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Re: 2017 Reval ~ Property Inspections
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At 1.62% I am looking at a significant cut in my taxes, even after adjusting my appraised value up significantly. For me this will be a savings of $10k to $15k a year (multiple properties).

That will cover most of my son's tuition, once he is old enough to attend school.


Have you looked at any comps recently? Things have gone through the roof, I'm not at all certain that I'll see reductions in my Heights properties. Zillow says my 3U paying $8k is worth >700k, 1.6% means $11,200!!!

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At 1.62% I am looking at a significant cut in my taxes, even after adjusting my appraised value up significantly. For me this will be a savings of $10k to $15k a year (multiple properties).

That will cover most of my son's tuition, once he is old enough to attend school.

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Disagree on private schools. There is a whole culture to being a part of the A tier private schools - Dalton, Trinity, Brearley, etc. For those in that world price is not the consideration, the snob factor and community with other richie parents are. The JC area and Hoboken private schools aren't in the same universe. Sure they are perfectly decent and send kids to Ivies. I don't think too many people are making moving decisions around Stevens or St. Peters.

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I do not expect a full-blown crash. I do think there will be some churn, some instability, and probably a drop in values as some people feel forced to dump properties they are suddenly not able to afford. But, Jersey City is very enticing for many people, and not just financial refugees from NYC. But, there are a few factors that give me pause, and we will have to wait to see what happens. An elimination or capping of mortgage or SALT deduction, plus the uncertain state of school / BOE taxes (you can be certain that if we end up with a 1.6% tax rate, Trenton and many municipalities will be pushing for JC to take on a larger share of the local BOE budget) and there is the fact that we are in a 10-year period since the last correction/recession.


There's a whole lot of moving parts in this machine, and many of them have the potential to affect the market. As for the DT school situation, I hope the overflow is temporary and more schools are coming, didn't some of the abatement deals include school space? I think the district was irresponsible not leasing the Resurrection School on 7th when the Diocese closed it, they must have seen this coming.

Posted on: Yesterday 23:58
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As for "who cares about kids"... precisely the people that you highlight as not caring about kids (those childless by choice, or perhaps single) are precisely the kind of people who often find it objectionable to have to pay such high taxes when getting nothing in return! Often times, the people with kids choose to move further out into the burbs because, well, if you are going to pay 25 - 30 K annually in taxes, you "might as well get something out of it".


But the 1.6% property tax rate is less than the burbs. Why would someone without kids move to the burbs only to pay higher school taxes? If the burbs had a lower property tax rate, I could see where you have a point but the reverse is true.

I have no doubt there will be some people priced out of downtown Jersey City, but I also have no doubt there will be many more people moving into downtown Jersey City (from Manhattan and Brooklyn). I don't see a market crash because of the reval.



I do not expect a full-blown crash. I do think there will be some churn, some instability, and probably a drop in values as some people feel forced to dump properties they are suddenly not able to afford. But, Jersey City is very enticing for many people, and not just financial refugees from NYC. But, there are a few factors that give me pause, and we will have to wait to see what happens. An elimination or capping of mortgage or SALT deduction, plus the uncertain state of school / BOE taxes (you can be certain that if we end up with a 1.6% tax rate, Trenton and many municipalities will be pushing for JC to take on a larger share of the local BOE budget) and there is the fact that we are in a 10-year period since the last correction/recession. Ideally, none of those three things will come to pass, but if one or two or all three come to be, well... all bets are off. The 2007 situation was bad (assuredly, DTJC fared better than the rest of JC, and recovered quickly) so a combination of all these factors could be brutal. But, long term, JC is likely to have a very bright future. Enough change has taken place and I think the city will be fine.


Agreed on federal capping of the SALT deduction and Trenton pushing for JC to take on larger share of BOE budget. To me, these are much bigger stories than the reval.

I also accept that the 1.62% tax rate produced by the reval and possible changes to the school funding aid formula, are indirectly related, as stateaidguy predicted.

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As for "who cares about kids"... precisely the people that you highlight as not caring about kids (those childless by choice, or perhaps single) are precisely the kind of people who often find it objectionable to have to pay such high taxes when getting nothing in return! Often times, the people with kids choose to move further out into the burbs because, well, if you are going to pay 25 - 30 K annually in taxes, you "might as well get something out of it".


