New Jersey Real Estate Market Slowdown

Yesterday I heard an interview regarding the New Jersey real estate market. The real estate market is in the midst of an "adjustment," and we are seeing "more homes for sale than we have in the last several years." Both, of course, are fact. The slowdown was attributed to the increased mortgage rates, and the availability of more choices.

Perhaps my perspective is different because my memory of history is better, because I realize that there is a cycle to the business or because I listen to what people say. My previous experience of the real estate slowdown in the 1980s had been accompanied by mortgage interest rates in the 17 and 18 percent range. This rate almost made people stop and stutter, and homes still sold.

The years of steady growth and often double-digit appreciation could not continue indefinitely.

And what do people say? Doing my own exit polls at "open houses" in the Princeton and Hopewell area gives me a much different view of the buyer standoff. The cost of a home is negotiable, the cost of money is adjustable, but property taxes are the dollar signs that are making the buyer cringe. When buyers tally property taxes with increasing energy/maintenance costs (gas, electric, water, sewer, garbage, association fees, etc.) the total is unacceptable.

There is no doubt that the boom is over, but it's not due to mortgage rates. Blame the inflated prices, greater competition, high taxes, and increasing energy costs. Faced with a new Governor who is asking New Jersey Legislators to increase the State sales tax, tax additional categories, and tax services provided by attorneys, accountants, realtors, and others will not help matters.

Increasingly, residents in New Jersey and across the nation are looking for areas with less taxes and more affordable homes. These towns are and will continue to experience growth. We must ask, how long before they too must raise taxes to better the schools, increase the fire department, hire more police . . . . . . . . . . provide all the services a growing community demands.

Each year the National Association of Home Builders compiles the Housing Opportunity Index,
which calculates the percentage of the population that can afford the areas median home (28% of total household income).

• Rockford, Illinois $ 99,000 89.4%
• Kokomo, Indiana 99,000 88.4%
• Springfield, Illinois 100,000 88.3%
• Syracuse, New York 80,000 88.2%
• Binghamton, New York 72,600 85.5%
• Elkhard/Goshen, Indiana 117,000 85.5%
• Wilmington/Newark, Delaware, Maryland 89,000 85.5%
• Dayton/Springfield, Ohio 106,000 85.3%
• Vineland/Millville, Bridgeton, New Jersey 89,000 85.2%
• Lima, Ohio 97,000 85.8%