprime woes weigh on market
Utah: Home-for-sale signs stack up
Vermont: Housing sales indicate heyday has passed
Virginia: Area still trying to shake off housing slump
Washington: Pierce County property not as hot
West Virginia: Greenbrier officials ponder affordable housing shortage
Wisconsin: Home sellers see less profit
Wyoming: Cheyenne, Wyo.: Homes stay on market longer