Mortgage rates going up

Posted on February 3, 2018 by grim

From CNBC:

Mortgage rates jump even higher after positive jobs report

The good news is Americans are making more money – because they’re going to need it, especially people thinking about buying a home.

While the just-released January employment report showed job growth that topped expectations, to go along with a nice gain in wages, it also sent bond yields soaring. Mortgage rates loosely follow the yield of the 10-year Treasury. Bond yields have been rising for weeks on strong economic data domestically as well as changes in international monetary policy, but this move was the most dramatic.

The average rate on the 30-year fixed-rate mortgage is at its highest level in four years, about 4.5 percent, and for some lenders, it is even higher.

“This isn’t a knee-jerk reaction to some headline event. It’s a broad-based, deliberate move,” said Matthew Graham, chief operating officer at Mortgage News Daily. “A quick return to December’s levels is unlikely, even though we may get some relief on the way higher. How much higher is hard to say, but at a certain point, high rates are self-correcting. We’re probably at least half-way to that magic line in the sand.”

Boiling the change so far down to a monthly payment, if a borrower took out a $200,000 mortgage in the middle of December, when the average rate was around 3.875 percent, they would have had a monthly payment of $940 (that’s not including taxes and insurance). If they were to take out that same loan today, the monthly payment would be $1,013.

While $73 a month may not sound like a lot to some, this is just a best-case scenario. Depending on your creditworthiness, it could be a bigger difference. For some borrowers on the margins, they may no longer even qualify for the loan. Lenders today are required to make sure the borrower has the ability to repay a loan, based on income and other expenses. If the monthly payment is even slightly higher, some borrowers may not make that ability-to-repay standard.

For those out house hunting already, the higher rates will only add to the weakening affordability in the market. Home prices continue to move higher at three times the rate of wage growth. In some large metropolitan markets, annual price gains are in the double digits.

Posted in Economics, Employment, Mortgages, National Real Estate | 122 Comments

January MarketNews

Posted on February 1, 2018 by grim

From Otteau Group:

This topic has caused quite a stir, with some forecasters predicting ‘Armageddon’ and that the ‘The Sky is Falling’! Contrary to these claims, our analysis indicates that most existing homeowners and homebuyers in New Jersey and New York will realize a net tax savings under the new tax code. Even more surprising is that those who will be adversely affected consist primarily of high-income households in the luxury home market.

As with all major policy changes there will be winners and losers, but the big picture is that the housing market will remain viable in the years ahead. The hysteria that has ensued due to misinformation is however likely to cause home sales to be sluggish during the early part of 2018 resulting in a delayed Spring-Surge. Because of this, Right Pricing! marketing strategies are more important than ever in the coming months to offset this adjustment as normal marketing times lengthen and unsold inventory increases. Looking ahead, while home sales are expected to regain their footing by late Spring once the facts about the tax reform become known, rising mortgage interest rates will serve to limit the number of home sales in 2018. All of this is likely to result in fewer home sales in 2018 following last year’s record breaking performance.

Over the longer term, the changes to the tax code will have some adverse effects on local housing markets by weakening the financial incentives of home ownership and reinforcing out-migration patterns for people and businesses from high tax states like New Jersey and New York. But these are largely self-induced problems rooted in policy that will take years to address. In the short term, the local housing markets will remain viable and home prices are expected to continue to rise.
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After two consecutive months of increases, home purchase contracts in New Jersey were basically unchanged in December. This is compared to a 4% increase one year ago in December of 2016. Despite a stagnant end to the year, purchase contracts in New Jersey hit a 12-year high in 2017, with 115,237 contracts recorded. This reflects a 5% increase compared to the 109,471 home sales that occurred during 2016. It is anticipated, however, that the hysteria that has ensued due to misinformation on the Tax Reform is expected to cause sluggish home sales in the early part of 2018 resulting in a delayed Spring-Surge. Looking ahead, home sales are expected to regain their footing by mid-year once the facts become known, but it is also likely that mortgage interest rates will rise faster in response to continued economic growth. All of this is likely to result in fewer home sales in 2018 following last year’s record breaking performance.

