Thank Trump for fixing NJ’s property tax issue

Posted on February 19, 2019 by grim

From CNBC:

One surprising way to beat the SALT deduction cap: Move to a nearby town

A few years ago Dawn Donaghy and her husband, Raymond, made a decision that many residents in high-tax states make. They wanted to move.

The couple, then residents of Old Tappan, New Jersey, a town less than 30 miles outside of New York City, loved where they lived.

But Raymond’s three children were now adults, and no longer needed the school system. And the taxes that came with that high-quality public school education were high.

The couple considered moving as far as Connecticut, so they were surprised at what they found in their own backyard.

In June 2017, the Donaghys moved to a neighboring town, Saddle River, just about eight miles away.

“We started looking and we could not believe some of the homes that we saw and the tax bracket,” Dawn said. “We just looked at each other in amazement. We’re going to have more property, a larger home and one of them was half the taxes.”

While the couple did not end up choosing that house, they still were able to bring down their tax bill substantially — by about $10,000.

The property taxes they were paying in Old Tappan were around $37,000 at their highest, according to Dawn. Today, they’re paying around $27,000.

More residents of high-tax states are reportedly looking to move in light of changes ushered in by the Tax Cuts and Jobs Act. Notably, that includes a lower cap — $10,000 — for deductions for state and local taxes.

Posted in New Jersey Real Estate, Politics, Property Taxes | 110 Comments

Stop making sense

Posted on February 18, 2019 by grim

From the APP:

Making NJ competitive will do more than $15 minimum wage

New Jersey routinely places at or near the bottom in almost every economic analysis of states in America. It’s one of the worst places in the country to do business; it has among the highest business and personal taxes; it’s overregulated; it’s electric utility rates are high and it has one the highest debt loads in the country. And its high property taxes make home ownership unaffordable for the middle-class.

Instead of addressing crucial structural issues with the state’s economy — like lowering corporate and property taxes, the leadership in this state has determined that it’s more important to boost the minimum wage to $15, raise taxes on job-producing people, legalize marijuana and lay down a welcome mat for illegal immigrants — at taxpayers’ expense.

The Murphy administration tried to lure Amazon to Newark with an outrageous $7 billion incentive. Amazon thumbed its nose at New Jersey’s enticement and decided to spend its money in two other places — which combined offered billions less than New Jersey.  That says a lot about the state’s economic reputation.

…

While the governor pursues his progressive “fairness economy” his tax policies are destroying the opportunity to unlock New Jersey’s potential to attract investments that create jobs that support middle-class families.

According to a recent report, the average salary in New Jersey ($57,000) is not enough to afford the average rent of $2,062. A $15 minimum wage will not help. State property taxes now average $8,700 a year; New Jersey has the sixth-highest personal income tax rate in the nation (8.97 percent) and the third-highest per capita tax ($6,709) and the sixth-highest debt.  Consequently, young people and retirees are fleeing the state — and business owners are taking note that the state is failing to address affordability issues.

If the governor is seeking a “fairness economy,” shouldn’t he be focusing on creating an environment that attracts good-paying jobs for millennials and older adults?  Technology and manufacturing jobs that lift people out of poverty are going to less expensive states. Companies like Mercedes Benz and Honeywell are taking their high-paying jobs to Georgia and North Carolina and it’s not hard to figure out why.

Posted in Demographics, Economics, New Jersey Real Estate, Politics | 21 Comments

Uh oh.

Posted on February 15, 2019 by grim

From the Star Ledger:

N.J. revenues continue to slump, and Trump tax reforms are blamed

New Jersey’s state budget is really feeling the effects of the federal tax reform hangover now.

Last month, Gov. Phil Murphy’s administration warned tax revenues were falling behind because taxpayers were altering their behavior in response to federal tax changes. An updated report released Thursday shows the state’s growing risk of running a shortfall that could force mid-year cutbacks.

In total, the state’s major tax revenues were forecasted to increase by 7.5 percent over the last fiscal year, but growth has slowed to just 3 percent.

Thursday’s report would look worse if it weren’t for a tax amnesty program that brought in $282 million in delinquent tax payments. That winter amnesty program well exceeded its $200 million goal as taxpayers settled up with the state in exchange for waived penalties and reduced interest.

Without the amnesty bump, growth would have clocked in at just 1.3 percent.

The gross income tax — New Jersey’s largest source of tax revenue — is a big source of the trouble. Income tax collections for the first seven months of the fiscal year are down about $500 million compared to this same period last year. That’s a 6 percent decrease year-over-year, when the budget forecasts gross income tax collections are supposed to increase by 5.4 percent.

