- Floridians pay an average $5,679 per person in state and local taxes
- Residents pay an average $2,584 in state taxes – one of the least amounts nationwide. Only the residents of one other state pay less.
- However, local tax burdens are higher. “Per Capita Local Tax Collections” ranked No. 27 nationally.
- In the balance between state and local taxes, Florida relies more heavily on local revenue than almost all other states and is No. 2 nationwide. Local taxes account for 53.3 percent of the total.
- With property taxes, Florida ranks a solid “average” score – No. 25. The state’s per capita property tax ranking is right at the median – 25th.
- Florida also classifies 38.7 percent of its state and local revenue as non-tax revenue (such as “fees”) – the 7th largest percentage in the nation.
- Florida relies more heavily on transaction taxes, such as general and sales taxes. They make up, 81.5 percent of all state tax collections compared to the national average of 47.2 percent.
- Florida has the highest state and local selective sales (excise) taxes on utilities in the nation. The tax on motor fuels is No. 15; the tax on alcoholic beverages is No. 19.
- Florida’s housing sector produces significant revenue, and the state’s documentary stamp taxes are rising rapidly post-recession. It collected an average of $276 per capita in 2006, $72 in 2009, and $130 per capita in 2016 – the nation’s second-largest doc-tax burden.
- Florida is one of seven states without a personal income tax. The average state relies on personal income taxes for 37.0 percent of its tax revenue.
- Businesses pay 51.7 percent of all Florida state and local taxes – the 12th highest percentage in the nation.
Real Estate Investment
World events are conspiring to make it more expensive for you to borrow money to buy a house.
Mortgage rates have increased for six consecutive weeks, according to Bankrate data, bringing interest on a 30-year fixed rate loan to 4.44 percent—the highest level in 11 months—while home prices continue to rise due to a lack of available homes.
After years of tepid economic growth, inflation and wage growth recently found a groove, while the Federal Reserve’s plan to raise short-term interest rates multiple times for a consecutive year has reduced the value of government debt.
Homebuyers Should Get off the Fence
Mortgage rates are moved by the yield on 10-year Treasuries, rather than short-term rate hikes by the Fed. That’s why mortgage rates fell throughout 2017, for instance, even as the central bank raised the federal funds rate three times. Rates remain cheap, however, compared to historical prices. A 30-year fixed-rate mortgage came with an interest rate above 6 percent just before the Great Recession in 2007. Potential homeowners should get off the fence and make a bid, assuming you have an affordable home target and adequate savings, because rates are likely only heading north.
Mortgage rates are expected to climb in 2018, so it might be worth shopping for a mortgage before this long period of low rates takes a turn.
Here are several predictions from the largest housing and mortgage groups for the 30-year fixed-rate mortgage:
The Commerce Department reported that January Housing Starts jumped 9.7 percent from December to an annual rate of 1.326 million units. This was the highest level since October 2016 and up 7.3 percent from January 2017. Single-family starts, which account for the largest share of the market, rose 3.7 percent from December while multi-dwelling starts with five or more units surged 19.7 percent. Housing Starts rose in the Northeast, South and West but declined in the Midwest.
Building Permits, a sign of future construction, rose 7.4 percent from December to an annual rate of 1.396 million units. With many buyers facing inventory shortages across much of the country, this strong report regarding new home construction is a welcome sign!
The National Association of REALTORS® reported that January Existing Home Sales declined 3.2 percent from December to an annual rate of 5.38 million units. Sales were down 4.8 percent from a year ago, the largest decline since August 2014. Low inventories of homes for sale were indeed a thorn in the side of would-be buyers with just a 3.4-month supply available at the current sales pace. A 6-month supply is considered healthy.
Retail Sales also disappointed in January, as the Commerce Department reported a 0.3 percent decrease. December’s reading was also revised downward to 0 percent from a 0.4 percent increase. The key highlight was that consumer spending wasn’t strong in recent months, and this could impact GDP expectations.
Consumer inflation edged higher in January, with an important component jumping to a 12-month high! The Consumer Price Index (CPI) rose 0.5 percent in January, just above expectations due to higher gasoline prices, the Labor Department reported. Core CPI, which strips out volatile food and energy prices, rose 0.3 percent from December. This was the largest increase in a year, boosted by rising rents.
