Monday, August 28, 2006

New Jersey - Tax Hell

From the Star Ledger:

Study calls Jersey a taxing place to call home
New Jersey's reputation as a tax hell just got worse.

The $1.9 billion worth of tax increases in the state's new budget represents a 5 percent increase over last year, far outpacing any other state, according to a study by the National Conference of State Legislators.

New Jersey now has the highest state sales tax, tied with three other states, at 7 percent. Its cigarette tax now leads in the nation. And, of course, this all comes on top of the nation's highest average property taxes.

It's no wonder people like Donley Kuendel are thinking of leaving.

"The quality of life is going down about as fast as taxes are going up," said Kuendel, 50, of Atlantic Highlands. He and his wife are looking at houses in Delaware, where there is no sales tax, no income tax and property taxes are relatively low.

He's not much impressed by the Legislature's current efforts to come up with tax-cutting plans.

"I just can't see how you are going to get relief in this state," he said.
...
Other data provided by the Americans for Tax Reform and National Governor's Association show no state has boosted taxes more than the $5.2 billion enacted by New Jersey in budget years 2002 through 2007 -- a per capita increase of $596. Our big next-door neighbor, New York, raised taxes $4.6 billion during that period, or $240 per person. Only Alaska, with its small population, had a higher per capita increase, $699.
...
"Businesses are fleeing New Jersey as well as residents, and it's very discouraging," he said.

13 Comments:

Anonymous Pragmatist said...

Funny how no one ever talks about how we get 50 cents back for every dollar we pay in.

8/28/2006 05:59:00 AM  
Blogger grim said...

Great despinning article over at Dr. Roubani's blog:

Eight Market Spins About Housing by Perma-Bull Spin-Doctors...And the Reality of the Coming Ugliest Housing Bust Ever…

8/28/2006 06:19:00 AM  
Anonymous Anonymous said...

Another Starving realtor Myth Busted.

8/28/2006 07:13:00 AM  
Anonymous Anonymous said...

‘Every Week Something Is Cheaper’

The Sacramento Bee has this update from California. “Sam Webber had it all during the real estate boom. The former accountant bought old houses, fixed them up and resold them for more than he paid. It was a good independent living until four months ago when the bottom fell out of his game.”

“Now as home prices have declined 5 percent from last year in Sacramento County, Webber is what analysts call ‘upside down.’ He owes banks more than his two remaining fixer-uppers are worth. He’s missed mortgage payments on each. Worse, he’s tied up his entire savings and previous profits in remodeling the houses.”

“Webber has one last hope to avoid foreclosure, selling the houses for what he can get and persuading his bankers to accept less than he owes. ‘The house in North Sacramento, I’m $305,000 into the bank, and it’s worth $280,000. I’m trying to get the bank to agree to $280,000,’ he said.”

“Known in the real estate trade as a ’short sale,’ this desperate, but practical tactic, negotiating less than a complete payoff to lenders, reappears like clockwork when real estate markets sour. Elk Grove real estate agent Derek Kirk recently counted 264 short-sale listings in El Dorado, Placer and Sacramento counties compared with fewer than 50 six months ago.”

“‘I made a decision to do this as my livelihood,’ Webber said recently as he begins a job search. ‘All my income was coming from the houses. This time it’s burned me. I’ve tapped out every dime I have.’”

The Contra Costa Times. “By the time Janie Kent received the notice that her two-bedroom, one-bath cottage in San Leandro was going to be sold in three weeks, she was desperate. ‘I was in denial, sitting in my house and didn’t know what to do,’ said Kent. Kent isn’t alone. Hundreds of people in Alameda County will lose their homes this year; 176 already have. Thousands more will sit in their home, awaiting what they feel is the inevitable outcome.”

“Home foreclosures are on the rise across the East Bay, with Alameda, Contra Costa and Solano counties all reporting data similar to the post dot-com bust years of 2000-01.”

“Alan Wolf, a mortgage banking attorney said that interest-only and negative amortization loans seem to be fueling the higher default rates. ‘Once those refinanced adjustables hit, it’s going to be a big problem,’ he said. ‘This is not the bad year. Next year is going to be the bad year.’”

“San Ramon Loan consultant Ed Jeffry puts some of the blame on lenders who haven’t been historically gentle with borrowers but also faults borrowers for not thinking through loan decisions. ‘A lot of problems occur when people enter into a high-cost or subprime loan,’ he said. ‘Usually because there’s no plan and no strategy.’”

The Press Democrat. “In Windsor, where homes stay on the market longer than anywhere in Sonoma County, some newer neighborhoods sport ‘for sale’ signs on every other block and sometimes several on the same street.”

“‘Price reduced’ and ‘price reduction’ are common inducements on the signs in front. It is a scene repeated across Sonoma County, from neighborhood to neighborhood, cul-de-sac to cul-de-sac. Behind those for sale signs are sellers who have put their lives on hold as a market that stayed red hot for so long has turned cold.”

“Now the market has reached a kind of psychological standoff, with sellers reluctant to accept the reality of falling prices and buyers holding onto the expectation of even deeper cuts. Some forgot that home prices could go down, as they did in Sonoma County in 1993 and 1994. That downturn lasted four years.”

“‘A year ago, you got away with murder. You sold a house no matter the condition,’ said Sandy Geary, broker in Rohnert Park. ‘Buyers have almost too much choice. I have buyers who come back and every week something is cheaper,’ Geary said.”