Posted in Economics, Employment, New Jersey Real Estate, Politics, Property Taxes | 105 Comments

No deals in 2019

Posted on February 14, 2019 by grim

From CNBC:

Here’s why the housing market, while still risky, won’t be all bad for buyers in 2019

With spring on the way, many home buyers are starting their hunt for a new home. But with the housing market in transition, will they be able to find what they’re looking for?

Thus far this year, the 30-year-fixed has averaged 4.46 percent, down from 4.54 percent in 2018. The dip in interest rates, combined with modest gains in home prices, have helped turn some parts of real estate into a buyer’s market – but one clouded by at least some uncertainty.

“Going forward, it won’t be the record number of sales we saw in 2017, but we have seen mortgage rates come down considerably over the course of even the new year,” Nela Richardson of Edward Jones Investments and former chief economist at Redfin, told CNBC’s “On the Money” in an interview. “That is a good advantage for buyers.

However, it wasn’t just interest rates that caused buyers to pull back in 2018. Many home buyers couldn’t find a home that fit in their budget, and Richardson said that’s not likely to change this year.

“That’s going to be the myth in the housing market you are going to see play out in 2019. You’ll see reports that inventory is increasing, but it’s increasing at price points that are not affordable to millennials or first time buyers,” she said. “And that has been persistent for the last five years.”

Posted in Demographics, Economics, National Real Estate | 99 Comments

Thank goodness Cuomo’s our governor … wait

Posted on February 12, 2019 by grim

From Newsday:

Cuomo to meet with Trump to seek end of cap on SALT deductibility

Gov. Andrew M. Cuomo said he is scheduled to meet with President Donald Trump on Tuesday to press his effort to overhaul Trump’s tax plan, which is driving up federal income taxes for high-income, highly taxed New Yorkers.

Trump’s tax cut package, passed in December 2017, provides a long-term corporate tax break, but helps pay for it by capping the deductibility of state and local taxes, or SALT, on federal income taxes. That is increasing many New Yorkers’ federal income tax bills in areas with high local property taxes and income taxes, such as Long Island, Westchester County and Manhattan.

“To me, there is no more vital, long-term issue for this state than SALT,” Cuomo said.

A week ago, Cuomo blamed the SALT provision and Trump for a $2.3 billion hole in state income tax revenue for December alone. Cuomo said the loss in estimated income tax payments by high-income earners indicates that many top earners may be leaving the state, threatening a long-term loss of revenue. Fiscal analysts, however, have also noted that Wall Street bonuses are down and the economy is slowing.

Last week, Trump said he was open to discussing changes in his tax package. He provided no specifics.

Cuomo said that in his midafternoon meeting with Trump he will press for a full repeal of the SALT provision. He said he has no alternative or compromise to offer, but said Trump would simply have to find another way to fund his corporate tax break.

Posted in New Jersey Real Estate, Politics, Property Taxes | 108 Comments

Publicity stunt worked, but will it sell?

Posted on February 10, 2019 by grim

In case you’ve been living in a cave, or basement…

From the Star Ledger:

Big uproar erupts over house with sex basement, just 30 minutes outside of N.J.

We’re not recommending you leave the Garden State, but if you’re looking to stay close by and you happen to have a fascination with some of the things that go on in “Fifty Shades of Grey,” a recent real estate listing in the Philadelphia suburb of Maple Glen could be the right fit.

From the outside, the big brick Colonial looks like it fits in with many upscale suburban neighborhoods. But the listing has gone viral since it was posted Thursday afternoon — because of one not-so-common feature.

The house has a fully furnished pleasure room, straight out of the popular series of erotic romance novels and movies.

Realtor Melissa Leonard has been fielding media requests and angry neighbors since the listing was posted. But she had no hesitations in taking on the project, she told Slate. She has since dubbed the house “50 Shades of Maple Glen.”

“I saw the first two of the movies. I only read maybe a couple of chapters of the book. That was the first thing that came to mind when I saw it: This guy has ‘Fifty Shades of Grey’ going on his basement!” Leonard told Slate. “But I know that it’s a way of life for people. Philly has clubs for this. I go out, I know about nightlife, they nickname me Philly Socialite on Instagram, so I go out all the time. Nothing bothered me.”

…

If you’re interested, the asking price for the home is $750,000. And once it’s yours, you can do whatever you want to the basement.

Posted in Lowball, Philly | 65 Comments

Tax those who attempt to leave

Posted on February 7, 2019 by grim

From Fox News:

Mansion sales rise in Florida as wealthy buyers are drawn to its low taxes and sunshine

Is bigger really better? It’s true to Florida buyers. Many wealthy buyers are moving to the Sunshine State for higher ceilings — and a lower tax bracket.    

