The taxable value of real estate in Indian River County turns out to have soared even more in 2023 than Property Appraiser Wesley Davis estimated just six weeks ago.
In his June 1 estimate, issued to help cities and agencies begin their budgeting process, Davis and his team reported that property taxed to fill the coffers of the county’s general fund increased 9.59 percent in value to $29.1 billion last year.
But the latest report pushes that number $200 million higher, up to $29.3 billion, for a 10.33 percent increase in value in a single year.
No surprise, based on what residents see going on around the county, a significant part of that increase in value was due to new construction, which is broken out in the latest report, amounting to $680 million in appraised value.
The actual market value of new buildings in the county is much greater than that, way over a billion dollars, but much of the value is protected from taxation by state laws such as the Homestead Exemption.
Property values were revised upward in most cities, too. The latest report shows that the value of property in Indian River Shores increased by 13.31 percent, up from an estimated of 12.59 percent in the June 1 report, the biggest increase in the county in both cases.
As of Jan. 1, real estate in the Shores had an appraised value of $5.27 billion, up $619 million from a year earlier.
Almost 25 percent of that increase is due to $140 million in new construction, driven by the completion of single-family homes and condos in John’s Island, The Strand, Blue at 8050 Ocean and other communities.
Johns Island Real Estate owner/broker Bob Gibb told Vero Beach 32963 that more than 10 new homes got certificates of occupancy in John’s Island in 2023, Including teardown/rebuilds.
With currently listed new-built homes offered at prices up to $11 million in the country club community, those houses accounted for a large chunk of the $140 million in new construction value added to Indian River Shores tax rolls last year.
Countywide, most of the $680 million in completed new construction was single-family homes, but the number also includes apartments and other commercial buildings such as self-storage warehouses, car washes, luxury garages, and new gas stations and stores.
For instance, partners Vic Lombardi and Joe Schulke, developers of Indian River Motorhaus 2.0 on 41st Street, got certificates of occupancy for 67 of their luxury garage units in 2023, putting approximately $20 million worth of property on the books.
“We are helping out the tax rolls!” said Lombardi.
Davis cited two big new apartment complexes on route 60 midway between what’s left of the Indian River Mall and I-95 as examples of commercial property going on the roles in 2023.
Between them, the Griffon and Aspire include 15 large apartment buildings, along with townhouses, garages, club houses and other structures. Three of the apartment buildings came online in 2023, adding $7.5 million in taxable value to the county’s real estate portfolio, according to Davis.
The sprawling, side-by-side complexes will add tens of millions of dollars more to the tax rolls this year.
“We think next year and 2026 will be big years for commercial construction,” said Davis.
There are multiple ways to gauge the extent of new construction in the county besides the methods employed by the property appraiser’s office to determine taxable value, including counting up the number of building permits issued or projects underway in a given year. No one method takes in the entire new construction picture.
As an example, island builder/developer Coastmark closed on $25 million worth of units at its luxury condo project Blue at 8050 in 2023, according to managing partner Yane Zana.
But only part of that total is reflected in Davis’s latest number because not everything that sold was CO’d and went on the tax rolls.
Coastmark also commenced work on $55 million worth of new construction at Indigo on a section of beachfront recently annexed into Vero Beach, but none of that value is included in the $42 million in new construction in Vero Beach reported by Davis because no condos or villas units were complete by the end of 2023.
Likewise, the 10 or 12 homes under construction in Central Beach this summer aren’t counted in the just-released 2023 numbers. Instead, the value of those houses will become official when they are completed and show up on Davis’s 2024 or 2025 tax roll reports.
Lifestyle Homes provides another example of the moving target of a new construction total in the county. Building at Bent Pine Preserve, Indian River Club and other locations, the company closed on five homes in 2023 that averaged nearly $1 million each and signed contracts for seven more with a combined value of $6.9 million, according to Dale Sorensen listing agent Megan Raasveldt. But all of Lifestyle’s combined $11.5 million in new construction in the county won’t show up on the tax rolls in the same year.
New single-family homes make up the bulk of added construction value in the county for several reasons, including a burst of new subdivisions during the pandemic migration, higher new home prices, limited resale inventory and rising insurance costs for older homes.
“New construction home prices and values have been driven higher by inflation in labor and materials, and added levels of regulation,” said Bill Handler, president of GHO Homes, which has eight active subdivisions in Indian River County, including The Reserve at Grand Harbor where buyers are paying an average of $1.9 million for new luxury homes on large lots.
“Last year and the first part of 2024 have brought strong demand to all three of our Indian River County projects at Waterway Village, Harbor Isle and Costa Pointe,” said Brent Baker, division president-PulteGroup Southeast Florida – which may be an understatement.
The exhilarating pace of construction at Pulte/DiVosta’s Indian River County subdivisions is illustrated by activity in The Preserve at Waterway Village, where 55 homes with starting prices from $380,000 to $620,000 are in various phases of construction as this paper goes to press. None of that accruing $30 million or so in new property value is reflected in Davis’s latest report but it will help boost next year’s total.
“There is an overall lack of new supply relative to demand, so we continue to see strong demand from buyers who want all the benefits of new construction in a highly amenitized community,” Baker said. “The lower cost of insurance for new homes is driving many people to buy new over resale.”
“New construction is gaining traction,” said Berkshire Hathaway agent Chip Landers, who estimates there are 15 to 20 builders with subdivisions in the county, in addition to custom homebuilders who typically build only a few homes a year.
“I’d say 30 percent of my business now is new homes and lots, compared to 10 or 15 percent before the pandemic,” Landers added. “The percentage has increased since Covid, as more new homes have become available, and the resale market has tightened up due to higher interest rates and a lack of inventory.
“Higher insurance costs are a huge factor driving people to new construction and it is becoming a bigger factor every day,” Landers continued. “If a new $500,000 home can be insured for $1,500, an older home at the same price will probably cost $4,500 a year for insurance – if you can get it.
“The first question buyers looking at a resale home ask is, ‘How much is the homeowner’s insurance?’”
“We will build over 200 new homes this year in Indian River County in our three projects combined,” said Baker. “And we are optimistic on the ongoing demand in IRC moving forward due to a great quality of life, overall lack of new supply coming, and strong demographics benefiting all of South Florida.”
