Wrong way people

From Newsweek:

WHY ARE PEOPLE LEAVING CITIES? U.S. MAYORS BLAME HOUSING COSTS

Mayors across the United States say that housing costs are the biggest reason that people are moving away from cities, according to a new survey released Tuesday. According to the Menino Survey of Mayors, 51 percent of leaders in 115 cities said housing affordability is the most common reason that people move away from cities, followed by jobs, schools and public safety concerns.

A dismal 13 percent of mayors said the current housing stock fits the needs of their city constituents “well” or “extremely well.” Both mayors of expensive and inexpensive cities, with populations of over 75,000, shared concerns about low housing stock, according to the survey conducted by the Boston University Initiative on Cities.

Maxwell Palmer, assistant professor of political science at Boston University and one of the three principal investigators in the survey, told Newsweek that the consensus from mayors about housing stock is significant because “usually we think of the affordable housing crisis as a coastal problem, but it’s really a problem around the country.”

Posted in Demographics, Economics, Employment, National Real Estate, New Development | 58 Comments

Looks like we got a loophole

From Bloomberg:

State Tax Workarounds Could Mean $154 Billion Lost to Treasury

New York state lawmakers could punch a $50.6 billion hole in the federal government’s budget by revamping their state income tax.

If California followed the same approach, its legislature could keep $66.8 billion out of the U.S. Treasury. And in New Jersey, state lawmakers could hold back $12.5 billion more.

Their plans face obstacles, and not every state is pursuing the same strategy. But five Democratic-leaning states that are exploring ways to change their tax laws could remove roughly $154 billion from federal coffers over the next eight years, adding to anticipated deficits, according to an analysis compiled by Bloomberg in conjunction with Daniel Hemel, a professor at the University of Chicago Law School.

The potential drop in federal revenue reflects a furious burst of creativity among state lawmakers and tax experts in response to the Republican-sponsored federal tax-overhaul legislation that President Donald Trump signed last month. One controversial piece of the new law caps a previously unlimited federal tax benefit that individuals in high-tax states get by deducting the state and local taxes they pay. The new cap is $10,000.

Now, various states are considering circumventing that limit by switching from a state personal income tax to an employer-paid state payroll tax calibrated to produce the same amount of revenue. Employers can deduct payroll taxes fully on their federal returns.

Talk of a payroll tax maneuver is loudest now in New York. On Jan. 17, the state’s Department of Taxation and Finance released a preliminary report outlining its options for tax changes. The report includes analysis of workarounds such as “a statewide employer compensation expense tax,” or payroll tax. New York state budget director Robert Mujica says lawmakers will have draft legislation to debate within 30 days.

“What we are trying to accomplish here is to put [New Yorkers] back to where they were” before the new tax law, said Mujica. “The federal tax law aimed at the heart of New York and California, and we produce 25 percent of GDP for the nation.”

If states’ shifting to payroll taxes becomes a “large enough trend, [it] could wipe out all the savings from the repeal of the SALT deduction — and then some,” wrote the authors.

That’s because most federal taxpayers don’t itemize their deductions — meaning they don’t benefit from the SALT write-off for state income taxes. But all employers could deduct payroll taxes as expenses, the paper notes, making “a sizable portion of all current state income taxes deductible.”

Posted in New Jersey Real Estate, NYC, Politics, Property Taxes, Unrest | 87 Comments

NJ about to become more affordable

From the Record:

Wall Street warns New Jersey home values could tumble 7.5 percent

A pair of federal and state tax policy decisions could deliver a double whammy to New Jersey and its homeowners, a Wall Street credit-rating agency warned on Monday.

Just days after outgoing Gov. Chris Christie’s administration proclaimed that it was leaving New Jersey in good fiscal health, Moody’s said reductions in the state sales tax and federal tax reform signed at the end of the year could deliver punishing blows to the state’s finances.

The reduction in corporate and personal income taxes backed by congressional Republicans and signed into law by President Donald Trump could result in the average value of a New Jersey home dropping by 7.5 percent, Moody’s said in a report.