Luxury Florida homes have wealthy Americans making the move from high tax areas like New York, New Jersey and California, cutting their tax bill and increasing the size of their homes. It’s a movement many are calling “tax migration.”

Jay Parker, CEO of Douglas Elliman Florida brokerage, one of the largest residential brokerage firms in Florida and Manhattan, said New Yorkers are the new “foreign” buyers.

“We have really created the perfect storm. The age of our population, the tax benefits of moving to South Florida. Someone that wants lifestyle, amenitization, really an experience in their living environment. Larger units, higher ceiling space,” Parker said.

The Tax Cut and Jobs Act — passed by Congress and signed by the president in December 2017 — capped the federal deduction for property, state and local taxes at $10,000. As a result, high-income earners are fleeing their home states and looking to the Florida real estate market for a better quality of life.

New York Gov. Andrew Cuomo on Monday blamed Trump’s tax law on the number of people leaving the state, saying it had contributed to the state’s deficit.

….

“People that are moving here, they are moving quickly, they are moving consistently. They are looking for opportunities, they are evaluating the market and I think all of these things combined really are very favorable to us in the state of Florida,” said Parker.

But Parker said it’s not like New York is losing ground to Miami — it’s still the hotting market in the country.

“I still believe New York is still positioned to be the most important real-estate market in the country, if not the globe. It is just an opportunity for us now to expand our luxury market and to become a safe haven,” Parker said.

Posted in Demographics, Economics, Property Taxes | 140 Comments

See ya!

Posted on February 5, 2019 by grim

From the NY Post:

As revenue drops, concern about the proposed state budget rises

Gov. Andrew M. Cuomo on Monday announced a dramatic drop in state income tax revenue of $2.8 billion, which he says will prompt him to revise his 2019-20 budget and reconsider spending on schools, health care and repairs to roads and bridges.

Cuomo, a Democrat, blamed the shortfall on a federal tax plan backed by Republican President Donald Trump. Cuomo said the law’s cap on deductions for state and local taxes at $10,000 was to blame and suggested it is, anecdotally, triggering high-earners to leave New York. 

“At this point there is no doubt that the budget we put forward is not supported by the revenues,” Cuomo said at a State Capitol news conference. “It’s as serious as a heart attack.”

Cuomo said he’s not certain what areas might need to be cut, but said the biggest spending areas now are education, health care, infrastructure and another phase-in of a previously approved middle-class tax cut.

The hole in revenues in December, which some analysts have called a December surprise, and continued poor performance in January have created a $2.3 billion drop in anticipated revenues, according to the Cuomo administration. Add that to the $500 million drop in revenues for December that the Cuomo administration had previously projected and the revenue hole is $2.8 billion, according to Cuomo Budget Director Robert Mujica.

Posted in Demographics, Economics, New Jersey Real Estate, NYC | 159 Comments

Another hit to the shore

Posted on February 3, 2019 by grim

From Shorebeat:

Legislators: N.J. Minimum Wage Hike A ‘Death Sentence’ for Jersey Shore Economy

Shore area businesses will be forced to either raise prices, cut workers or close down entirely in the wake of the state’s proposed law that gradually increases the minimum wage to $15 per hour, the state lawmakers who represent the boardwalk towns of Seaside Heights and Point Pleasant Beach said Friday.

The Shore will take a decidedly hard hit from the law because many young workers are likely to spurn the traditional summer job – where wages will increase at a slower pace – in favor of what is expected to be higher-paying jobs at non-tourism-based businesses. As a consequence, tourism-based businesses that often operate on low margins and must generated revenue in a short amount of time could find themselves overwhelmed by labor costs.

If the legislation is signed into law next week as expected, beginning Jan. 1, 2020, seasonal businesses need to pay their employees at least $10.30 an hour, and then increase that wage each year until it reaches $15 an hour in 2026.

“Restaurants, bars, boardwalks and amusement parks on the Jersey Shore will be the hardest hit,” added Assemblyman Dave Wolfe. “Even with the delayed increase, the mom and pop shops on the boardwalk will have to pay a competitive wage to attract young workers, who will undoubtedly choose to find higher-paying jobs at a supermarket or coffee shop chain instead. This is devastating to the Jersey Shore economy no matter how you slice it.”

Wolfe, along with his 10th district GOP colleagues state Sen. James Holzapfel and Assemblyman Gregory P. McGuckin, blasted the proposal, saying it would hurt the Shore area the most – doubling down on a separate tax on rental properties that is expected to increase the cost of a Jersey Shore vacation.

