From the APP:
Weighed down by high property taxes and a sluggish economy, New Jersey’s housing market is recovering from the Great Recession much more slowly than the rest of the nation.
It’s forcing real estate agents to leave clients selling their homes with a simple message: Lower your expectations.
“The homeowner feels their house is worth more, but the buyers can’t pay that because of high taxes and high monthly payments,” said Robert Shirvanian, broker for Exit Realty East Coast, with offices in West Long Branch, Middletown, Holmdel and Woodbridge.
The message from Realtors represents a new day for New Jersey’s housing market that is driven by simple math. Workers only have so much money to spend on mortgage, interest, taxes and insurance, and their wages have fallen since the Great Recession. If taxes go up, they’ll have less money to prop up the state’s real estate market.
And a housing market that gets too far out-of-balance will cause home owners to downsize — or pick up and move to bigger, more affordable homes out of state.
That migration is underway in New Jersey, and it can ripple through the economy. From 2009 through 2013, the 88,000 state residents who moved out of state have not been replaced by new workers. In total, the state lost $8.2 billion in taxable income.
New Jersey has been hit harder than the nation. Its home prices fell 21.3 percent, while U.S. home prices fell 20.7 percent. And its prices remain 15.4 percent lower than they were in 2007, while U.S. home prices are 2.4 percent lower, said Patrick J. O’Keefe, director of economic research at CohnReznick, an accounting firm.
Meanwhile, New Jersey’s home ownership rate declined from a peak of 70 percent in 2005 to 63 percent in the second quarter of this year. The U.S. home ownership rate declined from 69 percent at its peak in 2004 to 63.4 percent in the second quarter of the year, O’Keefe said.
“New Jersey has seen some improvement, but it has not participated in the price recovery to the same extent that we’ve seen around the nation,” O’Keefe said.
The pool of buyers isn’t as big as it was. New Jersey’s median household income of $65,243 in 2014 has fallen 4.1 percent from its peak of $68,059 in 2006, according to U.S. Census Bureau figures that are adjusted for inflation. And banks have tightened their lending standards since the housing bubble burst.
The new landscape can frustrate home owners hoping for top dollar when they sell. And it can frustrate Realtors, who need to lower the expectations of the sellers they represent.
“You can’t overestimate your home price,” said Joy Bearden, a broker associate with Keller Williams Shore Property in Toms River. “Any agent can list at any number, but if (an appraisal doesn’t match it) we’re back to square one.”