While the number of home sales has increased across all price ranges in 2017, the largest gain occurred for luxury homes priced over $2.5-Million, rising by 11%, while homes priced under $600,000 experienced the smallest increases. It’s important to note that home sales in excess of $2.5-Million are increasing for the first time in more than a decade. The improvement has however been primarily concentrated in towns with direct rail service to Manhattan.

Shifting to the supply side of the equation, the supply of homes being offered for sale remains constricted, which is limiting choices for home buyers. The number of homes being offered for sale today in New Jersey has fallen to its lowest point of the past 12 years, having declined by 5,000 over the past year. This is also about 40,000 (-55%) fewer homes on the market compared to the cyclical high in 2011. Today’s unsold inventory equates to 5.0 months of sales (non-seasonally adjusted), which is lower than one year ago, when it was 5.8 months.

Currently, 17 out of New Jersey’s 21 counties have less than 8.0 months of supply, which is a balance point for home prices. Essex County has the strongest market conditions in the state with 3.0 months of supply, followed by Middlesex, Hudson, Somerset, Bergen, Passaic, Morris and Union Counties, which all have 4.5 months of supply or less. The counties with the largest amount of unsold inventory (8 months or greater) are concentrated in the southern portion of the state including Cumberland (9.3), Atlantic (9.3), Salem (10.1) and Cape May (12).
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Sales of residential real estate in New Jersey rose to $38.3-Billion in 2017, which is a 10%increase from the prior year. Also noteworthy is that this was the highest residential transaction volume since 2005. Single family dwelling transactions accounted for the largest share in 2017 with $29.5-Billion in sales or 77% of all transactions, followed by Condo/Townhouse properties, which accounted for 19%, and Age-Restricted dwellings, which accounted for only 4%.

Posted in Demographics, Economics, New Jersey Real Estate | 192 Comments

Case Shiller up 6.4% yoy

Posted on January 31, 2018 by grim

From HousingWire:

Case-Shiller: Home prices rising three times the rate of inflation

The S&P CoreLogic Case-Shiller U.S. National Home Prices NSA Index, which covers all nine U.S. census divisions, reported an increase of 6.2% in November. This is up from the annual increase of 6.1% the previous month.

The 10-City Composite held an annual increase of 6.1%, up from 5.9% the previous month. The 20-City Composite increased 6.4% year-over-year, up from the annual increase of 6.3% in October.

“Home prices continue to rise three times faster than the rate of inflation,” said David Blitzer, S&P Dow Jones Indices managing director and chairman of the index committee. “The S&P CoreLogic Case-Shiller National Index year-over-year increases have been 5% or more for 16 months; the 20-City index has climbed at this pace for 28 months.”
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Some cities saw higher increases than others. Seattle, Las Vegas and San Francisco reported the highest annual gains among the nation’s top 20 cities with increases of 12.7%, 10.6% and 9.1% respectively.

And one factor stands above the rest as being the main factor to the continually rising home prices.

“Given slow population and income growth since the financial crisis, demand is not the primary factor in rising home prices,” Blitzer said. “Construction costs, as measured by national income and product accounts, recovered after the financial crisis, increasing between 2% and 4% annually, but do not explain all of the home price gains.”

Posted in Economics, Housing Bubble, Housing Recovery, National Real Estate | 79 Comments

Yeah yeah, be priced out forever, we’ve heard that before.

Posted on January 30, 2018 by grim

From Forbes:

2018’s Housing Market Looks Good Unless You’re A First-Time Millennial Buyer

The nation’s housing market for 2018 continues to look good, according to two recently released reports. But first-time millennial buyers will continue to struggle with affordability, especially in high-priced areas like Los Angeles, San Francisco, Boston, New York and Washington DC.