Inflation reduces the value of fixed investments like Mortgage Bonds. This means signs of inflation can hurt Mortgage Bonds and impact the home loan rates tied to them, which is a trend we’ve seen through much of this year. Stocks have also reacted negatively to hints that inflation was on the rise because inflation brings higher rates and higher rates hurt corporate borrowing. Stocks even entered correction territory in early February, meaning a 10 percent decline from recent highs.
After Hurricane Irma, much of Florida lost power. And during Hurricane Maria, all of Puerto Rico is in the dark.
The one-two punch of storms reminded Floridians of the importance of owning a generator. If you’re shopping for a power source, here are factors to consider:
How much do you want to spend?
Stand-by generators can power your whole house and usually run on natural gas or propane. They typically cost $5,000 to $10,000, according to Consumer Reports. And you’ll need to start planning the installation months in advance. Most homeowners opt for portable generators, which usually won’t run central AC and cost $400 to $1,000. (However, Consumer Reports’ top-rated portable generator is a Honda that goes for $3,999.)
What do you want to power?
If you want to run a fridge, a fan and a few lights, a small portable generator will do the job. If you hope to keep living as if the hurricane never hit, you’ll need a stationary generator. And if you’re willing to rough it but would like to run a window AC unit, you’ll want to make sure before the storm that your generator has enough juice to run your AC. Another caveat: Cheap generators can produce power surges that will fry expensive electronics.
How much noise can you stand?
Or, put another way, how many decibels do you want to bombard your neighbors with? In general, the more expensive the generator, the quieter it is.
Technology is getting better.
For decades, Floridians have been buying portable generators that were the mechanical equivalent of muscle cars, says Paul Hope of Consumer Reports. Now, though, manufacturers are designing fuel-injected engines for generators. These models are quieter, more fuel-efficient and emit less carbon monoxide. They’re also more expensive.
The smart move, says Hope, is to shop for a generator between storms or after hurricane season. That gives you time to research what you need — and to hire an electrician to install a transfer switch or interlock device that lets the generator power your house.
If a flood swamps your home, will insurance cover the damage? That depends on the value of your home, the amount of water damage and whether you have a flood insurance policy.
Let’s look at some persistent myths about flood insurance.
Myth: You must live in a flood plain to get coverage.
If you live in a flood plain, your mortgage company will likely require you to buy flood insurance. But you can purchase it even if you don’t live within a flood zone. “Almost anybody can get flood insurance who wants flood insurance,” says Chris Hackett, director of personal lines for the Property Casualty Insurers Association of America. The price through the federal flood insurance program is based on standardized rates and depends on the home’s value and whether or not it’s in a flood plain.
Myth: Flood insurance covers everything.
When it comes to the physical structure of your house, federal flood insurance policies top out at $250,000. If you have a $300,000 house that’s a total loss because of a flood, the most you can recoup through the program is $250,000 to cover the structure itself. For your personal possessions, the cap is $100,000 under the federal program.
Myth: My homeowners policy covers floods.
“Unfortunately, a lot of folks may be under the impression that their standard homeowners policy might cover flood damage,” Hackett says. But the standard policy does not! The typical home insurance policy doesn’t cover earthquakes or floods. So a homeowner wanting coverage for either of those disasters will need to pick up separate, specific coverage against those types of disasters.
Myth: Water damage is water damage. When it comes to your insurance, not all water damage is the same.
If there’s a storm and your “roof comes off and water comes through, that would be covered under your homeowners policy,” Hackett says. “Versus a flood situation where the water is rising from an over flowing riverbank overflows or an unnatural amount of rain that is rising from the street.
Myth: Flood maps don’t change.
Flood plains (and flood plain maps) change and evolve. Just because you weren’t in a flood plain when you bought your home a few years ago doesn’t mean you’re not in one now.
For more information, visit FloodSmart.gov.
Do not read this list and become overwhelmed, it is an extensive list meant to cover basic home maintenance. Not all of these maintenance items will apply to all homes. This is a comprehensive guideline designed for homes in the South as well as Northern climates.
Spring cleaning is a way to demonstrate pride in ownership (or rentership). A home and its contents are investments; money spent on something you really love or really need (ideally both). When you take the time to clean thoroughly and properly, you can maintain and prolong the life of the item or finish for years. Further, it means you live in a cleaner and healthier home; less dust, dust mites, allergens, odors, and dirt.
