file photo by Boyd Loving
1) Historicall (pre-07) people still hung around because home prices were going up. 2% a year in taxes does not matter as long as your house’s value is going by by 6-7% a year. Home prices are at best flat now, if not declining. The 2.5% and ever growing property tax is coming out of people’s pockets now.
2) Wall St (finance generally) was on a 30 year tear till 2007. That is the NYC area’s main driver. Accordingly, the riches drifted to places like Ridgewood. That gig is OVER. I work in the industry – trust me. That gig is done. People are lucky to hang on to their jobs, forget compensation. The replacement tech folks want to live in ‘city-like’ environments. Condo prices in NYC and surrounding towns have gone up at double-digit rates per year for 4-5 years running now. Home prices are at best flat in Ridgewood.
3) Schools are not a function of teachers, they are a function of students. Being a top school district attracts parents who are interested in education, and that is a self reinforcing dynamic. The reverse is also true – once you drop out of the top rankings, you stop attracting top students. Ridgewood is no longer a ‘top school district’ compared to places like Teaneck, Short Hills, Baskin Ridge etc.
4) Ridgewood taxes are higher (on a % of property market value basis) than even Short Hills, let alone neighborhood Bergen County towns, all with similarly rated schools. And despite paying higher taxes than everywhere else, and more than ever paid in Ridgewood’s history, you have greedy teachers striking and looking for various ways to make life difficult for students as payback. And this will only get worse once Obamacare taxes kick in and the teachers force taxpayers to pick up the 40% excise tax tab on their platinum insurance plans.
So to summarize,
1) The main supporting industry is in sharp decline
2) Home prices are no longer increasing
3) Taxes are at national highs and only likely to increase further
4) School district ranking is falling and will get worse
This combination has not existed so far. In fact, the reverse did. That was history. This is reality.
I curse the day I bought a house in the place. My kids are still too young so I am likely stuck, and am going to live through the decline. Assuming, of course, my industry even has a place for me till then.
Spot on
If Christie’s school funding proposal goes through and Valley starts paying taxes, will my taxes go down?
Will the village and school just treat this as a windfall and start planning expensive projects?
I bought at the bottom of the market.
Still the worst real estate investment I ever made…
Perfect! Teachers in Ridgewood complain about being paid less than other “professionals” or similarly educated folks – just a crock! (Really do not consider their behavior “professional” in any respect.) They have it made in our town and are holding the taxpayers hostage. Most of us are tired of your whining and livid at how you are taking this out on the kids and most of us do not speak up because we know you will retaliate against our children. Shame on you!
Chin up, fella! It’s not so bad to be here!
8:15- You bought at which “bottom?” And you lived in it ? So was it really a “real estate investment,” or an asset that you resided in and it happened to go up, or down in value, depending on when you bought it ?
Make Ridgewood Great Again! (translation: I fear change, and I want things to go back to the way they were when I still thought I was cool).
I was the one who left the original comment – quick correction, I meant Tenafly not Teaneck in the list of top schools.
@8:41 – Things do not go upside down overnight. We are talking trends here and the place is most definitely not trending up, it is trending the other way. You are free to counter any of the points I made if you want.
@7:57 – The Christie tax proposal is DOA – the progressives on NJ supreme court will ensure that, even if by some miracle it passes the legislature.
The Valley tax thing may happen, but all of it will go to offset part of the increase in school budget once the 40% Obamacare cadillac plan excise tax kicks in.
The teachers union is not ready to pay $10 extra in copays, and perfectly comfortable lashing out at the kids and making their lives miserable if asked to do so. What do you think will it do if asked to pick up any part of that 40% tax?
This just in: the sky is falling!!!!!
Some countervailing thoughts:
1. Wall St/Finance mostly drives the top of the market. That end is definitely soft and will remain that way. One might argue that the huge bonuses created a market segment that is inherently unsustainable. The 4k-5k sq ft homes are definitely going to be hard to sell. If you are around the $1MM mark there remains a robust market
2. A home should not be viewed as a real estate investment. Historically, residential real estate keeps pace with inflation over time (decades). In the short term there are of course peaks and valleys. I have been in Ridgewood for almost 40 years, so I have seen dramatic increases and long flat periods. that’s real estate.
3. School system is in decline? Based on these arbitrary metrics from magazines trying to sell copy? I don’t see it.
4. Taxes in Ridgewood have always been high. This is not a new development.
5. I am an early baby boomer. I am still here. When and if I leave Ridgewood it will have nothing to do with the real estate market or the school system–it will be a lifestyle decision.