The tax reform limits federal deductions for state and local tax payments to $10,000, well below the average $17,850 deduction claimed by New Jersey taxpayers in 2015.

The loss of home values will leave New Jersey homeowners with less wealth and disposable income, depressing retail sales, Moody’s said.

On top of that, a Christie-backed reduction in the state sales rate that took effect Jan. 1 will cut $400 million from collections in the year ended June 30 and $500 million the following year, according to the rating agency’s report.

Posted in Demographics, Economics, New Jersey Real Estate, Property Taxes | 80 Comments

Hackensack is hot?

From the NY Times:

Hackensack, N.J.: Small, Ethnically Diverse and Affordable

Hackensack, N.J., could not have been farther off the radar screen when Bibi Masara and her two teenagers began looking to move from the Bronx. Ms. Masara, 41, who works for a venture capital firm in Midtown Manhattan, wanted a slower pace and initially considered Westchester County. But her research into home prices pointed her to New Jersey.

Last spring she closed on a three-bedroom, two-bath colonial near a nature preserve in the leafy Fairmount section of Hackensack. “For what I paid, $399,000, you couldn’t get a house in Westchester,” Ms. Masara said. Her new address is a mile from the shopping she prizes — the Whole Foods Market in Paramus. She and her daughters, who attend school in Manhattan, have a reasonable 15-mile, 45-minute bus ride to the Port Authority terminal.

What’s more, “there’s a sense of community here,” Ms. Masara said. “My neighbor next door takes in my recycling bins in the morning because she knows I’m a working girl with two kids. Everyone looks out for everyone. My older daughter even has been asked to babysit.”

Immortalized in an unflattering Billy Joel lyric — “Who needs a house out in Hackensack? Is that all you get for your money?” — the Bergen County seat is an ethnically diverse city of 45,000, suburban in feel but with an urban center hugging the Hackensack River. For decades, Hackensack’s Main Street was the county’s commercial hub and even boasted a pair of ornate movie theaters. The advent of shopping malls in Paramus touched off a long decline that the city is now addressing in earnest.

Six years after a zoning change permitted residential construction in a swath of downtown deemed in need of rehabilitation, about 10 rental apartment projects are in varying stages of construction or planning. One, Meridia Metro, with 222 units, was completed in 2016. The Current on River, with 254 units, is going up on the site of a former tennis club. An art deco, 10-story bank tower and an adjacent building are being converted into 119 luxury apartments.

The projects include fitness centers, rooftop decks and other amenities sought by young professionals, and those fronting Main Street will have ground-floor retail. The hope is that new businesses will follow apartment dwellers downtown, creating a pedestrian-friendly core, burnishing the city’s cachet and bolstering property values.

“We don’t want it to be just a shopping area with a bunch of Starbucks,” said Jerome J. Lombardo, chairman of the Hackensack Main Street Business Alliance, the public-private partnership championing the redevelopment. “We want to keep our local flavor. But we want lots and lots of eateries, maybe even a brew pub or an active brewery.”

Posted in Demographics, Economics, New Development, New Jersey Real Estate | 43 Comments

Nothing to see here…

From NJ101.5:

NJ foreclosure rate tops the nation in 2017, report finds

Nationwide, the seven counties with the worst foreclosure rates are right here in the Garden State.

According to online real estate tracker ATTOM Data Solutions, New Jersey had the highest rate of foreclosure activity among the 50 states and D.C. in 2017 — 1.61 percent of all housing units, compared to a rate of .51 percent nationally.

The report pointed to 57,559 New Jersey properties with a foreclosure filing — default notices, scheduled auctions or bank repossessions — in 2017.
While the nation hit an 11-year-low for the number of homes repossessed by lenders, New Jersey reached an 11-year-high in the same category, experiencing a 19 percent increase from 2016.

“That’s where homeowners are actually losing their homes,” said Daren Blomquist, ATTOM senior vice president. “Those properties then hit the market, which in many cases can be a drag on the market because they’re often distressed properties that sell at a discount.”

