DESIGNATED
REALTOR
®
ISSUE 4: August 2018
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SHORE TAX
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SALES TAX THE VACATION FOR STOPPING
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® NJ Realtors Issues *Paid for by the
NJREALTOR.COM
Designated REALTOR® | August 2018 | 1
I M P O R TA N T D AT E S
AUGUST 15
Realtors® Care Day volunteer and sponsor applications due rcd.njrealtor.com
SEPTEMBER 3
NJ Realtors® Office Closed Labor Day observed
OCTOBER 18
Asian Real Estate Association of America Convention Las Vegas, N.V. areaa.org
31
Realtors® Conference & Expo Boston, M.A. conference.realtor
NOVEMBER Daylight Savings Time ends
Quarter Century Club application due njrealtor.com
4
12
Board of Directors Meeting 11 a.m. Trenton, N.J.
6
21
Realtor®-palooza Trenton, N.J. njrealtor.com/realtorpalooza
21
Good Neighbor Award application due njrealtor.com/goodneighbor
22
26
Realtors® Care Day rcd.njrealtor.com
23
5
Election Day
Veterans’ Day
11
NJ Realtors® Office Closed Thanksgiving Day observed NJ Realtors® Office Closed
DON’T MISS THE FIRST
Realtor-palooza NJ Realtors® will be hosting the first-ever Realtor®-palooza on September 21! This is a day dedicated entirely to you, the member! Your $15 ticket, which supports the NJ Realtors® Educational Foundation, grants you access to CE courses, meetings with our leadership team, games, craft beer, complimentary headshots, and more. Spend the day at our Trenton headquarters and enjoy all the perks of being a NJ Realtor®! Ticket sales are limited. To purchase tickets or view more information, go to njrealtor.com/realtorpalooza.
Designated REALTOR® | August 2018 | 2
2019 State Budget Breakdown With concerns of a state shutdown looming, the New Jersey State Legislature passed the 2019 state budget on the July 1 deadline.
JUNE 15
JUNE 18
JUNE 19
JUNE 21
Tensions are high as Gov. Phil Murphy and Senate President Steve Sweeney leave two budget meetings with no compromise. There are 16 days until the constitutional deadline to pass a budget or there could be a government shutdown.
Sen. Sweeney and Sen. Craig Coughlin introduce an alternative $36.5 billion budget proposal, which replaces the millionaires’ tax with a corporate tax hike from nine to 12 percent. Gov. Murphy says he will veto the bill if it lands on his desk, citing concerns that the revenue will not fund budget investments.
Despite Gov. Murphy’s disapproval of the proposal, the legislature’s budget passes through the Senate Budget Committee in an 8-3-2 vote and the Assembly Budget Committee in a 9-5 vote.
The Senate passes their budget in a 21-17 vote and also passes a corporate business tax bill. Gov. Murphy and Senate President Sweeney meet but still cannot agree on a compromise.
FRIDAY
MONDAY
Designated REALTOR® | August 2018 | 3
TUESDAY
THURSDAY
JUNE 26 TUESDAY
Gov. Murphy sends a letter to Senate President Sweeney asking for a modified Corporate Business Tax surcharge, a twoyear phased in sales tax increase and a “modest” increase of the millionaires’ tax to ensure sustainable revenue for the state. Senate President Sweeney says he will consider the compromise.
JUNE 27
JUNE 28
JUNE 29
JUNE 30
JULY 1
Senate President Sweeney releases a compromise to Gov. Murphy’s letter, which includes a seasonal rental sales tax and an increase to the realty transfer fee by one percent on properties purchased for $1 million or more. NJ Realtors® releases its first Call to Action letter at 6:01 p.m in strong opposition to these fees.
Within 24 hours of the initial notification, NJ Realtors® sends nearly 10,000 messages to elected officials opposing the two real estate bills. Two more Call to Action emails are sent throughout the day. Sens. O’Scanlon, Gopal, and Van Drew announce their opposition to the shore rental tax.
Sens. Sweeney and Coughlin offer Gov. Murphy a “megamillionaires’ tax” on those with a $5 million income threshold. Gov. Murphy rejects this tax and counteracts with a millionaires’ tax income threshold of $1.75 million. Gov. Murphy also removes the seven percent sales tax restoration and adds a four-year corporate business tax surcharge at two percent.
There is now less than 24 hours to approve the budget. News breaks early evening that a deal is reached and both real estate bills are off the table. The budget for 2019 will not have the sales tax restoration, adds a 2.5 percent increase on corporate business tax over a four-year period, and sets the millionaires’ tax income threshold at $5 million. By Saturday afternoon, 17,914 messages from NJ Realtors® have been sent to New Jersey’s elected officials in opposition to the seasonal rental tax and RTF hike.
The State Legislature meets in the morning and passes a batch of bills. The budget passes the Assembly in a 41-23 vote and the Senate in a 23-15 vote. The governor signs the budget late Sunday night.
