Instead of a whole year of Fed interest rate cuts, policy seems to be getting reversed again, with zero cuts now expected in 2024.
Don’t be surprised if this leads to higher property tax rates over the next two years.
Vacancies And Delinquencies
We’ve even seen Amazon and Microsoft fail to create jobs after being given sweet deals on property and taxes. On Long Island, Amazon had to start subleasing the warehouse space they built. In Atlanta, the city wants their land back from Microsoft. Especially as locals are facing an affordable housing crunch.
Not only are workers not returning to the office, but they are being laid off by thousands and tens of thousands.
This has resulted in major cities seeing office and other commercial property vacancy rates hit scary new records. Now over 50% for Manhattan offices.
This in turn means loans aren’t getting paid to banks. Causing more issues like NYCB. In Atlanta, 20% of all properties with commercial mortgage backed securities are more than 90 days delinquent. Many more are in other stages of default.
Similar trends are being seen in other debt.
With no Fed interest rate cuts it will be harder for these properties to be refinanced or bought. We’ll experience more inflation, which will fuel this cycle of financial distress among businesses and consumers even further.
Here Come The Tax Hikes
NY is heavily reliant on property taxes to operate. So are states like GA. Even though there are proposals in other places like Florida to eliminate these taxes.
If counties and states are seeing a 20% plus drop in tax revenues due to bankrupt companies and property owners, they have to get that money another way. The most obvious being to increase tax rates on the remaining taxpayers.
Get a review of your tax assessment and annual property tax bill now. Don’t overpay. You’re sure to be gouged on prices on everything else this year already.