But the 1.6% property tax rate is less than the burbs. Why would someone without kids move to the burbs only to pay higher school taxes? If the burbs had a lower property tax rate, I could see where you have a point but the reverse is true.

I have no doubt there will be some people priced out of downtown Jersey City, but I also have no doubt there will be many more people moving into downtown Jersey City (from Manhattan and Brooklyn). I don't see a market crash because of the reval.



I do not expect a full-blown crash. I do think there will be some churn, some instability, and probably a drop in values as some people feel forced to dump properties they are suddenly not able to afford. But, Jersey City is very enticing for many people, and not just financial refugees from NYC. But, there are a few factors that give me pause, and we will have to wait to see what happens. An elimination or capping of mortgage or SALT deduction, plus the uncertain state of school / BOE taxes (you can be certain that if we end up with a 1.6% tax rate, Trenton and many municipalities will be pushing for JC to take on a larger share of the local BOE budget) and there is the fact that we are in a 10-year period since the last correction/recession. Ideally, none of those three things will come to pass, but if one or two or all three come to be, well... all bets are off. The 2007 situation was bad (assuredly, DTJC fared better than the rest of JC, and recovered quickly) so a combination of all these factors could be brutal. But, long term, JC is likely to have a very bright future. Enough change has taken place and I think the city will be fine.

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As for "who cares about kids"... precisely the people that you highlight as not caring about kids (those childless by choice, or perhaps single) are precisely the kind of people who often find it objectionable to have to pay such high taxes when getting nothing in return! Often times, the people with kids choose to move further out into the burbs because, well, if you are going to pay 25 - 30 K annually in taxes, you "might as well get something out of it".


But the 1.6% property tax rate is less than the burbs. Why would someone without kids move to the burbs only to pay higher school taxes? If the burbs had a lower property tax rate, I could see where you have a point but the reverse is true.

I have no doubt there will be some people priced out of downtown Jersey City, but I also have no doubt there will be many more people moving into downtown Jersey City (from Manhattan and Brooklyn). I don't see a market crash because of the reval.


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Also, how could anyone whos taxes arent increasing / substantially dropping (greenville & west side) complain that downtown isnt paying enough ? Seems like everyone wants a free ride these days


Again with this? You obviously don't get it. This new (estimated) numbers show what most have been claiming for years now: that DTJC had been underpaying their taxes to the detriment of poorer residents in areas that have seen little or no appreciation.


Yes I realize that genius - and reductions in taxes for Greenville \ Westside are totally warranted, but how is 1.6% multiplier for downtown not enough tho ? Hence free rides


Like I said, you just don't get it. The ~1.6% rate is what EVERYONE will be paying once the reval is concluded. People have been complaining until now because the effective rate being paid my many/most of DTJC was often 1% or lower, while other areas, like Greenville, were paying closer to 5-6%, which is why they are seeing such a substantial drop in their average payment.

It all in the assessment the rate will be $16 per $1000 of assessed value.

Posted on: Yesterday 18:17
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Dolmoti is spot on. Tight inventory and high demand will soften the blow to DTJC RE in the short term. Longer term it's tough to say. 1.6% is less than I was expecting so frankly it could have been worse for DTJC.

The real issue is will DTJC buyers pay suburb level taxes for lousy city services (iffy schools). Trump's tax plan ain't making the case any easier. Taxes are sunk costs, owners aren't building equity with those payments.

My take is DTJC is overvalued as are stock markets and RE in general. I think if the other bubbles deflate DTJC will take it a bit harder than average. As always tough to know when or if other bubbles pop...


No one cares about schools. You're either living the life with no children or sending your kids to private schools if you can afford a $7,000 a month mortgage payment.

Downtown prices will continue to appreciate because they're still a bargain compared to New York City prices.


I am not so sure I agree with this take. Take an upper middle class family, paying 5K for monthly mortgage, now add 2K for taxes, and if they have a kid that's another 2K for private school. That's 9K / month. Or, you can go to BK, or even Manhattan, and be able to get an 8K mortgage, with almost negligible property taxes (definitely below 1K for that mortgage) and free schooling and you end up spending the same or less in NYC, with better city services at your disposal. At some point, the combination of crazy property taxes + shitty city services + private schools starts to bridge the gap in real estate costs.


