How do people afford homes in city centers?

[msomnipotent]

We're in NJ, home of the worst property taxes in the country.
Our home is worth about $250,000 and our taxes are $8,000. It is the main reason why very few people remain in NJ after they retire. They all move to other places like Delaware or Florida or the Carolinas or wherever. Just anywhere but NJ because of the taxes.

IL is right behind NJ with the taxes and my area is one of the highest in the state. But don't you get exemptions? I would be paying $18,000 a year if I rented my house out, but I get an exemption for living there. I have also noticed that our county seems to think that our house is worth $50,000 more than it actually is. The time to challenge the assessment is opening in a few weeks, so we will be doing that. The two problems that really inflate property taxes here are missing exemptions and the wrong assessment.

[disneysteve]

IL is right behind NJ with the taxes and my area is one of the highest in the state. But don't you get exemptions? I would be paying $18,000 a year if I rented my house out, but I get an exemption for living there.

I'm not sure what you mean by exemptions. We actually pay about $8,000/year. I have no idea what it would be if we rented it out.

And now that the new tax laws capped the deduction at 10K, it's really nailing people in high tax states like NJ who can no longer fully deduct their property tax.

[~bs]

^

Possibly kind of a moot point, as the much higher standard deduction wipes out the necessity to itemize for most middle class people paying a mortgage and high property taxes. Essentially cutting off tax incentives for owning a home, and making most middle class people have essentially the same amount of deductions.

[LivingAlmostLarge]

Yeah but some people still will itemize. Actually many people who have large medical bills or large mortgages. The problem will fall to people who live in high property or state income tax states with the $10k cap.

[corn18]

Yeah but some people still will itemize. Actually many people who have large medical bills or large mortgages. The problem will fall to people who live in high property or state income tax states with the $10k cap.

The SALT cap will effect us. SALT for us is about $34k total, so we will lose $24k of itemized deductions. But the lower rate more than offsets that. We're saving about 2% in federal tax on $500k of w-2 income.

[msomnipotent]

I'm not sure what you mean by exemptions. We actually pay about $8,000/year. I have no idea what it would be if we rented it out.

And now that the new tax laws capped the deduction at 10K, it's really nailing people in high tax states like NJ who can no longer fully deduct their property tax.

I'm surprised NJ doesn't have exemptions like we do. I thought every state had them. Without our exemptions, we would be paying 3.8% tax every year. Even though we lose all of the exemptions on our cottage, we still pay a lot less in property taxes in IN than IL.

I read something about a homestead rebate from 2015 that NJ residents are just getting now. Sounds confusing!

[scfr]

My home owners insurance runs about $3200 per year. Ouch.

Holy moly!
Might be time to shop around?

[LivingAlmostLarge]

home insurance is location dependent. Probably floods or hurricane locations are super expensive.

But even cheaper cities the city center or nearby suburbs are expensive compared to people living further out. The same economics are at play whether it's a HCOLA city or LCOLA. The more desirable locations for schools or commuting cost more in any level of city.

But how and why do people chose to live there? Well more people value the same thing schools or commute. And that makes it a premium to buy but you usually get a premium to sell.

Usually the trade off is older homes or smaller lots or smaller homes. So it becomes about priorities.

Reading a blog someone said that. For what we paid for our home we could have bought a house 10 miles further out for 2x the sq footage and new. I look at it sometimes and drool. I think wow 3 car garage 3000-4000 sq ft and all the bedrooms and kitchen space I could dream. But then DH commute would double and that would suck just for a bigger home. So smaller it is.