“Brett and Amy Reiter lowered the price for their Santa Rosa home nearly 4 percent to $515,000 to attract potential buyers, but they have received only one offer since putting their home on the market in March. ‘When we first put it on there was a lot of interest,’ Brett Reiter said. ‘But no one was ready to jump on anything. It seemed like people were waiting, knowing prices would go down some.’”

8/28/2006 07:24:00 AM  
Blogger grim said...

Corps protecting CEOs from the bubble fallout. From Slate:

The CEO Real Estate Scam

hat with low housing starts, declining builder confidence, soft sales of existing homes, growing inventories, and surging foreclosures, anyone looking to sell a house these days is likely to be a bit stressed out. Except for top executives at big public companies. Yes, the executives who were first in line with jets, sweetheart loans, stock options, and repriced stock options have now devised the first post-real-estate bubble compensation trick. They've figured out how to shelter their own houses from the declining real estate market—by getting their corporations to guarantee their sale price. You may be sweating that you have to sell at a loss, but your CEO isn't.

Since the beginning of this summer, at least a half-dozen companies, including eBay and Nike, have disclosed in their routine Securities and Exchange Commission filings that they're now protecting their executives from real estate market forces. The terms in the filings vary—"protection against loss"; "loss protection"; and "price protection"—but the meaning is the same: They are essentially guaranteeing that executives' homes will sell for a good price. In other words, companies that depend on free markets are making sure their own executives are safeguarded from them. In the past, companies often offered to buy a relocating executive's house if didn't sell after a specific amount of time. But that's different than the price guarantees being offered now.

8/28/2006 08:37:00 AM  
Anonymous UnRealtor said...

NJ should just copy the approach of another, better-managed state.

8/28/2006 08:38:00 AM  
Blogger grim said...

Deluge of economic data this week:

8/29
Consumer Confidence (August)
Fed FOMC Minutes

8/30
Preliminary GDP Q2

8/31
Personal Income/Spending/Savings
Chicago PMI

8/1
Nonfarm Payrolls (Aug)
Construction Spending
ISM Index
NAR Pending Home Sales Index

8/28/2006 08:51:00 AM  
Anonymous Anonymous said...

"Funny how no one ever talks about how we get 50 cents back for every dollar we pay in."

Assuming you are referring to federal taxes, it gets talked about all the time, including (recently)on this blog. It is a misleading argument that does not account for differences in per capita income among the states and $ that gets funnelled (sp?) back through regional authorities and NGAs.

8/28/2006 09:26:00 AM  
Blogger Richard said...

guess on GDP? i'll go with 2.7%.

8/28/2006 10:35:00 AM  
Anonymous Anonymous said...

This isn't like other RE slowdowns, regional. The world may be hinging on this. In the past, there has not been one bubble that has resulted in a soft landing.

BC Bob


US housing slump feeds fears of crash


THE OBSERVER , LONDON
Monday, Aug 28, 2006,Page 10
The downturn in the US housing market will force businesses to slash 73,000 jobs a month in the new year and could be more damaging to the world economy than the dotcom crash, economists have warned.

After official figures last week showed that the number of new homes sold last month was 22 percent lower than a year earlier, while prices were almost flat, fears are mounting that the "orderly" housing slowdown predicted by the US Federal Reserve will become a full-blown crash.

"Things do seem to be getting worse very quickly. Freefall is a strong word, but I think it's the right one to use here," said Paul Ashworth, chief US economist at Capital Economics.

House prices have been rising at unprecedented double-digit rates in recent years, giving homeowners massive windfalls and supporting a wave of investment in new housing construction. However, the number of unsold new homes is now at a 10-year high.

Ashworth reckons 30 percent of all the jobs created since the end of the last recession in 2001 -- 1.4 million -- have been in sectors related to the housing market boom, from construction to DIY stores. As the boom runs out of steam, Capital calculates that 73,000 jobs a month will be lost.

The Federal Reserve left interest rates unchanged for the first time in 18 meetings earlier this month, as Chairman Ben Bernanke weighed the risks of high inflation and the threat to growth from the long-expected housing market crunch.

Stephen Roach, chief economist at Morgan Stanley, predicts that the property slowdown will shave at least 2 percentage points off GDP growth next year, taking the US perilously close to recession, as construction spending plummets and homeowners lose the cushion of extra wealth that comes from rapid price rises.

"For a wealth-dependent US economy, the bursting of another major asset bubble is likely to be a very big deal," he said, warning that, with US fiscal and trade imbalances now larger than five years ago, the fallout for the rest of the world could be more devastating than the aftermath of the dotcom boom.

"A bursting of the property bubble poses equally serious risks for America's key trading partners and for the rest of an increasingly integrated global economy," he added.

Anxieties about the fragile US housing sector come as analysts in the UK debate whether this month's rise in interest rates will dent prices there. Property Web site Hometrack will warn today that the so-called "mini-boom" that has buoyed the market in London over the past few months will be snuffed out by higher mortgage costs.

8/28/2006 10:35:00 AM  
Anonymous Anonymous said...

If a CEO has to relocate to take a position, protecting the value of the real estate changes in that process (guaranteeing against loss when selling the old property and reselling the new) seems pretty fair as long as it's public and approved by the board.

Of course, if the board's a pushover, the voters should kick them out, otherwise it's the voters' fault.

8/28/2006 12:06:00 PM  
Anonymous Anonymous said...

When will the NJ taxpayer
see any relief?

Seems to me never.

8/28/2006 02:54:00 PM  
Anonymous Anonymous said...

How do we have the highest state sales tax?
Isn't it 8.25% in NY? Or is that just New York City?

8/28/2006 08:42:00 PM  

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