What's missing from your calculation is the NYC income tax that all NYC residents must pay and that can be easily avoided by living in Jersey. And who cares about kids? The folks moving here could be on permanent birth control or same sex and quality of schools have exactly zero influence on their decision to buy.

The beauty of this discussion is we will find out relatively soon who is right and I hope every posts is bumped a year from now to see who was right and who got it painfully wrong.

In my opinion, prices should have plummeted already if prices were expected to fall in the near future.



Agreed about the NYC personal income tax being a bit of an equalizer. But, again, for someone making 200K, the ~7K "penalty" may be easier to swallow over a 24K property tax bill.

As for "who cares about kids"... precisely the people that you highlight as not caring about kids (those childless by choice, or perhaps single) are precisely the kind of people who often find it objectionable to have to pay such high taxes when getting nothing in return! Often times, the people with kids choose to move further out into the burbs because, well, if you are going to pay 25 - 30 K annually in taxes, you "might as well get something out of it".

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At some point, the combination of crazy property taxes + shitty city services + private schools starts to bridge the gap in real estate costs.


Not really the focus of this thread, but I think you overstate the school situation. Especially DT, the k-8s are not bad to quite good. Add to that the charters, magnet middle schools and McNair, if your kid is on the ball they can get a pretty good education.

We know very few children of college educated parents who didn't get into one of the magnet HS, even if it's County Prep, considered the least of them. A grade school friend of my son's who didn't get into McNair or HT and went there is now a Freshman in physics at Carnegie-Mellon. Not too shabby.


You should check out some of the NextDoor threads about schools, and the over capacity problem. There are many parents shitting bricks after getting notices that their kids will be getting bussed to another school, particularly when the other school is one they consider to be in the ghetto or inferior (their words, not mine) so I don't think that factor can be so easily dismissed. Right, or wrong, perception is a problem, and for parents unable to get their kids into one of the better K-8 schools due to capacity problems, they will then have to weigh private school, which is a pricey proposition in JC (last I looked, most were about 2K /month).

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Not many private school options in this area and none of them compare well to NYC or BK private schools.


Umm, you don't know what you're talking about. Hudson School in Hoboken is excellent and a bargain compared to Manhattan schools. Kids from there go to top colleges. St Peters has boys spending an hour on the train coming there from the burbs.

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Not many private school options in this area and none of them compare well to NYC or BK private schools. JC is still only an option for the bargain hunters/adventurers. Snobs will be in NYC or BK.

JC will always be a second derivative of NYC. So vacuum analysis is correct. I still think the all in costs post tax changes will be an anchor for DTJC...


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At some point, the combination of crazy property taxes + shitty city services + private schools starts to bridge the gap in real estate costs.


Not really the focus of this thread, but I think you overstate the school situation. Especially DT, the k-8s are not bad to quite good. Add to that the charters, magnet middle schools and McNair, if your kid is on the ball they can get a pretty good education.

We know very few children of college educated parents who didn't get into one of the magnet HS, even if it's County Prep, considered the least of them. A grade school friend of my son's who didn't get into McNair or HT and went there is now a Freshman in physics at Carnegie-Mellon. Not too shabby.

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Dolmoti is spot on. Tight inventory and high demand will soften the blow to DTJC RE in the short term. Longer term it's tough to say. 1.6% is less than I was expecting so frankly it could have been worse for DTJC.

The real issue is will DTJC buyers pay suburb level taxes for lousy city services (iffy schools). Trump's tax plan ain't making the case any easier. Taxes are sunk costs, owners aren't building equity with those payments.

My take is DTJC is overvalued as are stock markets and RE in general. I think if the other bubbles deflate DTJC will take it a bit harder than average. As always tough to know when or if other bubbles pop...


No one cares about schools. You're either living the life with no children or sending your kids to private schools if you can afford a $7,000 a month mortgage payment.

Downtown prices will continue to appreciate because they're still a bargain compared to New York City prices.


