While New Jersey brokers saw lower sale volume and prices in October and September as compared to same period last year, brokers seem more concerned about the economic infrastructure of the state.
Several brokers who spoke with The Real Deal cited the tax system as a source of worry.
One broker said, “The entire tax picture in the state of New Jersey is very unsupportive of the future of the real estate business and the future economy of the state.”
Governor Corzine has made a public mission out of improving the state’s tax policies and internal mechanisms. His administration is considering reform in previously off-limits laws and policies, such as the Uniformity Clause that holds residential and commercial property taxes at the same level.
William Keleher, chairman and CEO of Prudential New Jersey Properties, said, “The only way to reduce taxes is to reduce spending.” Without a decrease in spending, he added, a cut in property tax would result in a hike in sales tax, for example.
During previous periods of recession in the real estate market, other sectors of the economy also failed, said Keleher. But unlike those previous recessions, other current sectors of the economy remain strong. Interest rates remain low and financial services experienced a record year.
That is heartening considering the softness in the New Jersey market in recent months.
According to the New Jersey Association of Realtors, the average residential sales price for all types of property in Bergen County, the county closest to New York City, was $500,769 in October 2006, down from $514,401 last October. In the same period, sales volume dropped from 1,751 to 1,349.
Statewide, contract sales volume dropped 20 percent in the first nine months of 2006 — slightly less in Northern New Jersey. By the end of September 2006, available inventory had increased by 53 percent over the previous year.