The effect of high taxes, part 2
In our previous post we talked about the differing tax rates in various NJ communities and how certain municipalities face an unusually high property tax burden.
One of the effects of higher taxes is reduced marketability. Roselle, NJ is one of the better municipalities to single out for analysis for several reasons. Firstly, it is a community which faces an unusually high effective property tax burden according to a Rutgers study and NJ Treasury data. Also, it is a densely populated town with a high enough number of sales to make it more statistically relevant (in other words a few anomalous data points are not likely to have an effect on a study).
I like to think in sports analogies, and one that comes to mind is baseball. I’m partial to the Yankees but not a particularly devoted baseball fan. One of the most reliable basic measures of hitting prowess is the batting average. It measures the percentage of time that a batter accomplishes success ( a hit ) when stepping up to the plate.
Looking at real estate the same way, every time a homeowner places their home on the market, they are essentially stepping up to the plate trying to accomplish a positive result. So how does Roselle perform when stepping up to the plate compared to its competitors? Well to do this I looked at Roselle’s new listing batting average versus the batting average experienced in the surrounding four towns (Elizabeth, Linden, Roselle Park and Cranford).
Looking at the results of over transactions, a homeowner stepping up to the plate to list their property in Roselle from January of 2013 to present accomplished a 59.7% success rate (they sold the property). In the surrounding towns, a homeowner accomplished significantly better results with a success rate of 68.7% during the same time period. This analysis covers over 1400 listings, which is a large enough number that it is unlikely to be affected by statistical irregularities.
So, in other words it was significantly more difficult for a seller to accomplish a positive result in Roselle than surrounding towns (each of which have lower tax burdens).
More on this to follow…