I am not so sure I agree with this take. Take an upper middle class family, paying 5K for monthly mortgage, now add 2K for taxes, and if they have a kid that's another 2K for private school. That's 9K / month. Or, you can go to BK, or even Manhattan, and be able to get an 8K mortgage, with almost negligible property taxes (definitely below 1K for that mortgage) and free schooling and you end up spending the same or less in NYC, with better city services at your disposal. At some point, the combination of crazy property taxes + shitty city services + private schools starts to bridge the gap in real estate costs.


What's missing from your calculation is the NYC income tax that all NYC residents must pay and that can be easily avoided by living in Jersey. And who cares about kids? The folks moving here could be on permanent birth control or same sex and quality of schools have exactly zero influence on their decision to buy.

The beauty of this discussion is we will find out relatively soon who is right and I hope every posts is bumped a year from now to see who was right and who got it painfully wrong.

In my opinion, prices should have plummeted already if prices were expected to fall in the near future.


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Dolmoti is spot on. Tight inventory and high demand will soften the blow to DTJC RE in the short term. Longer term it's tough to say. 1.6% is less than I was expecting so frankly it could have been worse for DTJC.

The real issue is will DTJC buyers pay suburb level taxes for lousy city services (iffy schools). Trump's tax plan ain't making the case any easier. Taxes are sunk costs, owners aren't building equity with those payments.

My take is DTJC is overvalued as are stock markets and RE in general. I think if the other bubbles deflate DTJC will take it a bit harder than average. As always tough to know when or if other bubbles pop...


No one cares about schools. You're either living the life with no children or sending your kids to private schools if you can afford a $7,000 a month mortgage payment.

Downtown prices will continue to appreciate because they're still a bargain compared to New York City prices.


I am not so sure I agree with this take. Take an upper middle class family, paying 5K for monthly mortgage, now add 2K for taxes, and if they have a kid that's another 2K for private school. That's 9K / month. Or, you can go to BK, or even Manhattan, and be able to get an 8K mortgage, with almost negligible property taxes (definitely below 1K for that mortgage) and free schooling and you end up spending the same or less in NYC, with better city services at your disposal. At some point, the combination of crazy property taxes + shitty city services + private schools starts to bridge the gap in real estate costs.

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Also, how could anyone whos taxes arent increasing / substantially dropping (greenville & west side) complain that downtown isnt paying enough ? Seems like everyone wants a free ride these days


Again with this? You obviously don't get it. This new (estimated) numbers show what most have been claiming for years now: that DTJC had been underpaying their taxes to the detriment of poorer residents in areas that have seen little or no appreciation.


Yes I realize that genius - and reductions in taxes for Greenville \ Westside are totally warranted, but how is 1.6% multiplier for downtown not enough tho ? Hence free rides


Like I said, you just don't get it. The ~1.6% rate is what EVERYONE will be paying once the reval is concluded. People have been complaining until now because the effective rate being paid my many/most of DTJC was often 1% or lower, while other areas, like Greenville, were paying closer to 5-6%, which is why they are seeing such a substantial drop in their average payment.

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Jersey City's real estate valuations can't be viewed in a vacuum...


Nailed it.

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So you've got softening demand plus increased supply...seems to be a good predictor of lower average RE prices through 2018.

Sure. But... so what?

DTJC prices have been on a tear for years. A 10-20% drop in prices will hurt, but it's not like thousands of DTJC sellers will be underwater.

The increase in supply will be short-lived, probably most of 2019. I for one doubt that supply will vastly outstrip demand in the short term, and definitely not in the long term. (There are currently 170 units for sale in 07302; let's see how that changes over the next 3 years....)

Oh, and DTCJ != All Of JC. Other neighborhoods, some of which are already gentrifying, should see reductions in their property taxes, which should mean a rise in demand and their home values.


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From a supply side - I'm assuming supply will not go down (i.e. they will not tear down any buildings) - if anything supply will increase as some people will not be willing or able to absorb such a dramatic increase in taxes, and will look to move to lower cost areas.


Your mistake here is that supply is largely dependent on people selling, and in a downmarket people are reluctant to sell. This is why there's so much stickiness in RE, it takes a while for the people who HAVE to sell to set new comps.