New Jersey also ranked among the worst states for the average time it takes for a foreclosure to move from start to finish (1,298 days), and the share of loans in foreclosure that originated between 2004 and 2008 (20,172), known as legacy loans.

New Jersey’s foreclosure rate fell 13.56 percent between 2016 and 2017. But the counties of Atlantic, Burlington, Camden, Cumberland, Gloucester, Salem and Sussex posted the seven worst rates in the nation.

Posted in Economics, Foreclosures, New Jersey Real Estate | 155 Comments

So what’s this all mean for fifteen?

From the Washington Post:

Minimum wage, sick leave, ethics top Murphy’s agenda

Democratic New Jersey Gov. Phil Murphy spent his first full day on the job Wednesday rallying for a $15 minimum wage and statewide paid sick leave, holding a Cabinet meeting and signing his second executive order.

Murphy, a wealthy former Wall Street executive who has never held elected office before, took over from Republican Chris Christie on Tuesday, pledging to move state government in a progressive direction and promising to thwart President Donald Trump.

Day 1 on the job comes as Murphy returns state government to Democratic control for the first time since former Gov. Jon Corzine, a Democrat, left office in 2010 and making New Jersey one of only eight states where the party controls the governorship and the Legislature.

Despite having political control, Murphy seemed to tamp down expectations on hiking the $8.60 minimum wage to $15 and implementing statewide paid sick leave, saying he didn’t have a timeline in mind.

“You can’t get there overnight,” said Murphy during a roughly 45-minute round-table with workers at a Newark church.

Murphy also reiterated his stance that the minimum wage should be raised to $15 an hour over time, but stopped short of explicitly backing legislation that Christie vetoed in 2016. Under the bill Christie vetoed, the wage would have risen to $10.10 an hour and reached $15 after five years.

Posted in New Jersey Real Estate, Politics, Unrest | 183 Comments

The death spiral continues

From the Star Ledger:

Ex-N.J. attorney general.: How Murphy can make state more affordable

It’s become a ritual of gubernatorial transition in New Jersey: the incoming governor expresses “shock” at the dismal state of New Jersey’s finances, thus setting up his predecessor as the scapegoat for what will become — because it has been — every administration’s failure: to resolve New Jersey’s crisis of affordability.

Granted, Gov.-elect Phil Murphy’s way of expressing concern — by quoting then-Gov.-elect Chris Christie’s own words to Gov. Jon Corzine back to Christie eight years later — is a bit more pointed than in prior transitions. But the dynamic is unchanged, as is the stark reality that threatens to make New Jersey ungovernable: We pay too much in taxes, and it’s never enough.

New Jerseyans have been for years among the most highly taxed citizens in the nation, but our tax revenues cannot keep pace with the state’s commitments — to schoolchildren, to the poor, to the elderly, to public employees such as police, firefighters and teachers, and to the provision of local and county services.

To make matters worse, as the population ages and costs escalate, the amounts that the state pays in pension and health benefits to public employees at every level of government are increasingly leaving New Jersey’s economy — as seniors and others choose to move to warmer and more affordable states. Our population growth, among the lowest in the nation, cannot keep pace with that of other states or with steady increases in the cost of obligations, resulting in pressure to raise taxes further.

It isn’t hard to envision the result if nothing intervenes to change this dynamic: a death spiral, the statewide equivalent to what many cities have experienced, in which a shrinking tax base is asked to pay higher and higher taxes, which causes the tax base to shrink further.

Posted in Economics, New Jersey Real Estate, Politics, Unrest | 107 Comments

Make NJ Cool Again

From the APP:

Phil Murphy wants to spark NJ economy, but how?

New Jersey’s economy looks far different than it did when the Great Recession struck a decade ago, but its long-standing problems are firmly in place, academic and business leaders said Wednesday.

It prompted them to urge incoming Gov. Phil Murphy to break through the polarized political climate and develop a clear plan that will lead to long-term growth.

