NY Times Real Estate weekly article "The Hunt" features couple looking in the Heights...

Submitted by Chris_NJ t3_xx91yo in jerseycity

https://www.nytimes.com/interactive/2022/10/06/realestate/jersey-city-heights-houses.html

I peruse the NY Times real estate section and this week had a couple looking for a single family house in the Heights. They ended up picking a small attached house for $385K and did a $400K renovation including adding a 3rd floor and rooftop deck. I would have thought developers would buy something like that cash but maybe the lot was seen as too small for them to go for it. Kudos to the couple for taking on a huge project- I am sure that would be a stressful process but hopefully in the end they got the best set-up for their tastes.

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Capable_Elk_3070 t1_irbk5ls wrote

I read this too and was taken on an emotional journey. I was like, wow, my spouse and also live in JC and enjoy gardening and love the heights and were recently looking for a house! And then I saw their 650,000 budget and was like-- not the same. I was really confused by their choice because they initially stated that they did not want a "Bayonne box" but in the end, that's exactly what they ended up with after their renovation. (For the record, my spouse and I love JC but are bailing and moving to Somerset county where we are getting almost an acre and a historic farmhouse for under 500K including renovations, which is still a rarity but was possible).

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Chris_NJ OP t1_irbqkrn wrote

I would be curious in walking past this house if I knew where it was and see. It did look a little boxy from the outside but certainly an improvement from how it looked pre-renovation. I have to assume they got rid of the ugly chain link fence fence in the front.

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Miringanes t1_ircn71i wrote

My fiancée and I are too leaving JC (sad face) to go into Essex county. Taxes are horrific but not too much more than JC after the 1bn school budget for the price bracket we were looking in. The schools in our new town are arguably better.

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ProBillofRights t1_irblrfu wrote

Good for you. My friend who lives in JC will be doing the same after getting hit with a massive school property tax hike. If taxes keep going up more people will follow

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BokenUnbroken t1_irawa5e wrote

These never seem to make it to the market. To OP’s point, developers snatch them up to renovate.

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ProBillofRights t1_irbcdqq wrote

Had a friend do the same around 2010. Probably spent $800,000 in renovations. Their taxes were around $16,000 until 2016 when they were hit with a reval tax, and started paying $27,000 in taxes. Now with the new school tax hike they're paying around $40,000 in taxes.

It's insane the taxes went up that much in 12 years. Hopefully these nice people realize that the same thing will most likely happen to them too.

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Blecher_onthe_Hudson t1_irblc1k wrote

Sigh. Just to clarify for those new to this game, there's no such thing as a reval tax. Their property value was underassessed, and the taxes went up dramatically once that was corrected in the reval. $27k at 1.6% means their property was assessed at a value of $1.7m, seems about right given what was said.

Odd are this property was Downtown and not in the Heights, where properties were overwhelmingly overassessed, and paying more than they should have, prior to the reval.

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JNmbrs t1_irebhdk wrote

So your friends paid $16K per year for a place worth at least $800K for 6 years until the city got around to revaluing their house to market price… and your assessment is that that was unfair to your friends? Isn’t the story that your friends snuck into a property tax loophole and benefited from it for half a decade at the expense of their neighbors? As someone else pointed out, the reval wasn’t a tax increase. It was just a rebalancing of which units owed which share of taxes. Before the reval, other units were screwed with higher taxes than was fair (because units like your friends’ were paying artificially low bills).

As to the BOE budget change, that’ll be painful for sure, but again, not a tax increase. The BOE’s share of budget for JC schools went up because NJ state’s subsidy to JC schools went down. No net tax increase—just changed where the taxes came from.

Apologies for the tone, but it’s difficult seeing many of these posts repeating the same misleading headline. I think there’s plenty of room to be unhappy with the tax burden and/or how JC officials have spent their budget and those conversations should be had, but I hope we can do so with full information.

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ProBillofRights t1_irepozo wrote

No offense taken with the tone of conversation. As the saying goes the devil is the details. I live in Hoboken and I'm just pointing that out now because I'll be circling back to it later on.

So my friend bought back in 2010, and didn't move in until 2012 when all the renovations were done. The house was very run down and on the verge of collapse. No one wanted it especially because it was surrounded by abandoned buildings as well. I thought it was a bad idea and I tried to convince them to buy in Hoboken instead. At the time Hoboken was safer, homes were more expensive but taxes were about equal or less than JC. And any future returns on selling a home was far superior to JC. I would unhappily be proven right.

Let's compare apples to apples. Hoboken was also hit with a reval too around 2013, a year after hurricane Sandy and 3 years before JC was hit with reval. My mom's house taxes went from $14,000 to $21,000. We now speed forward to present day and her taxes pretty much remained the same.

What can we learn from this? JC in 2010 at the time was suffering just like the rest of America from a housing bubble crash. Entire blocks with zero tax revenue coming in and a high crime rate, and people like my friend taking a gamble on a very bad neighborhood to beautify it and pay a much higher tax than my mom's house in Hoboken. $2,000 more to be exact.