WEDNESDAY
THURSDAY
FRIDAY
SUNDAY
SATURDAY
24h
Designated REALTOR® | August 2018 | 4
Passing the 2019 State Budget
Association Healthcare Plans –
B
ack in March, Gov. Phil Murphy released his $37.4 billion budget proposal for the fiscal year 2019 state budget. For many legislators, the proposed millionaires’ tax, which would have increased the income tax rate to 10.75 percent, was a cause of contention during budget hearings in June. On June 27, just four days before the budget deadline, news broke that the state legislature was considering two bills that would have negatively impacted the real estate industry. New Jersey Realtors® acted immediately. The first bill proposed a sales tax on seasonal rental properties and the other proposed an increase to the realty transfer fee. Within the first 24 hours, New Jersey Realtors® sent nearly 3,000 messages to elected officials. By the time both bills were defeated on June 30, New Jersey Realtors®, along with members from the public, sent 17,914 messages in opposition. If the seasonal sales tax passed, the Jersey Shore and other areas that depend on summer tourism would have suffered greatly. According to a 2015 Oxford Economics study, the average New Jersey tourist spends $1,000 a week on food, transportation, shopping and entertainment. This bill had the potential to hurt not just the homeowners who rent their homes, but also the businesses that profit most during this time of year. The realty transfer fee bill proposed a one percent increase on properties sold over $1 million. For counties with some of the state’s highest home values, such Designated REALTOR® | August 2018 | 5
What’s Buzzing in Real Estate This Month
1 2 3 4 5
On June 19, the U.S. Department of labor finalized its rule to allow real estate professionals to participate in association health plans. Click here to read more.
Transient Accommodations Tax – Beginning in Oct.
On Sat., June 30, NJ Realtors® CEO Jarrod Grasso and Government Affairs Director Douglas Tomson met at NJ Realtors® headquarters before heading to the State House for budget negotiations.
as Bergen, Hudson, Essex, Monmouth, and Cape May, adding more financial burdens for new homeowners could have resulted in an outmigration. New Jersey Realtors® understood this proposal would impact many New Jersey homeowners – in the Garden State, there are about 60,000 homes worth over $1 million, which means one in every 43 homes fall into this price bracket. If passed, this increase would add a minimum of $10,000 to the expenses of selling a property. Because New Jersey Realtors® acted quickly by sending letters to their legislators and encouraging others to do the same, both bills were officially dropped on Saturday, June 30. For more information on the 2019 budget, please visit nj.gov/governor.
2019, short-term rental sites booked through a third party, rather than a Realtor®, will not be taxed. This includes AirB&B, FlipKey, HomeAway.com, etc. Get the details here.
Foreign Investments in U.S. Real Estate is Down – Smaller inventory
and higher prices is not boding well for international investors – since last year, international sales in the U.S. are down 20 percent. Click here to learn more.
National Flood Insurance Program –
The Senate extended the NFIP until Nov. 31. This program was set to expire on July 31 and would have impacted 20,000 communities nationwide. Click here for more.
Nationwide Sales Decline, NJ Continues to Rise –
Home sales fell around the country to an eight-month low but New Jersey’s market remains strong. Read more on page 7.
Online application management platform now open!
COE.NJREALTOR.COM
2018
There are two ways to achieve the award. The Dollar & Unit Method calculates both quantity of transactions, as well as the dollar value of those transactions. The Strictly Unit Method only counts the quantity of transactions.
DOLLAR & UNIT:
$2.5 MILLION & 15 UNIT MINIMUM
STRICTLY UNIT:
30 UNITS
DOLLAR & UNIT:
$6.5 MILLION & 20 UNIT MINIMUM
STRICTLY UNIT:
70 UNITS
DOLLAR & UNIT:
$12 MILLION & 25 UNIT MINIMUM
STRICTLY UNIT:
90 UNITS
DOLLAR & UNIT:
$20 MILLION & 30 UNIT MINIMUM
STRICTLY UNIT:
125 UNITS
STRICTLY UNIT
DOLLAR & UNIT • • • •
Every closed transaction is worth 1 COE unit and the full dollar value the transaction closed for. Disclosed dual agents can count a transaction twice, as you earn for each side of a transaction. Rentals of one year or more are worth 1 COE unit and the gross value of the rental agreement. Rentals of less than one year are worth the gross value of the rental agreement and 1 COE unit for every 20 transactions.
• • • •
Every closed transaction is worth 1 COE unit. Disclosed dual agents can count a transaction twice, as you earn for each side of the transaction. Rentals of one year or more are worth 1 COE unit for every 5 transactions. Rentals of less than 1 year are worth 1 COE unit for every 20 transactions.
COE.NJREALTOR.COM Designated REALTOR® | August 2018 | 6
Housing Market Report for Second Quarter of 2018 New Jersey’s housing market is steady in the second quarter of 2018, with prices on the rise and properties spending fewer on the market, according to NJ Realtors® data.
The median sales price of a single-family home in June was $340,000, up 4.6 percent from last year. The townhouse/ condo median sales price increased slightly to $260,000 in June and adult communities increased 10.5 percent to $210,000 when compared to this time last year. Singlefamily homes spent an average of just 57 days on the market in June, down 10.9 percent over last year. Average time on the market for townhouses and condominiums was down 15.4 percent at 55 days, with adult communities not far behind at an 11 percent decline to 65 days, when compared to this time last year.
A strong economy and a quarter point increase to the federal funds rate in June is spurring competition among buyers, with low inventory adding to an already aggressive market. The number of single-family homes on the market in June dropped 12 percent over last year to 37,573. The townhouse/condo and adult community market numbers followed suit, dropping 12.6 percent to 9,741 and 6.9 percent to 2,335, respectively, for June.
“Many buyers will lock in at the current rate in anticipation of higher rates in the near future,” said 2018 New Jersey Realtors President Christian Schlueter. “Though the 30-year mortgage rate did not increase, this is a common pattern when the federal government increases the federal funds rate, which has occurred twice this year and a total of seven times since 2015.” With buyers quick to purchase homes from a smaller pool of available options, sellers are happy but buyers are feeling the market challenges. First-time homebuyers, who make up a large share of the market, are struggling to find inventory in their price range. “The current market is an opportune time for sellers,” said Schlueter. “But we must remain cognizant of the younger individuals—often first-time buyers—may not be able to compete with other bidders. Everyone needs a piece of the pie.” For the full reports, visit njrealtor.com/data.
Designated REALTOR® | August 2018 | 7
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