“Phil Murphy is a wonderful person,” said Tom Bracken, president and chief executive officer of the New Jersey Chamber of Commerce. “But where are we going?”

Bracken joined other leaders at Rutgers University’s Edward J. Bloustein School of Planning and Public Policy for a forum that took stock of the state’s economy 10 years after the recession.

It came at a crossroads. Murphy, a Democrat, is getting set to take over for Republican Gov. Chris Christie on Jan. 16, becoming the latest in a long line of governors facing a seemingly intractable problem: The state needs to invest in work force development and transportation, but its residents are already among the nation’s most heavily taxed.

Posted in Economics, New Development, New Jersey Real Estate, Politics | 87 Comments

NJ Democrats face existential crisis

From the Star Ledger:

Democrats take control … of empty treasury | Moran

After Gov. Chris Christie hands off to Phil Murphy in two days, liberals in New Jersey will be unleashed to do as they please, with unchecked power in all three branches.

Part of me rejoices. Murphy will raise the minimum wage, fight climate change, and end the pointless war against pot. His cabinet looks like New Jersey, with a Muslim, a Sikh, and six women, two of them black and two Latino.

But I worry. Because New Jersey is broke, and most Democrats don’t seem to get that.

“That will be a challenge for the new governor,” says Tom Byrne, former Democratic state chairman, and son of the former governor. “People will be saying, ‘You promised me this. Why didn’t you do it already?'”

You may go numb when you hear the phrase “fiscal crisis” because it’s been a fact of life in New Jersey for so long. The sky has not fallen, so it may seem an empty threat, just numbers in a book in a dusty archive.

But it’s real, and the symptoms are everywhere. It explains why our transit system is such a mess, why addicts die waiting for treatment, why college kids pay more for tuition, why some poor kids can’t get a seat in preschool. Aren’t liberals supposed to care about all that stuff?

Jersey City recently paid a retiring police chief $512,000 for unused sick pay. Obscene is the only word I can think of to describe that. How many addicts could have been saved with that money? How many kids could be enrolled in preschool? In all, New Jersey taxpayers are on the hook for nearly $2 billion in these payments.

Health spending is out of control as well. Yes, public workers in New Jersey have taken a beating in the Christie years, with lower benefits and higher payments. But even now, their health plans would qualify as “platinum” under Obamacare.

So, this is an existential moment for Democrats. Murphy will try to raise taxes to soften the pinch, but that won’t be enough. If Democrats want progressive government, they will have to cut spending.

It won’t be easy. Most Democrats hear the word “union” and they think of coal miners fighting ruthless robber barons. But that’s way off.

Benefits for public workers are paid for mostly by middle-class taxpayers. By what warped logic is it “progressive” to force those families to pay for platinum coverage they can’t afford themselves? How many taxpayers are paid for unused sick time?

Posted in Economics, Employment, New Jersey Real Estate, Politics, Unrest, Where's the Beef? | 59 Comments

Ummmm. This analysis didn’t yield what you thought it would.

From the Star Ledger:

The 16 N.J. towns with the most single people

Looking for love? New Jersey isn’t a bad place to visit.

Just less than half of the population is married, according to Census data. About a third have never been married, and the rest are widowed, divorced or separated. But those numbers vary; white and Asian residents are more likely to be married than black or Hispanic residents. Women in their 20s are more likely to be married than men of the same age. And women over 65 are three times as likely to be widowed.

The most single cities in New Jersey are also some of the youngest, and have a relativity high percentage of minorities. They also tend to be the larger cities in New Jersey.

Don’t laugh too hard after the click.

Posted in Demographics, Economics, Humor, New Jersey Real Estate | 33 Comments

In foreclosure … for 10 years

From Curbed:

In 2017, NYC foreclosures reached its highest level since 2009

Foreclosures have been on the rise across New York City for a while now but in 2017, the number of cases hit its highest peak in eight years.