Listen to Ralph G. DeFranco, Ph.D, global chief economist, Mortgage Services, Arch Capital Services Inc.: “With interest rates and home prices both on the rise, first-time homebuyers – largely millennials – may want to consider making the jump from renting to owning sooner rather than late.”

DeFranco further said: “Our research shows few signs of a housing bubble because the typical warning signs aren’t present. Overall, the shortage of housing paired with a robust job market should keep the housing market strong and growing, short of an unexpected event and despite the contrary pressures that may be created by the tax bill.”
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The HaMMRSM also makes market predictions to 2020. Among them: Home prices will continue to increase around the country in most markets. Look to annual increases of 2-6%, with most housing markets currently at low risk for a downturn.

Mortgage rates will rise, causing people to move less often. According to the report, “rising rates give existing borrowers with fixed-rate mortgages a financial incentive to stay put.” In addition, “homeowners will have more incentive to seek second liens or home improvement loans rather than move to a new home or refinance.” Makes sense since a new mortgage would likely be a higher rate cutting into the key affordability factor.

Posted in Demographics, Economics, Housing Bubble, Housing Recovery, National Real Estate | 113 Comments

So what’s in store for NJ?

Posted on January 29, 2018 by grim

From the APP:

Real estate forecast: Partly sunny, with mix of clouds

How would you characterize the health of New Jersey’s residential housing market, from the perspective of homeowners and potential home buyers and sellers?

In a word, uncertain. The basic economic measures are reasonably good. The job market is growing, albeit slower than some would like, but growing. The lower inventory of homes for sale remains low. This should be good for sellers, but the uncertain impact of the new tax laws may give potential buyers pause and thus reduce demand. There is much noise currently about the negative impact of the new tax laws on housing prices that may lead buyers to offer lower prices to sellers. Sellers may be reluctant to lower their asking prices until there is more certainty on the tax law impact. I believe that strong market towns will continue to be strong as the community characteristics, school system reputation, proximity to transit and other features will offset the tax law impacts. On the other hand, towns that do not have those advantages may suffer greater reductions in home prices as there is little to offset the tax law impacts.

What kinds of housing are in greatest demand in New Jersey, and does that match what is being built?

The greatest demand is for higher-density townhomes, condominiums and rentals near mass transit. That housing is being built in those towns that have undergone a redevelopment analysis and revised their zoning to allow it. In those towns that have not undertaken to amend their master plans and zoning to attract the younger generations, that type of housing is not being built. The belief that higher-density housing is bad for a suburban town because it brings in too many schoolchildren persists despite a decline in pupil enrollment in many towns. There are a sizeable number of commercial and other non-residential structures that have outlived their usefulness but are in desirable locations and could be converted into residential uses. All towns should take a look at their inventory and take steps to allow the conversion of these buildings to residential.

Average home values in most municipalities in New Jersey remain well below what they were more than a decade ago. Do you see that changing any time soon?

Average is a dangerous term here. In those municipalities with the advantages of market-favored locations, good school system reputations, proximity to mass transit, home values have largely recovered or surpassed the pre-recession values. Other towns not fortunate to have those advantages will continue to struggle. The new tax laws will only make the home value recovery more difficult. The type of home also has a large impact on the value recovery analysis. Older homes that have not been upgraded will continue to decline in value. Location is still the major factor in value analysis. Look at the steep increase in home values in some older towns in close proximity to transit. During the latter part of the 20th century, most new development was in the outer suburbs. Now, the more desirable locations and most new housing is in the municipalities close to mass transit. We have also benefited from a low interest rate for many years. Interest rates are likely to rise in the next two years, which will likely not help values. And, by the way, those pre-recession home values were not sustainable and the frothiness was the result of speculators and horrible lending practices.
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What kinds of policies would you like to see Gov. Phil Murphy implement that would benefit homebuyers and developers?

