First, when taxes are doubled, tripled and quadrupled, in the absence of a presidential declaration of a national emergency, it is indicative of a failure of government at all levels, including the municipal. Let’s look back at how the municipal government contributed to the fix we’re in. During the past 20 years, real-estate entrepreneurs have come to Jersey City seeking to build things. They’ve made generous campaign contributions and by and large have been allowed to do whatever they wanted.
They’ve also been excused from paying taxes for a considerable length of time on the properties that have been (and are being) constructed. Meanwhile, municipal office-holders have turned around and told us how wonderful all this “development” is. “It will increase your property values,” they said. Downtown Jersey City is now chock full of 30-story campaign contributions, and property values have increased to the point that half the electorate has to live somewhere else. Many thanks, municipal government…
Second, we all understand that if a serious terrorist incident had occurred here two weeks ago, the real-estate market would substantially change. The metro area would lose its cachet. Large numbers of people would be looking to sell their homes at the same time, thereby creating a buyer’s market.
An increase in supply relative to demand depresses prices. The individual seller would not likely reap the full value of the property being sold. Similarly, if there had been a natural disaster— hurricane, flooding, earthquake, tsunami—again, the market would have been altered. Numerous homes would be up for sale, and a buyer’s market would ensue. The appraisers who conducted the re-evaluation failed to consider the economic impact of their own process. The evaluation has itself changed the market.
Huge numbers of property owners are being forced to sell simultaneously. A buyer’s market is in the cards—the result being that the individual seller is unlikely to obtain anything close to the value the appraisers have projected. In this way, the re-evaluation process has managed to invalidate itself.
Which is reason enough to SCRAP IT and start over with a team of appraisers who have a more mature understanding of the impact of their own actions on the market they analyze. The process might incorporate a few guidelines such as capping maximum tax increases at 25%. That would prevent a buyer’s market from being created. Actually, there are thousands of reasons for scrapping the current re-evaluation and starting over. I refer to the multitude of property owners who had no intention of selling, but find themselves unable to meet stratospheric tax obligations, and the countless tenants facing steep rent increases who had no previous desire to move.