Always start from the top and work your way down. Think about it like this: dust falls down (like rain or snow) so if you start at the top, you’ll never have to re-clean a surface (which is a time waster). It doesn’t make sense to clean the floors first and then dust the tabletops; you’ll just have to clean the floors again. Use gravity to your benefit and always work from top to bottom. It also helps you not miss anything!
General Spring Cleaning Tasks:
These are a list of some of the things that need to be done around the house, and spring is a great time to do them. So often we don’t remember to do them, so let this be your wake-up call!
Tests and replacements:
Test smoke alarm
Test carbon monoxide alarm
Check flashlight batteries
Check fire extinguishers
Change air filters
Check all window screens for tears and repair or replace as required
Overall Spring Cleaning Chores:
Remove fingerprints and dirt from light switches and door handles
Spring Clean Outside:
Before you let that dream home slip away, consider these strategies to help bridge the transition:
Make an offer that’s contingent on the sale of your house:
A seller may be persuaded to accept your offer with the caveat that you’ll have to sell your house before closing on theirs. You’ll strengthen your chances of getting a seller to take a chance on you if you can show that your home is priced properly and has a solid marketing strategy. Successful contingency offers depend on good communication between the real estate agents representing both sides. It’s up to you and your agent to reassure the seller that the closing won’t be delayed. Obviously, in hotter housing markets with potentially multiple bids, it can be harder to get sellers to accept such an offer.
Offer the seller a rent-back option:
One way to buy yourself extra time to complete your sale is to offer to buy the new house, then rent it back to the seller after closing. A rent-back agreement is typically for just a month or two. But this arrangement can give sellers extra time to move – or to find a new house of their own – while putting a little money in your pocket and keeping you from having to pay two mortgages at once.
Tap the equity in your current home:
If you have a high credit score and considerable equity in your house, you could free up some of the latter with a home equity line of credit. A HELOC lets you use up to 85 percent of your home’s value, less the balance remaining on your mortgage, and is fine-tuned based on your credit profile and income. Most HELOCs have a variable interest rate, so it’s in your best interest to pay off the loan as soon as your current home sells.
This strategy may let you buy a house before you sell, but it’s not a last-minute option. A HELOC requires an appraisal, income verification and a thorough credit check, so it takes time – generally 30 days or more – to qualify, says Tim Beyers, mortgage analyst with American Financing in Aurora, Colorado. If you’re thinking of going this route, make sure you run the numbers with an expert upfront, Beyers says.
To qualify for the new loan, a lender will evaluate your current mortgage payment, plus the HELOC payment and your new monthly mortgage payment, to calculate your debt-to-income ratio for the new mortgage approval, Beyers says. If your income is high enough to have a debt-to-income ratio below 40 percent with all those payments and other monthly expenses taken into account, only then should you consider a HELOC, he adds.
“Once you start dipping into your home’s equity, that changes the equation when you apply for a new mortgage,” he explains. “Taking too much out can hurt your qualification chances on a new mortgage. Don’t make an offer, then try to scramble to do the math.”
Add a HELOC to your new mortgage:
With this strategy, you break up the financing on your new home with a first mortgage for the amount you need, plus a HELOC to make up the difference in your shortfall for a downpayment, says Elise D. Leve, senior mortgage banker at Citizens Bank in New York.
Once you sell your current home, you can pay the HELOC portion off in full and end up with the single mortgage you wanted in the first place, Leve says.
Get a Bridge Loan:
A much riskier strategy is what’s called a ‘bridge’ or ‘swing’ loan. Using your existing home as collateral, you take out a bridge loan for three months to five years to use as the down payment on your new home. Once you’ve purchased your new home, you sell the old one and pay off the mortgage and the bridge loan. Such a loan is less risky in a fast appreciating market where appreciation can cover the extra payment on the old home. Even in the best market, however, swing loans can be expensive, last-ditch propositions that are fraught with caveats. Bridge loans can cost 5 to 10 percentage points more than a typical equity loan. Your home must be lien free. Excellent credit is mandatory, as are good income-to-debt ratios. It may be a better idea to get a cash-out refinance, second mortgage or equity loan to use as a bridge loan. Traditional financing is cheaper and less risky, but that could preclude you from landing another mortgage for a new home should the lender consider you stretched too thin.