“This bill is yet another attempt by Governor Murphy to force residents and business owners out of the state,” said Holzapfel. “Small businesses are the backbone of the Jersey Shore and this wage increase will send ripple effects throughout our Shore economy.”


Posted in Economics, Employment, Shore Real Estate | 79 Comments

$15 here we come

Posted on February 1, 2019 by grim

From the Star Ledger:

N.J. minimum wage set to rise to $10 in July and $15 by 2024 after big votes

The Democrat-controlled state Legislature on Thursday gave approval to an historic increase in New Jersey’s minimum wage to $15 an hour over five years, with a $1.15 raise coming this July.

The votes seal the deal reached earlier this month by Gov. Phil Murphy, state Senate President Stephen Sweeney and state Assembly Speaker Craig Coughlin — all Democrats — on a bill to boost the Garden State’s minimum wage by 70 percent for most workers while putting agricultural, seasonal and small business employees on a slower path to $15.

The bill passed the Assembly 52-25 and the Senate 23-16 on Thursday.

Murphy said he will sign the bill Monday, putting the trio of Democrats within striking distance of a major progressive policy achievement.

“History has shown us that raising the minimum wage is actually good for the business community, it’s good for New Jersey, and most importantly it’s good for the people that benefit from it,” Coughlin, D-Middlesex, said before the Assembly vote.

Under the bill, the minimum wage for most workers would increase to $10 an hour on July 1, to $11 on Jan. 1, 2020, $12 an hour on Jan. 1, 2021, $13 in 2022, $14 in 2023 and $15 in 2024.

New Jersey Policy Perspective, a liberal Trenton think tank, estimated more than 1 million workers will benefit from the wage hike. But about 10 percent of those employees will be put on a slower path.

Posted in Economics, New Jersey Real Estate, Politics | 73 Comments

An Icon Falls

Posted on January 31, 2019 by grim
Posted in Economics, Employment | 35 Comments

National home prices continue to soften

Posted on January 30, 2019 by grim

From CNBC:

Home prices rise at a slower pace: S&P Case-Shiller

Home values increased 5.2 percent annually in November, slowing from 5.3 percent in October, according to the widely watched S&P CoreLogic Case-Shiller National Home Price Index.

The 10-city composite annual increase also fell to 4.3 percent, down from 4.7 percent in the previous month. The 20-city composite saw a 4.7 percent annual gain, down from 5.0 percent in October.

Home price gains have been slowing since last spring, as higher mortgage interest rates cut sharply into affordability. The gains are slowing the most in large metropolitan markets, where home prices had overheated over the past three years.
…
“The pace of price increases are being dampened by declining sales of existing homes and weaker affordability,” said David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices in a release.

Sales peaked in November 2017 and then began falling as mortgage rates rose. After rising steadily, rates began to drop again in November 2018, following a change in policy at the Federal Reserve. But the rate on the popular 30-year fixed mortgage is still higher today than it was one year ago.
…
“Housing market conditions are mixed while analysts’ comments express concerns that housing is weakening and could affect the broader economy. Current low inventories of homes for sale – about a four-month supply – are supporting home prices. New home construction trends, like sales of existing homes, peaked in late 2017 and are flat to down since then,” added Blitzer.

Rising wages and continued growth in employment are all favorable, he added, and with prices moderating and rates currently not rising, the spring market could see a slight boost.

“Slower price growth will help would-be buyers feel like their goal isn’t moving away faster than they can catch up. Against incomes rising at a roughly 3 percent pace, 4 percent home price growth is nearly at just the right pace,” said Danielle Hale, chief economist at Realtor.com.

Posted in Economics, Housing Recovery, National Real Estate | 70 Comments

Nice house, if you can afford it

Posted on January 28, 2019 by grim

From HousingWire:

Redfin: Middle class buyers are being priced out of housing market

Although housing inventory is increasing, affordability for the typical middle class household is retreating, according to new data from Redfin.

“Homeownership is increasingly out of reach for the typical American,” Redfin Chief Economist Daryl Fairweather said. “Over the last few years builders have focused on luxury homes, and there hasn’t been enough construction of affordable starter homes.”

Redfin calculated housing market data ranging from 2017 to 2018, focusing on the share of affordable active listings that were available to households making the median income across 49 metro areas.

In San Jose, just 14% of homes that were on the market in 2018 were affordable for those making the area’s median household income of $117,000. This is a significant decrease from 2017 when 26% of homes for sale were affordable, according to the company.

Redfin attributes this lack of affordability to gains in home prices and interest rates.

According to ATTOM Data Solutions’ latest affordability report, in the fourth quarter of 2018, the median home price reached its least affordable level since the third quarter of 2008.