In their annual foreclosure report, PropertyShark disclosed that last year, 3,306 homes in NYC were scheduled for auction. This represents a 58 percent year-over-year increase and is the highest level witnessed since 2009. What’s even more alarming, the number of foreclosures has practically doubled in just two years: in 2015 there were only 1,762 foreclosure auctions (Since auctions are constantly rescheduled or postponed, the report only focused on stats that include first-time foreclosures). To put it all into perspective, PropertyShark has created this interactive foreclosure map.

Queens and the Bronx both saw high increases in the percentages of homes in foreclosure, at 40 percent and 44 percent year-over-year increases, respectively. Once again, Queens had the highest number of homes in foreclosure in all of NYC with 114 homes scheduled in 2017. The highest concentration of foreclosure cases in all of NYC came from zip code 10469, which covers Baychester, Pelham Gardens, and parts of Williamsbridge.

In Brooklyn, first-time auctions rose drastically from 898 in 2016 to 1,260 in 2017, with Canarsie and East New York logging the highest number of foreclosures within the borough.

While Manhattan didn’t see much of a year-of-year increase in homes scheduled for auction last year, it did bring forth the biggest residential foreclosure in the city’s history when the owner of a full-floor condo at One57 defaulted. A $22.5 million apartment at One57 also hit the auction block last year and was actually the first foreclosure to hit Billionaire’s Row.

Staten Island had the most dramatic year-over-year increase and was up a staggering 134 percent from 2016. There were 428 first-time foreclosures scheduled in 2017, compared with just 183 in 2016.

Posted in Foreclosures, Housing Bubble, NYC | 267 Comments

Pyrrhic victory?

From the Star Ledger:

N.J. Legislature clears way for $5B in Amazon tax breaks

The state Legislature on Monday embraced Gov. Chris Christie’s plan to offer Amazon $100,000 per job it creates should it build its sought-after second headquarters in Newark.

New Jersey’s offer, which could total $5 billion in tax breaks, rivals some of the largest incentive packages hatched by states looking to land big businesses, and would set a record within the state.

These deals are often controversial, with governments giving away their claim to badly needed tax dollars businesses would generate otherwise. But those same tax dollars and the ancillary economic benefits wouldn’t exist at all, supporters say, if the business located somewhere else.

Here, lawmakers said the rare opportunity to compete for such a major development — Amazon predicts it will hire 50,000 workers and invest $5 billion in its new headquarters — is too big an opportunity to risk coming up short.

“When a company like Amazon is looking to invest billions and create tens of thousands of jobs, we simply cannot afford to be overlooked,” state Sen. Samuel Thompson, R-Middlesex, a bill sponsor, said in a statement. “This legislation sends the message that New Jersey is a serious contender.”

Christie’s administration has said residents stand to gain some $9 billion in economic benefits if Amazon comes.

xperts say Newark isn’t likely to be high on Amazon’s list.

Moody’s Analytics’s list of Top 10 candidates led with Austin, Texas, followed by Atlanta, Philadelphia, Rochester, N.Y., New York/Jersey City, Miami, Portland, Ore., Boston and Salt Lake City.

Newark’s bid has been criticized as too generous by those who call corporate tax breaks a race to the bottom. Christie’s administration dramatically scaled up the state’s awards to recruit and retain businesses.

State Sen. Michael Doherty, R-Warren, voted against the Amazon package, saying “New Jersey shouldn’t be in the business of picking winners and losers, nor should we give special tax breaks to a company that’s driving our mom and pop shops out of business.”

Posted in Economics, New Development, New Jersey Real Estate, Politics | 88 Comments

Parting shot or return to ugly reality?

From Pensions and Investments:

Fiscal woes greeting N.J. governor

New Jersey’s Republican state treasurer sharply reduced the New Jersey Pension Fund’s assumed rate of return, producing a financial and political dilemma for Gov.-elect Phil Murphy, a Democrat, who will be sworn in later this month.

Last month, Treasurer Ford Scudder announced a cut in the assumed rate of return to 7% from 7.65% for the fiscal year that starts July 1, the second rate cut in 12 months. Last February, he reduced the rate to 7.65% from 7.9% for the current fiscal year.