6. Apart from the unpleasant crew (Aronsohn et al) that recently tried to disrupt the fabric and culture of this village, this has been a very nice place to live and raise kids for many years. It will continue to be. Take the long view–don’t plan your life around the ups and downs of the real estate cycle.
10:45- Perfect !!!
10:45, you’re a full of SH&T real estate agent. Worst real estate investment I ever made was buying in Ridgewood…. at the post GFC lows. Market stinks and is trending down. As the boomers leave in the next 5-10 years, we’;ll be left paying outrageous pensions and health benefits to all of the retired boomer school teachers, and mid-50 year old police & fire “special” retirees. Stop your RE agent BS and give honest, fair advice please.
Though I am thinking about moving soon it is good to remember that it is not all bad.
@10:45 – Let’s work some numbers, shall we?
Take your $1MM house. Say someone pays 20% down for an $800k 30 year fixed rate mortgage at today’s historically low mortgage rate of 3.5%. ($200k downpayment + $10k ‘mansion tax’ + another $20k in various settlement costs).
Monthly costs:
Mortgage payment: $3600
Tax: $2100
Insurance: $140 (low grade Allstate insurance, $250 for something like Chubb)
Water + Electricity + gas: $275
Heating: $600 for 5 months (at today’s low gas prices, I paid $1k+ just two winters back)
Total: $76,000
Assuming 40% all-in tax rate (federal + FICA + medicare + state), pre-tax equivalent: $127,000
So cost of just keeping the lights on – no landscaping, heater/ac maintenance, snow removal, gutter cleaning, dryer vent cleaning, water softener servicing, sprinkler winterizing and de-winterizing, tree pruning – which are required annually. Forget the once in a few years deck, roof work etc etc.
Assuming that this individual is trying to be fiscally responsible (saving for college, retirement (unlike unions!) etc), they would try to keep the base housing cost mentioned above at no more than 30% of their pre-tax income.
That would imply a pre-tax income of about $420k.
Not to mention, this is given today’s low mortgage rates. Oh, and income taxes for folks earning $420k are most likely to going to go up very shortly, and property taxes are also headed higher. And finally, health insurance costs will also soar once obamacare cadillac taxes kicks in.
I may be clueless here, but the universe of people earning that kind of money in NYC is rapidly, rapidly shrinking.
12:52- And that’s exactly why the market up to around $650,000 is doing so well. Like the buying of most assets, “timing is everything.”
@10:45 – The economic argument above is all I needed to counter your complete fantasy of $1MM houses being in great demand, but let me also comment on the rest.
2. The 40 years that you claim to have been in Ridgewood for happened to be the 40 years when the financial sector exploded in size, and NYC being the financial center benefited tremendously. Additionally, home ownership steadily increased to an all time high in 2004. Unless you have not read the news for 8 year now – all of that is GONE. That is history. Finance is rapidly shrinking, homeownership is at lower than it has ever been since 1984. This despite mortgage rate being lower than it has been in forever.
3. Those ‘arbitrary rankings’ are what new homeonwers make their decision based on. And who will I believe – what multiple magazines claim or what you claim? And how is it that school districts like Short Hills, West Windsor and Tenafly are unaffected by the randomness of those surveys?
4. If taxes were already ‘high’ shouldn’t they stop rising then? What is the logic of already ‘high’ taxes going even higher – for no additional services whatsoever?
5. For a vast majority of people without money to burn, it is a rational decision based on their own income and costs vs. quality of services. I just pointed out that the equation is very unfavorable right now when it comes to Ridgewood.
6. The long view is that the state of NJ is bankrupt given how horribly underfunded its pensions are. Militant union will not let their benefits be haircut. So you are looking at combination of significantly higher taxes, fewer services and constant disruptions from striking unions. Math is math. The bill will come due – the can can only be kicked down just so much further down the road!
@1:06 –
1) Given that the median home price in Ridgewood is $677k, what you are saying is that half the real estate market is screwed? And if so, how exactly will the other half stay afloat? If I guy with a $800k house is forced to offload it for $700k, a guy with $700k house probably will have to cut his price too? Are you saying that when a $700k goes for $600, a $600k house will still hold its value? Does that make any sense to you?
2) Sub $600k houses in Ridgewood – for the lack of a better word – are garbage. Old houses, terrible maintenance problems, bad location, non-existent yards. You can get far better houses in other Bergen county towns with similar school systems for much less now. Remember – Ridgewood schools are not Short Hills or Tenafly schools right now. They are just one of of the generic ‘top ranked’ school in NJ. Not one is going to buy a cr*p house for the sake of access to a middling school.
