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Luxury Property Real Estate Transactions: CENTURY 21 Cedarcrest’s Fine Homes & Estates
We are blessed to have offices in Essex County and Passaic County, where many high-end homes are also located, with proximity to other luxury markets in Bergen County and Morris County. As a real estate brokerage that is part of the CENTURY 21 Fine Homes & Estates® program, we have the knowledge and resources to market luxury homes in our market. This is a specialized division that caters to the home buyers and sellers in the luxury market.
What constitutes a luxury home?
According to CENTURY 21 Real Estate, a luxury listing is one that is priced at three times the market area’s median price, and typically is in the top 10% tier of the local real estate market.
According to the New Jersey REALTORS®, the single-family median sales price was $458,675 in June 2021 (up by about 29% over the prior year); given that figure, a luxury listing in our area would start at approximately $1,380,000. In addition to price point, other criteria may include the home’s condition, size (property and house), number of bedrooms and bathrooms, location (neighborhood as well as environment such as waterfront property or golf/country club community), and high-end amenities.
Who are today’s luxury-home buyers?
Urban buyers who came out to North Jersey during the pandemic, seeking more house and space drove luxury home sales over the past year, as the money they were paying to live in New York City went (and still goes) further in our suburbs. These buyers are often well-positioned to buy the prestigious properties within our Fine Homes & Estates portfolio.
Further, they are usually millennials who postponed buying a “starter home” as their parents probably did, and now have the purchasing power to go big. In fact, according to the National Association of REALTORs, millennials comprise the largest cohort of home buyers nationwide followed by Gen Xers. Given they have delayed their residential real estate purchases and with mortgage rates historically low, it’s prime time for this population to enter the luxury market.
What do they want in an upscale home?
Some high-end amenities are based on the home’s location or the buyer’s profile, but some common sought-after upgrades include:
- Expansive outdoor entertaining space (complete with chef-worthy outdoor kitchen, built-in fireplace, multi-level patio or deck, spa, lush gardens)
- Kitchens with work/dining island, European appliances, industrial stoves
- Private dock and/or beach for waterfront properties
- Wine cellar
- Smart appliances/connected home
- Fully equipped media room.
- Home office(s) or playroom
- Guest/caregiver bedroom and bath
- Energy efficiency features from solar panels to tankless water heaters
Tools to market luxury homes
Preparing to list and market these distinctive homes requires a higher level of preparation and attention to detail. With the CENTURY 21 Fine Homes & Estates program, Cedarcrest Realty has access to specialized marketing tools to effectively market distinctive homes and address the expectations of the more affluent buyer or seller. For example, our real estate associates who work within this segment understand that they may be expected to work with or negotiate with other individuals such as trusted advisors (attorneys, accountants, business managers) or professional associates of the buyers or sellers.
Marketing your New Jersey luxury home
Every listing in Cedarcrest Realty’s Fine Homes & Estates program receives extensive exposure to potential buyers and their real estate agents through multimedia marketing and advertising support, which includes:
- Strong curbside visibility with our “Fine Homes and Estates” signage
- Exposure nationwide and internationally on hundreds of websites that cater to exclusive lifestyles, including Wall Street Journal (WSJ.com), RobbReport. com, duPontREGISTRY.com, LuxuryHomes.com, James Edition, MansionGlobal.com
- Professional real estate photography
- Professionally written and designed marketing collateral that highlights the property’s unique high-end features
- Property brochures distributed to potential luxury home buyers and the area’s finest real estate offices
- Featured listing in Suburban Essex magazine, Essex County’s upscale lifestyle magazine read by your potential buyers
- Outreach to our extensive Global Broker Referral Network℠
Remarkable homes for sale require remarkable service and attention. At CENTURY 21 Cedarcrest Realty, we have won multiple industry and consumer awards in recognition of our high level of customer service (as well as sales). Rest assured, our Fine Homes & Estates team will create an award-winning experience for your luxury home listing or to help you find the distinctive property you seek in North Jersey. Contact our office in Caldwell at (973) 228-1050 to get started.
How the SALT Deduction is Affecting NJ Real Estate Market
Photo Credit: Denise Kappa
The 2017 Tax Cuts and Jobs Act took effect for taxpayers upon filing their 2018 tax returns earlier this year. One of the biggest changes felt by homeowners in New Jersey—the state with the highest property taxes in the nation—was the state and local tax (SALT) deductions which include property, income, and sales taxes.
Property tax deductions
The SALT deduction allows taxpayers in high-tax states to deduct their local tax payments on their federal tax returns. Before the 2018 tax year, no maximum limits were attached to that deduction amount. Anyone who itemizes can deduct property taxes; the other taxes are their choice.