The lower rate means cash-strapped municipalities and the state must raise more money to feed the severely underfunded New Jersey Pension Fund. Mr. Murphy will be hard-pressed to find politically palatable and sufficient additional revenue sources, even from a Democratic Party-controlled state Senate and Assembly.

As of July 1, the funding ratio ​ was 59.3%, according to the state Treasury Department. This statutory funding status includes the estimated present value of the state lottery. Last year, Gov. Chris Christie signed a law making the lottery an asset of the pension fund, using the proceeds to cover part of the state’s pension contribution.

Pension experts say the 7% assumed return figure represents a more realistic rate given forecasts for lower stock market gains and modest interest rate increases. They also said the size of the cuts within the time frame is unusual.

“It is significant, but we are getting realistic,” said Thomas Brendan Byrne Jr., chairman of the State Investment Council, which develops policies for the Treasury Department’s division of investment to manage the pension fund’s investments. The Trenton-based fund has $76.6 billion in assets.

“Timing aside, the direction is clear,” Mr. Byrne said. “Experts say stocks will return to single-digit gains and long-term interest rates will stay low. We can’t bet the ranch on stocks.”

The New Jersey Pension Fund produced a 13.07% return for the fiscal year ended June 30. The annualized return for the past three fiscal years was 5.25%; for five years, 8.75%; and for 10 years, 5.55%.

Some observers of New Jersey government said the rate reduction appears to have had some political overtones.

Marc Pfeiffer, assistant director, Bloustein Local Government Research Centers, Bloustein School of Planning and Public Policy, Rutgers University, New Brunswick, N.J., said the rate reduction can be seen “as a parting shot” by Mr. Christie toward his successor.

Posted in Economics, New Jersey Real Estate, Politics, Property Taxes | 109 Comments

Income inequality in NJ

From the Star Ledger:

See how your town scores on income inequality

There are multi-million dollar McMansions and blue-collar families just trying to make ends meet. Across New Jersey, the gap between the rich and the poor continues to get wider.

But how are things changing in your town?

The Census calculates income inequality using a measure called the Gini index, which assigns a value between 0, which would mean complete equality, and 1. The closer a score is to 1, the more wealth is concentrated among fewer people and the bigger the income inequality.

As a state, New Jersey boasts a score of 0.4782. That’s slightly higher than the last five-year period, 2007 to 2011, measured by the Census, but lower than the national average of 0.4804 over the last 10 years.

Posted in Demographics, Economics, New Jersey Real Estate | 64 Comments

Snow Day Jobs Day!

From Bloomberg:

U.S. Added Fewer Jobs Than Expected in December

U.S. payroll gains slowed by more than forecast in December, wages picked up slightly and the jobless rate held at the lowest level since 2000, adding to signs of a full-employment economy.

Employers added 148,000 workers, compared with the 190,000 median estimate of economists surveyed by Bloomberg, held back by a drop in retail positions, a Labor Department report showed Friday. The jobless rate was at 4.1 percent for a third month, while average hourly earnings increased by 2.5 percent from a year earlier, after a 2.4 percent gain in November that was revised downward.

“It’s a little soft across the board but overall, when you’re this close to full employment, I think it’s reasonable to see some slowdown in job gains,” said Jeremy Schwartz, a U.S. economist at Credit Suisse in New York. “This year we should probably expect to see some slowdowns in job gains — it’s just harder to add jobs when there’s a smaller pool to choose from.”

“This is a benign slowdown,” Schwartz said. “The Fed would probably be happy to see this slowdown.”

The breakdown of December data across industries showed solid gains of 30,000 in construction and 25,000 in manufacturing. Retailers cut 20,300 positions during the height of the holiday-shopping season, bringing total gains among service providers to 91,000, down from 176,000 in November.

Revisions to prior reports subtracted a total of 9,000 jobs from payrolls in the previous two months, according to the report. November’s reading was revised upward to 252,000 from 228,000.

Posted in Economics, Employment, National Real Estate | 182 Comments