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Jersey City's real estate valuations can't be viewed in a vacuum. The strength of Manhattan (and Brooklyn) RE markets blows the crap out of all other federal, state and local variables.

Reval is irrelevant to them because it's still 2/3rd the cost.

Posted on: Yesterday 10:08
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I don't see a way that the increase in DTJC taxes in conjunction with the proposed changes to the federal tax laws will be offset by local market economics. The main reason that the RE market economics in DTJC have operated this way is because net expenses (principal + interest + taxes - tax shield savings) have made it attractive to purchase.

From a demand side, in 2018 you'll be paying significantly more out of pocket on a monthly basis due to the tax reval, and this pain will be magnified by also getting less $$ back at the end of the year from your tax return. This combined effect will have a marked downward effect on demand.

From a supply side - I'm assuming supply will not go down (i.e. they will not tear down any buildings) - if anything supply will increase as some people will not be willing or able to absorb such a dramatic increase in taxes, and will look to move to lower cost areas.

So you've got softening demand plus increased supply...seems to be a good predictor of lower average RE prices through 2018.


We shall see within 1 year if this prediction is correct. I have no doubt there will be several DTJC property owners that will be priced out of their homes but there will be twice as many Manhattan expats that will notice the bargains in Jersey City compared to similarly-sized homes in the city.

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I don't see a way that the increase in DTJC taxes in conjunction with the proposed changes to the federal tax laws will be offset by local market economics. The main reason that the RE market economics in DTJC have operated this way is because net expenses (principal + interest + taxes - tax shield savings) have made it attractive to purchase.

From a demand side, in 2018 you'll be paying significantly more out of pocket on a monthly basis due to the tax reval, and this pain will be magnified by also getting less $$ back at the end of the year from your tax return. This combined effect will have a marked downward effect on demand.

From a supply side - I'm assuming supply will not go down (i.e. they will not tear down any buildings) - if anything supply will increase as some people will not be willing or able to absorb such a dramatic increase in taxes, and will look to move to lower cost areas.

So you've got softening demand plus increased supply...seems to be a good predictor of lower average RE prices through 2018.

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Dolmoti is spot on. Tight inventory and high demand will soften the blow to DTJC RE in the short term. Longer term it's tough to say. 1.6% is less than I was expecting so frankly it could have been worse for DTJC.

The real issue is will DTJC buyers pay suburb level taxes for lousy city services (iffy schools). Trump's tax plan ain't making the case any easier. Taxes are sunk costs, owners aren't building equity with those payments.

My take is DTJC is overvalued as are stock markets and RE in general. I think if the other bubbles deflate DTJC will take it a bit harder than average. As always tough to know when or if other bubbles pop...


No one cares about schools. You're either living the life with no children or sending your kids to private schools if you can afford a $7,000 a month mortgage payment.

Downtown prices will continue to appreciate because they're still a bargain compared to New York City prices.

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Dolmoti is spot on. Tight inventory and high demand will soften the blow to DTJC RE in the short term. Longer term it's tough to say. 1.6% is less than I was expecting so frankly it could have been worse for DTJC.

The real issue is will DTJC buyers pay suburb level taxes for lousy city services (iffy schools). Trump's tax plan ain't making the case any easier. Taxes are sunk costs, owners aren't building equity with those payments.

My take is DTJC is overvalued as are stock markets and RE in general. I think if the other bubbles deflate DTJC will take it a bit harder than average. As always tough to know when or if other bubbles pop...

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Excellent analysis Dolomiti. The punchline is that if this had happened on schedule it would have been right at the beginning of the hottest part of this cycle and been absorbed easily. Now, this blow will fall at the same time as rising rates, federal tax issues, and a likely general RE market correction, if not a stock market burst and recession. Things are very bubbly on all fronts.

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thor800 wrote:
Yes I realize that genius - and reductions in taxes for Greenville \ Westside are totally warranted, but how is 1.6% multiplier for downtown not enough tho ? Hence free rides


How do you still not understand how this works? That 1.6 is the TAX RATE applied citywide, the properties will have already had their assessments corrected by the reval. DT will have risen more than elsewhere, resulting in DT getting a tax hike.