My taxes go up every year. Even if nothing else changed, the cost of employee salaries and health benefits have been increasing (and pensions on the state side).
All day K is “only” $111 for the average taxpayer, or so they say. I am not an average taxpayer. If half day K is inconvenient then enroll your kids in a full day school or some sort of day care with kindergarten. These are issues for the parents to deal with, not the taxpayers. Contrary to popular belief, it does not take a village to raise your child. “All the other towns have it” is not a rational argument, it is just whining like a 10 year old.
There are increases on top of the usual increases since the BOE has already hit the 2% cap. What will the teacher contract add to these costs? Is anyone accountable?
Ridgewood schools are still ranked highly, and even are ranked above Tenafly by several organizations. Niche.com also rates the entire Ridgewood public school district as 7th best in the state (Tenafly is 15).
As far as the real estate market goes, I am certainly no realtor, but I can tell you that homes around $1M in the Upper Ridgewood area (near Willard School) are still going in bidding wars and for above asking price. I have several friends who recently purchased in the area and some who are currently looking for a larger house within Ridgewood, and these are the stories I hear. In some cases I have heard that 20% down isn’t even enough for houses $1M+.
1:35- Very flawed logic. First, the market, real estate, stocks, bonds, whatever, dictate the price. Who says someone has a house worth 800k, the market, or you ? Second, at the height of the real estate market about 10 yrs. ago, did you really think the “average” price of a home would stay there ? If you bought that act in addition to being wrong you would have also have believed that salaries, and housing prices would keep growing to the sky. They didn’t. Third, I am saying that the market for anything below $650,000, a “starter” and “garbage” ( ridiculous stretch) by your evaluation, is selling both in Ridgewood, and elsewhere in towns similar to Ridgewood. Fourth, “far better,” and for “much less?” Where, when you compare apples to apples ?
@2:09 – The simple math is available at 12:52 above. Unless you are arguing that there is a surfeit of people making $425k plus in this area dying to spend their money on million dollar homes, I am note sure what your argument is.
While you are are it, also take a look at zillow for the number of houses in foreclosure. Responsible people will not put more than 30% of their money into a house. Irresponsible ones may chose to do whatever.
I know of realtors who tell me that the Ridgewood housing market is on fire. then I go to zillow that has actual transaction prices and see that prices are pretty much doing – In Dec 2013 the median home price was 660k, now it is 677k. Who should I believe, cold hard data or a realtor?
@2:29 – Your assertion that the sub $650k houses in Ridgewood will continue to do very well and increase in price even as the higher priced homes suffer is comical at best. Reminds me of the Realtor ads – where NOW is the BEST time EVER to buy a house, be it 2000, 2004, 2008, 2012 or 2016.
3:12- That’s not what was said, or even implied, but it sounds as if you could use a laugh, so enjoy ! I do know one thing, though. If someone were smart enough to pay $114,000 for a house in Ridgewood 29 plus yrs ago, live in it, maintain it, etc., and sell it in one day for $564,000, that’s a pretty smart, not greedy, individual. Trust me, that has happened more than a few times over the past six mos. to those who have enjoyed Ridgewood for a lot more reasons than you do.
Bill H @2.39 – You have been all over different threads constantly hyping how awesome sub $600k houses have been. And what does the zillow home price index (based on actual transactions) say?
% Price change for different tiers:
July 2012 (lowest point) to July 2016
– Top tier (1.05MM): 11.2%
– Middle tier (677k): 11.0%
– Bottom tier (496k): 13.8%
.
July 2015 (last year) to July 2016
– Top tier: 1.0%
– Middle tier: 1.8%
– Bottom tier: 0.6%
.
What was is once again that you were saying about housed below 650k being so much better than higher priced houses?
Bill H @ 3:41, what part of
– “This combination has not existed so far. In fact, the reverse did. That was history.” in the original post, and
– “The 40 years that you claim to have been in Ridgewood for happened to be the 40 years when the financial sector exploded in size, and NYC being the financial center benefited tremendously. Additionally, home ownership steadily increased to an all time high in 2004.” @ 1:11, did you fund confusing?
Otherwise, how do you think is your story about how the price of someone’s home bought in 1987 increased relevant?
O.K., I get it ! You made a bad “investment.” Then move to one of those towns that offer so much more than Ridgewood for far less, keep your home here but rent it out for a ridiculous amount, wait until it comes back to where you bought it, sell it, and live happily ever after. And, in the future, don’t rely so heavily on stats. Sometimes they really do “lie.”