However, the new tax law placed a cap, for those who claim deductions, of $10,000 for income and property taxes. Ouch! Especially for homeowners in high-end markets, with homes valued at $1 million-plus, that cap represents an enormous drop in the deduction from what those taxpayers were claiming just two years ago.
In northern New Jersey—particularly in highly taxed municipalities in Bergen, Essex, and Passaic counties—these deductions for taxpayers who itemize were highly valued when filing their federal tax returns.
As our friend Joseph Isabella, a loan officer at Investors Bank illustrated in a recent presentation to our Cedarcrest team, “If you are paying $25,000 in income taxes to NJ and $25,000 in property taxes to your North Jersey town, that $50,000 deduction goes down to $10,000.” This is certainly affecting wealthier taxpayers, who now pay a higher tax bill to the federal government. However, middle-class Americans who itemize (or had itemized), and who pay substantial property taxes, have also felt the pinch.
Mortgage interest and home equity/HELOC deductions
Another reason why the TCJA affects those with high-value homes is that the bill also reduces the limit on deductible mortgage debt.
- For loans taken out after December 15, 2017, the cap is $750,000. Loans existing on December 15, 2017 of up to $1 million are not subject to the new $750,000 cap (they are grandfathered in). This figure is based on married filing jointly status; for a married filing separately or a single filer, the cap is half ($375,000).
- If you have a loan of up to $1 million that existed on that mid-December date, you may refinance it and still deduct the interest. However, the new loan must not exceed the amount of the mortgage being refinanced.
- Interest is still deductible on second homes, subject to the $1 million/$750,000 limits.
- The Tax Cuts and Jobs Act of 2017 eliminates the deduction for interest paid on home equity loans and lines of credit for tax years 2018-2025 unless you use(d) those funds to purchase, renovate or substantially improve your primary or second home (any personal expenses are excluded, such as education or debt consolidation).
While high-net-worth individuals are seeing the biggest impact on their tax returns, the loss in deductions could be offset by the decrease of the top federal income tax rate, the doubling of the estate tax deduction, and the cutting of the capital gains rate.
Taking a broader view, these deduction limits may not have the negative effect many people fear. Due to their income or tax bracket, many taxpayers don’t qualify for itemization on their tax returns and/or are best served taking the (now higher) standard deduction. For taxpayers who are single or married but filing separately, the standard deduction is $12,000. For heads of households, it is $18,000 and $24,000 for the married filing jointly taxpayers.
Yes, New Jersey has high property taxes, but it also has some great places to live—with lots of town services and strong school systems supported by those local property taxes. John Sass, broker owner of CENTURY 21 Cedarcrest Realty, notes that, “Prior to buying or selling a home, consumers should consult with their tax advisors/accountants to see how the new tax laws may affect them, given their particular circumstances. This is especially true now as 2020 approaches. With lots of numbers to crunch and tax strategies to consider, it’s a great time to talk about tax matters related to real estate transactions with your trusted advisor.”
It’s also a great time to come talk to our real estate professionals at CENTURY 21 Cedarcrest Realty. Whether you’re looking for a new home or putting yours on the market, our team’s expertise in North Jersey real estate will help make the process a smooth one, every step of the way.
More Buyers Keep the New Jersey Housing Market Strong
If you have managed to survived the housing market crash thus far, you don’t have much more to go. The North Jersey market has been very lively this past spring season, giving homeowners a bit more hope that they will be able to successfully climb out of the worst housing bust since World War II. What has been helping the market to grow? Low interest rates, low home prices and added job security.
Bergen County remains one of New Jersey’s strongest markets, but all of the state’s counties have seen growth. What has changed compared to last year is that it’s not just a buyer’s market anymore; it’s both a buyer’s and a seller’s market. Low interest rates and low housing prices make now a great time for new homebuyers. After all, when will you see interest rates at 4 percent again?
At the same time, there is a low inventory and plenty of buyers, which means that there is a seller’s market going on as well. Sellers don’t have to accept low-ball offers or take the first person who bids on the house. In fact, some sellers were surprised to see that their house sold for more than what they put it on the market for just because people out-bid each other. It’s a great feeling, and the market has become an even playing field for both buyers and sellers, good news for the future.
What we hope is that these homebuyers keep the market going strong. A lot of buyers have a “buy now, pay less” mentality, and they want to jump in now before it’s too late. They see prices and interest rates going up, and they know they don’t have much time. Buyers are tired of waiting; they know that the best prices and rates are behind us. This is great for sellers, who are also tired of waiting. Is this the start of a healthy market? We sure hope so!