Just a few months ago before the Board of Education raised taxes they were paying $27,000 in taxes. That's almost $7,000 more in taxes.

Now from all my complaining it would sound like I'm against paying taxes. But, that's not true. If I'm going to pay $27,000 in taxes and then get slapped again with more taxes in the $40,000 range I better get a big return for my money

I want better schools, which JC really doesn't have except if you're willing to pay $35,000 a year for private school or your kid is lucky enough to get into a charter school.

I want safe neighborhoods where it doesn't take hours for the police to show up.

For $40,000 a year in taxes I better be getting better service. Roads closures, uncontrolled high rise construction, politicans hitting bicyclists, high crime in certain areas. And list goes on.

My entire point is I was right about everything I mentioned above. Hoboken is not a utopia and I hate that I can't find parking in Hoboken at times. I hate the dog poop left on the sidewalk. But at the end of the day I'm not saddled with a massive $40,000 tax burden.

So put yourself in my friend's shoes and and ask yourself what do I get in return?

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objectimpermanence t1_irgvwrp wrote

> So put yourself in my friend’s shoes and and ask yourself what do I get in return?

Since they bought and renovated the house over a decade ago, they’ve likely had plenty of opportunities to sell it for a decent profit in the last couple years. Not to mention that the first $500,000 of the capital gains from selling a primary residence are exempt from federal income taxes for a married couple filing jointly.

In short, I have practically zero empathy for them. If they can afford to pay $40k in annual property taxes, they are doing better than the vast majority of households.

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ProBillofRights t1_irgwf6p wrote

They can't afford to pay that and most people can't pay that. Hence why they are moving. You didn't even attempt to put yourself in a position were your taxes went up that high. And, you're angry for some reason which I don't understand.

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objectimpermanence t1_irgyzn3 wrote

Assuming a 1.6% tax rate, a $40k property tax bill implies an assessed value of around $2.5 million, which may even be below the property’s market value despite the recent reval.

All I’m saying is that at the end of the day, they will probably emerge from this situation in a better financial position than most.

Sure, it’s sucks to be forced to move because you can’t afford the property taxes on your dream home, but so many people are being forced to move under much worse circumstances than your friends. Hence my lack of sympathy.

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SonOfMcGee t1_irikfc8 wrote

They don’t even have to move to another town. It sounds like they’ve put roughly $1M into a property that is now worth over $2M. They could sell and buy a $1M house with cash.

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ProBillofRights t1_irh1al0 wrote

It's going to get worse. Rents are sky high and when taxes go high so do rents. Forcing people to move out as well. Not to mention the small mom and pop landlords selling off their rent control properties and rich land developers buying the land and turning them into so called luxury rentals.

JC can turn into Detroit if they can't control the tax hikes. Families like my friend are leaving, and in a decade or two what will be left? I don't see JC doing well in the future.

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objectimpermanence t1_irh7fnt wrote

High property taxes are not what killed Detroit. The decline of manufacturing and the rise of suburban sprawl are what killed Detroit.

There is nothing of that scale currently happening in JC or in the broader metro area. It would take a protracted financial crisis or other major event for that to happen.

If anything, higher property taxes are a symptom of increasing prosperity because they generally reflect the fact that property values are also rising. Property prices and rents only go up as long as people are willing and able to pay them.

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ProBillofRights t1_irhbizn wrote

Car manufacturing jobs made up most of the jobs in Detroit back in the 60's. With the new upward mobility from the jobs in Detroit, young families realized they could live in the suburbs and they started moving out of Detroit, just like the people did in Newark in the early 60's.

The manufacturing jobs didn't start leaving until the late 70's and accelerated into 90's with NAFTA. But, the major point is the families were leaving the cities in the 60's because they could get a bigger home, better schools, and safer neighborhoods with their tax money than the inner city.

JC suffered the same fate in the 70's and it lasted all the way into the early 2000's. If it wasn't for the cheap tax, low rent, and close proximity to NYC, JC wouldn't be so attractive to young people. Hence why my friend bought in 2010. He thought he could live here and retire here, but he was wrong. And, it's a shame because JC needs young families like them to make the school system better, to make the city safe by voting for a Mayor that cares, a school board that cares, but instead they'll move away and take that tax base with them to the suburbs.

JC will not survive in 20 years if things don't change.

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ChissWiz t1_irdrmft wrote

Their new neighbors must love them.

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HobokenJ t1_iresk6o wrote

On the other hand, it's just a matter of time before the units on either side of them are torn down or gutted...

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Ajkrouse t1_ircdjcg wrote

Honestly they did a good job with the renovation but their house stands out like a sore thumb by being surrounded by run down row houses.

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Ainsel72l t1_ird96t8 wrote

The backyard is nice, but that extra out of proportion front looks so out of place in that row. I can't believe something like that was approved.

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