Bill H, $650K is below the median assessed value in Ridgewood of $677K. So you’re saying more than half of our homes are unlikely to see strong demand in terms of offers on the market? Shouldn’t our property tax base collapse then based on falling realized sale prices coming in below assessed values on homes above the median? What you’re saying makes no sense.
Bill H, these Case-Shiller stats lie? 20-city property values index increased 5.1% from June 2015 after a 5.3% year-over-year advance in May. National home-prices also rose 5.1% from 12 months earlier in June. Yet property sales prices in Ridgewoid are in fact flat to down, with Zillow-based “Zestimates” trending down YoY based on comparable sales data. You seem to be living Ina fantasy world. Ridgewoid prices lag the recovery in home prices, not only nationwide, but also regionally. Tell the truth please instead of your realtor B.S. about $650,000 prices which are below the median assessed value here.
For the last time, I’m not a realtor, and you really should look onto becoming a real “investor.” If you are going to live your financial life depending on stats, best of luck. You are sure as hell going to need it.
National home prices are up over 5% in the 12 months since June last year, yet they are flat to down in Ridgewood apart from the below median assessed value price point of $650K?? Bill H, what you are saying makes no sense.
You don’t look at data Bill H? Just “feel”?
I may “look” at it, but being over 65 I certainly don’t rely on it. Tell me, do you “look” at the government ‘s unemployment data every month? I certainly hope you don’t rely on it’s accuracy to make your financial decisions. BTW, I’m also in the group that bought a home in Ridgewood many years ago as an “investment” in my family’s future, not as a financial asset. Trust me, you would be much better off looking at your home that way rather than as an “investment.”
A financial asset linked to the unlimited liabilities that are municipal and BOE pensions and “platinum” health benefits that are unsustainable as it is, and only crowding out spending on everything else that would make a home in Ridgewood a good long term financial asset. Time to realize today’s buyer is hitching his or her horse to that cost, no thanks
Chin up, fella? Are you for real?
Can’t really say I entirely disagree ( “unlimited ?) with your analysis of the municipal and BOE situations, but don’t give up on what this town offers compared to others. You may have less potential buyers than you once had, but that can be said of almost any above average town in Bergen County. Again, no matter where you live, a home should not be more than a home.
You clearly have a problem with math and stats. Makes sense – they do distract from fantasy.
Bill H @ 3:41 – You said “If someone were smart enough to pay $114,000 for a house in Ridgewood 29 plus yrs ago, live in it, maintain it, etc., and sell it in one day for $564,000, that’s a pretty smart”
$114k invested into the S&P 500 in 1987 would have been worth $1.8MM today.
$114k invested into US Treasury would have been worth $1.6MM today.
$114k invested in a house netted $564k, most like $519k once realtors and others have taken their cut. This after bleeding 30 years of property taxes, maintenance and insurance. And after 30 years of sitting on an illiquid asset.
There are a lot of words that could be used to describe this situation, smart may not be one of them. Just because $564 is bigger than $114 does not make it smart.
Actually, it is pretty smart since you got to live in Ridgewood for 30 years and you have to live somewhere. Is it worth $1MM in forgone investment opportunity to live in RW for 30 years? For me and many others, yes. For you clearly not. Also, even if you lived in a cardboard box for 30 years, as a finance whiz it is surprising that you failed to deduct cap gains from your big investment return (riding the bull market that you now deride as gone and never to return).
If you were the “finance whiz” the above commenter refers to you have long ago come to the conclusion that, in most cases, a one family home you live in is not a good “investment.” You keep missing the part about it being a place to live. As for the rest of your BS, you didn’t live in any of them, unless you’re a recluse with access to all kinds of cash you would had to tap them for at least some expenses over the years, etc.As for the guy who is now sitting on $564,000, he is very happy to take that money, plus everything else he made after paying for good schools, etc, on the stocks, bonds, and commodities you mention above because he was smart enough to DIVERSIFY over the years rather than put it all(most) into a house. Believe me, he is quite happy, and comfortable financially.
@3:31 – The house (excluding the gigantic running costs) under-performed other investments by over a million dollars over one of the strongest housing markets ever during the strongest economic period for the NYC area. That is one million out of retirement funds.
And going back to the original post, the carrying costs have gotten HIGHER and the outlook for any increase in home prices worse. So in one of the most bull housing markets, you lost at least a million bucks extra to live in Ridgewood, what is the expected hit in a worse market?
4:45- One thing for certain, he is a hell of a lot happier than you will ever be.