Property taxes have skyrocketed in NJ. Will I be priced out of an "affordable" home within a decade? Should I buy far below my means?

Asked by natalie, Wayne, NJ Fri Mar 25, 2011

We are ready to buy in NJ. However, we are concerned about the property tax trends over the past decade. What can we do to ensure we won't be priced out of a home that is initially affordable for us? Should we just move to PA and endure a long commute?

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Wayne Odenbr…, Agent, Mountain Lakes, NJ
Sat Apr 2, 2011
Taxes will vary by town. The Governor has put a 2% cap on tax increases in NJ. That should keep a lid on it. No one can be sure what will happen in the future, but that is a good start. Moving to PA can be the answer if you can indure the commute to your work. Only you can answer that. Find a good local Realtor. He or she can do so much of the work for you. Good Luck!
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Jeanne Feeni…, Agent, Basking Ridge, NJ
Sat Mar 26, 2011
Hi Natalie, Jonathan is right, the home affordability index is at a low - it measures home expense as a proportion to household income. Relaxed home prices and low interest rates is a rare combination - it exists today and is unlikely to remain for too long. Taxes in NJ are tough - there's no question. It explains why many downsizers make the decision to leave our area which is a real shame which over time will have a negative impact on the state overall. Having dealt for years with a longer than I would have liked commute to my job, I can tell you that it wears on you. So you've got to weigh the postives and negatives - as you look at the home price equation by all means pull in the taxes - they do vary from community to community and so I recommend you factor that in to your decision. There are some communities in NJ that are relative good bargains - we've got a few in Somerset County. Then think about lifestyle issues - remembering that a long commute can be "taxing" in and of itself. Allow the decision to come into focus - it will.

Good luck to you,
Jeanne Feenick
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Sarah Klamm, Agent, Wellsville, KS
Fri Mar 25, 2011
To answer the other part of your question...It is never a bad idea to buy below your means. Do a budget, figure out how much you can easily afford each month while still being able to contribute to your savings, retirement, etc. Make sure you that when you buy, you still have money in an emergency fund. By doing these things, you can ride out property tax, income or life changes. Home ownership is a great thing and I feel it is ultimately better than renting, but you don't have to buy the best home you can just barely afford.
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