New Jersey Property Tax Crisis

by | Jan 14, 2025 | Uncategorized

A Growing Concern for Real Estate Professionals

As real estate professionals in New Jersey, we’re facing an unprecedented challenge: skyrocketing property taxes that are making our state increasingly unaffordable for homeowners and potential buyers alike. While the Garden State has long held the dubious distinction of having the highest property taxes in the nation, recent trends indicate that the situation is only worsening.

Record-Breaking Property Taxes

The average New Jersey property tax bill has once again broken records, reaching a staggering $9,803 in 2023

This represents a more than 3% increase from the previous year, adding $313 to the average homeowner’s annual tax burden
To put this into perspective, the national average property tax payment is just $2,869, meaning New Jersey residents pay more than three times the national average.

Unaffordability Reaching New Heights

The impact of these escalating property taxes on affordability cannot be overstated. In several New Jersey counties, including Bergen, Essex, Hunterdon, Morris, Passaic, Somerset, and Union, the median property tax bills now exceed $10,000 annually
. This threshold is particularly significant as it marks the cap for federal income tax deductions for state and local taxes.

Factors Driving the Increase

Several factors are contributing to this property tax crisis:

  1. Rising Home Values: Similar to the situation in Miami, New Jersey has experienced significant home price appreciation. However, unlike Florida, which has no state income tax, New Jersey relies heavily on property taxes to fund local services.
  2. School Funding: Over half of the property tax revenue in New Jersey goes to school districts, totaling about $17.5 billion in 2023
  3. Municipal and County Services: Nearly $10 billion goes to municipal budgets, while almost $6 billion supports county government spending

The Impact on Real Estate Professionals

As real estate professionals, we’re caught in the middle of this crisis. High property taxes are making it increasingly difficult to:

  • Attract out-of-state buyers
  • Help first-time homebuyers enter the market
  • Retain current homeowners who may be considering relocating to lower-tax states

Looking Ahead

While some relief measures are in place, such as the ANCHOR rebate program, they may not be enough to stem the tide of rising property taxes. As we move into 2025, it’s crucial for real estate professionals to:

  1. Stay informed about local and state tax policies
  2. Advocate for more sustainable property tax solutions
  3. Educate clients about available tax relief programs
  4. Consider diversifying into markets with more favorable tax environments

The property tax crisis in New Jersey presents significant challenges, but it also offers opportunities for knowledgeable real estate professionals to provide value to their clients. By staying ahead of these trends and offering expert guidance, we can navigate this difficult landscape and continue to serve our communities effectively.