NJ Politics Digest: More Bad News for the State’s Homeowners

The home you bought 10 years ago might actually be worth less today.

New Jersey home prices have not recovered from the Great Recession. Glenn Hunt/Getty Images

New Jersey is already notorious for having some of the highest property taxes and overall tax burden in the nation, and as Gov. Phil Murphy seeks to increase the burden there is even more bad news for the state’s beleaguered homeowners—the values of their properties are suffering.

An analysis by radio station NJ101.5 indicates the average price of homes sold in the state last year was only one percent more than the average in 2007. Factor in for inflation, and homeowners were faced with what amounts to a 14 percent drop in value.

The reason for the price stagnation is simple, according to experts cited in the radio station report—the high cost of living in New Jersey and its high tax rate make the state less attractive to homebuyers.

While in the rest of the United States the rate of annual appreciation is about seven percent, New Jersey’s rate remains about half that, according to the report.

In 2017 New Jersey led the nation in the number of foreclosed homes, and as those homes come onto the market for resale it will serve to dampen upward pressure on prices, according to the report.

While Gov. Phil Murphy campaigned on a pledge to only raise taxes on millionaires, his budget plan includes raising the state sales tax as well as imposing new taxes on internet purchases and ride- and house-sharing services—broad-based taxes that will impact residents of every income level.

Murphy contends residents won’t mind additions to their tax burden if they feel they are getting their money’s worth from state government.

There is some good news for some homeowners. The price stagnation has meant that many people who purchased their homes 10 or more years ago don’t have enough equity to allow them to sell. Combine this with an improving economy and there is the possibility of a shortage of homes on the market, which could help boost prices, according to the report.

Quote of the Day: “This has less to do with a fundamental shift where households no longer desire to own their homes, and more to do with the subpar economic performance in New Jersey because of it being a very high-cost and high-tax state.” — Jeffrey Otteau, president of Otteau Valuation Group in Matawan, on the reason home prices are dropping, when adjusted for inflation, throughout New Jersey.

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