Hoboken's 47 percent tax hike

slows down real estate market

From NJ.com

by Carly

Monday December 29, 2008, 10:00 AM

We all know Hoboken's real estate market is softening and this past fall's 47 percent property tax increase has hit homeowners hard.

But what about potential buyers in Hoboken? Has the tax increase deterred people from owning in Hoboken, once the crown jewel of the gentrified Hudson County waterfront?

"The Hoboken market has been very difficult over the past few months," said Nick Costantino, owner of Empire Realty Group at 4th and Washington. "I haven't seen people say 'no' to homes because of the tax increase but people are making lower offers on homes because of the tax increase. If your taxes go up 47 percent your price will have to come down, they just have to."

Just two years ago, said Costantino, "We were trading at 60-70 homes a month; now we've done 22 to 20 in the last few months. We have about 18-20 months of inventory that's here; it's taking longer for the market to absorb all those condos to sell. We now have listings either for sale or for rent, and sellers will take whatever they can get."

Costantino said it's helpful that mortgage rates are so low right now, at around 6.5 to 5 percent and people are still making offers on homes in Hoboken.

But --

"Everyone is in limbo saying I don't even know what my specific taxes are for '08 yet," continued Costantino. "As our buyers go, they are looking at (this tax increase) and then making less of an offer in part because of the tax rate. We have to see what'll happen with the market once the taxes go into effect. Closings in February, March and April will determine that, but this will definitely affect us at some point."

Carly Baldwin/Hoboken Now"It's really been the perfect storm -- the economy getting crushed, job losses on Wall Street, no bonuses and then that tax increase -- it all happened within four weeks of each other."

Hoboken's real estate tax hike this past fall couldn't have come at a worse time.

"It's really been the perfect storm -- the economy getting crushed, job losses on Wall Street, no bonuses and then that tax increase -- it all happened within four weeks of each other," said Costantino.

Hoboken resident Ed Joback, 39, rents at The Shipyard. He considered buying a condo at Maxwell Place last year but decided to hold off after his portfolio "took a 50 percent hit" in the stock market this past fall.

"It is a concern," said Joback of the property tax increase. "Of course it's going to affect the market. People selling property are going to take a hit in terms of the market value."

"It's a joke, to have a 47 tax increase is a joke. The budget went from $80 million to $121 million -- and for what?," he asked.

"This is the most pissed off I've seen people. These kinds of things don't happen overnight. They were playing games for a long time, selling capital assets to fund operating expenses," said Joback of the City administration and the City Council. "It happened on their watch and for them to say it's not in their control is BS."

Costantino said many potential homeowners in Hoboken come from out of state, such as New York City or California. They are completely unaware of the fiscal quagmire the town's currently in -- or that they'll have to pay much more in taxes than they expect on their would-be new homes.

"It's the 2008 taxes on the listing forms," said Costantino. "When I see property at 8th and Grand -- it was $8,000 a year and now it's going to be $10,000 or $11,000 -- I have to sit down and tell the buyer that. I know some people aren't explaining that, but that's a violation of our ethical duties."

Like many in town, the tax increase prompted Costantino to attend last month's pre-Christmas rally in front of Hoboken City Hall.

"We have no control; Judy's in control of the city," said Costantino. "Hopefully, all this dialogue the residents and council are having with the mayor will bring those taxes back to reality, to where they were. But I don't see that happening in the short run."