Posted on: 2017/12/14 22:07
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Re: 2017 Reval ~ Property Inspections
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bodhipooh wrote:
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thor800 wrote:

Also, how could anyone whos taxes arent increasing / substantially dropping (greenville & west side) complain that downtown isnt paying enough ? Seems like everyone wants a free ride these days


Again with this? You obviously don't get it. This new (estimated) numbers show what most have been claiming for years now: that DTJC had been underpaying their taxes to the detriment of poorer residents in areas that have seen little or no appreciation.


Yes I realize that genius - and reductions in taxes for Greenville \ Westside are totally warranted, but how is 1.6% multiplier for downtown not enough tho ? Hence free rides

Posted on: 2017/12/14 22:01
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jc201jc wrote:
http://www.cityofjerseycity.com/RevaluationUpdate

if you click "1-4 family neighborhood analysis" on the bottom of the page, it opens a PDF with average tax increases by neighborhood. Downtown JC taxes are looking to go up by 50% (unless I'm misinterpreting the table). But...tell me again how the housing prices won't be affected by this?

I'll give it a whirl

Let's start by looking at the aggregate. Most of downtown is underpaying property tax; most of the rest of JC is overpaying property tax. DT buildings will pay more (as noted above, 50-75% seems likely) -- but property taxes will drop in other parts of town. On average, it ought to more or less average out, especially for areas near JSQ which are starting to gentrify.


Next, let's look at a situation where property taxes will increase by what we expect is a typical amount (around 60%).

We'll look at a DTJC single-family home on the market for $1.5 million. 3 beds, 2 baths, backyard, renovated etc. Assuming 20% down, a likely monthly mortgage payment is $5500/month. Property taxes are $10,000 per year. Their annual costs are $76,000 per year.

After the reval, they will now pay $24,000 per year. Their annual housing costs are now $90,000 a year. That's an increase of $1160/month. I can see how that can cause someone to seriously consider moving.

If we try to offset the entire cost of property taxes by reducing the home price, and thus the mortgage, the new price would be around $1.2 million.

At the same time, property taxes in other parts of JC will fall, and presumably become more attractive.

Will the owner drop the price by nearly 20%? That's certainly possible. Would the owner be upset? Probably. However, that's also only about 1 year of unrealized gains, and a much softer blow than 2007-2008.

However, inventory in DJTC is still very tight. My understanding is that demand vastly outstrips supply, and properties don't remain on the market long. I suspect that some buyers are discouraged by the lack of inventory, and look elsewhere. If inventory increases in 2019, those properties will be snapped up quickly, and prices will resume their upward trend. Demand may be so high that prices drop far less than 20% -- or might not drop at all.


Another way to put this is: The lack of revaluations over the years has caused home prices to become unfair and inequitable. DTJC real estate values are higher than they ought to be, and other areas are lower than they ought to be, because DT owners have received a tax break at the expense of their poorer neighbors. The reval could make both property tax and home values more fair overall.


Posted on: 2017/12/14 21:21
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This whole nonsense that downtown is underpaying while tax abated properties, nearly a third of the city's ratables, will not get an increase and artificially raises that tax rate since they are not ratables. If you want fair taxes, stop giving out abatements. The rest of Hudson County has been enjoying developments and rarely uses tax abatements.

Posted on: 2017/12/14 20:20
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JCGuys wrote:
http://jerseycity.hosted.civiclive.co ... ily%20NBHD%20Analysis.pdf

JC Heights - Western slope to see 25% reduction on average
$6,580 avg tax bill from $8,845

Greenville to see 40-50% declines in average property taxes

Paulus Hook is screwed with 75% increase!

$16,591 to $29,026 in average property tax bill

WOW

That's a nice savings, and it's about time !

Posted on: 2017/12/14 19:00
Get on your bikes and ride !
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thor800 wrote:

Also, how could anyone whos taxes arent increasing / substantially dropping (greenville & west side) complain that downtown isnt paying enough ? Seems like everyone wants a free ride these days


Again with this? You obviously don't get it. This new (estimated) numbers show what most have been claiming for years now: that DTJC had been underpaying their taxes to the detriment of poorer residents in areas that have seen little or no appreciation.

Posted on: 2017/12/14 17:32
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