“While poor home affordability continues to cloud the U.S. housing market, there are silver linings in the local data as home price appreciation falls more in line with wage growth,” ATTOM Data Solutions Senior Vice President Daren Blomquist said.

In fact, Redfin determined that although the share of affordable homes for sale in these 49 metros fell from 2017 to 2018, a few metros experienced growth in affordability.

These areas included Hartford, Connecticut, where the share of affordable homes grew 19%; Jacksonville, Florida, which increased 9%; and Nashville, where affordable inventory rose 4%.

Furthermore, Redfin notes homebuyers still have housing options in St. Louis, where 84% of homes are affordable to the typical buyer, and Minneapolis and Pittsburgh where 82% of homes meet the average buyer’s budget.

Fairweather said Redfin expects homebuilders to shift their attention to more affordable homes in 2019, which along with rezoning efforts by local governments should reduce this pressure to some degree over time.

Posted in Demographics, Economics, Employment, Housing Recovery, National Real Estate | 73 Comments

Anywhere but here

Posted on January 27, 2019 by grim

From the Real Deal:

Why millionaires are fleeing NYC and New Jersey

Volatile financial markets are leading high net worth individuals to leave New York and New Jersey in droves.

Last year, the region encompassing New York City, Jersey City and Newark lost more than 5,700 individual with liquid assets of $1 million to $30 million, the North Jersey Record reported. The exodus is thanks to turbulent financial markets and changes to federal and state tax laws.

“The folks that technically can afford to live here are also the people who have second homes. They could be in Pennsylvania. They could be in the Southwest. Very often it’s Florida,” said Debra Taylor of Taylor Financial Group in Franklin Lakes, New Jersey. “The tax situation in those states is much more attractive.”

Taylor said she has been advising many wealthy clients to establish residency in other states, as the tax law changes capped deductions for state and local taxes, including property taxes, at $10,000. That shift has increased the cost of living for many of the area’s residents. For one of her clients to remain a New Jersey resident would cost $150,000 more annually, she said.

Even middle-class New Jerseyans are weighing their options. Their money goes farther in states like Texas and Florida, which have lower taxes and a lower cost of living.

According to a previous report, brokers in Florida have taken note. Agents and developers brokers in Florida have been trying to lure homebuyers looking to escape high-property-tax states like New York, New Jersey and Connecticut.

Posted in Economics, New Jersey Real Estate, NYC, Unrest | 4 Comments

Thank Trump for Housing?

Posted on January 24, 2019 by grim

From Yahoo Finance:

Shiller: Trump is a ‘psychological boost’ to the housing market

“I describe the current boom in U.S. home prices as the third largest boom since 1890. And so it’s big, and people are starting to think that housing is expensive, and that could lead to a turnaround and a drop in home prices,” Shiller said in an interview with Yahoo Finance at the World Economic Forum in Davos, Switzerland. “But I’m not ready to forecast that yet.”

Shiller pointed out that the National Association of Home Builders’ monthly index of builder sentiment rose in January following two months of sharp declines, showing builders are beginning to look more favorably at housing demand. And in most cities, the S&P CoreLogic Case-Shiller data – which Shiller co-created – has pointed to continued home price appreciation, albeit at a slower pace. The 20-city home price index rose 5.03% from a year earlier in October, based on the most recent release in December, from a downwardly revised annual gain of 5.2% in September.

However, Shiller said he has taken note of the past several months of weakness in the housing market. Most recently, the National Association of Realtors’ report on Tuesday showed U.S. home sales tumbled 6.4% month over month to their lowest level in three years, far outpacing the 1.5% drop predicted by economists. This extends a trend of declines in existing and new home sales in the latter part of 2018, which occurred against a backdrop of rising mortgage rates and land and labor shortages.

“The housing market, when it starts to slow, that’s a leading indicator that it could turn down,” Shiller said.
…
“You don’t have the smart money going in and out from day to day,” Shiller said. “[The housing market] shows momentum, and that momentum is slowing down a bit. There could be a reversal in home prices and a recession. But I’m not giving it a probability of greater than 50% for this year.”

The key factor leading to a contraction are changes in confidence, Shiller said. And on that front, President Donald Trump has delivered a bump to the housing market.

“I think Trump does have a psychological boost for the housing market because of who he is. He kind of exemplifies lavish living. He writes books about success. He’s our first motivational speaker president,” Shiller said. “His motivation will tell you that you have to live the life of a successful person.”

“That’s an important reason why people buy homes,” Shiller added. “They want to be part of the successful people in the country.”

Posted in Demographics, Economics, Employment, Housing Recovery, National Real Estate | 92 Comments