I think the allowance of full deduction of property taxes on state income tax returns would be of some help. In addition, a full review of the entire state tax structure should be undertaken. Taking a holistic view of all revenues and expenses at all levels of government has not been done since the 1980s. That is long overdue. A review of the overall land use process from the Municipal Land Use Law through the county and state administrative policies and regulations would also be helpful in finding ways to shorten the regulatory process and align with market needs without sacrificing environmental safeguards. A comprehensive plan to better coordinate the needs of businesses and residents is needed. New Jersey is in competition with the rest of the country for jobs and talent and cannot afford to allow outdated laws and regulations at all levels of government to hurt us in that competition. The Murphy administration’s support for housing for all income levels will be very important in allowing the state to compete favorably. Nimble and flexible are not terms normally associated with government. But the state needs to be more nimble and flexible to compete.

Posted in Demographics, Economics, Employment, New Jersey Real Estate, Property Taxes | 93 Comments

Taxing to fix the tax problem

Posted on January 26, 2018 by grim

From City Journal:

New Jersey’s Tired Tax Tricks

“New Jersey needs tax reform to guarantee relief from soaring taxes.” That was the plea Brendan Byrne, a Democratic former governor of the Garden State, made 43 years ago to a group of mayors. Byrne, who died on January 4 at 93, has been widely mourned as a man who could work across the aisle to get things done. A prosecutor and World War II bomber-navigator, Byrne will be remembered by some for his life of public service, but for many New Jersey residents his legacy is evident whenever they look at their tax bills.

In 1975, with the state facing a budget shortfall, Byrne told mayors that the state would need a “large revenue package” to close a looming $413 million budget gap and raise the $300 million required to meet a state Supreme Court order for refinancing New Jersey’s public schools. The heart of the package would be a new statewide income tax, which went into permanent effect in 1977. Byrne promised that the additional money would help relieve the high property-tax burden on New Jersey’s citizens and reduce the disparity between rich and poor school districts.

Four decades later, the plan has failed on both counts. New Jersey’s property taxes have continued to climb at alarming rates, and the gap in quality between rich and poor school districts is, if anything, worse.
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Two useful lessons emerge from this experiment. First, politicians and special interests don’t see new streams of tax revenue as a means to replace or eliminate an existing stream, but rather as a way of adding to the public coffers. (For those who entertain fantasies of a value-added tax replacing the federal income tax, take heed.) New Jersey’s income tax started with a top rate of about 2.5 percent; it’s now around 9 percent. Even with such an increase, the income tax has never had much of an effect on the property-tax burden. The Census Bureau reports that the average property-tax bill in New Jersey was $4,820 in 1992; by 2014 (the most recent year for which data are available), it had grown to $12,960, among the highest in the nation.
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The second lesson is that education spending is not correlated with educational quality. When politicians demand more money for education funding—usually at the behest of teachers’ unions—schools are not likely to improve. Take Newark, which spent more than $22,000 per pupil in 2016. For all this largesse, the percentage of third-graders who met or exceeded expectations on state exams that year was less than 28 percent in math and 24 percent in reading. In nearby Maplewood, meanwhile, where the school district spends only $18,351 per pupil, more than 70 percent of third-graders are meeting or exceeding expectations in reading and more than 60 percent in math.

Posted in Economics, New Jersey Real Estate, Politics, Property Taxes | 157 Comments

Wrong way people

Posted on January 25, 2018 by grim

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

Posted on January 24, 2018 by grim

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.
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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.”
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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 | 88 Comments

NJ about to become more affordable

Posted on January 23, 2018 by grim

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 | 83 Comments

Hackensack is hot?

Posted on January 22, 2018 by grim

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…

Posted on January 19, 2018 by grim

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.
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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 | 156 Comments

So what’s this all mean for fifteen?

Posted on January 18, 2018 by grim

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 | 185 Comments

The death spiral continues

Posted on January 17, 2018 by grim

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

Posted on January 16, 2018 by grim

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

Posted on January 15, 2018 by grim

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