[MA-RPC] THE NEW NEW JERSEY? EASTERN PENNSYLVANIA

[Walt Daniels]

THE NEW NEW JERSEY? EASTERN PENNSYLVANIA

Jersey's cost of living driving many Jerseyans farther west.

By Stefanie Matteson, Staff Writer

Fed up with rising taxes, car insurance premiums, housing costs and
ever-worsening congestion, more New Jerseyans than ever are moving
out. The figures have been called "staggering" by Jeffrey G. Otteau,
president of the Bridgewater-based Otteau Appraisal Group, a real
estate industry analyst.

>From July 1, 2004, to July 1, 2005, a record 56,989 people left the
state -- more than double than for the same period three years
earlier.

"The taxes are forcing people out of their homes," said Karen Ettere,
newly installed president of the Branchburg-based Hunterdon-Somerset
Association of Realtors.

"The schools are excellent, but we no longer need them," said retiree
Michael Flynn of the Basking Ridge section of Bernards. He's thinking
about selling his single-family home. "For a retiree, the bottom line
is the expenses after you move in, which boils down to property taxes,
maintenance and association dues."

The stampede of New Jerseyans is partly offset by the 47,392
immigrants who entered the state during the same period, but the rate
of immigration is dwindling and in 2004-05 was 25 percent less than in
2001-02, said Joe Seneca, an economics professor at the Edward J.
Bloustein School of Planning and Public Policy at Rutgers University.
He attributes it post-9/11 homeland security policies that have made
immigration more difficult.

And both trends are expected to accelerate in the future.

The result is a dramatic decline in the state's population growth. The
population growth declined by more than 50 percent between 2002-03 and
2004-05, Seneca said.

While this might sound like good news for those who are tiring of the
consequences of rapid growth, it is also symptomatic of an underlying
set of chronic problems.

"It's a double-edged sword," Seneca said. "Some might say that it's a
good thing, that New Jersey has too many people -- you can't make a
left-hand turn anymore -- but the long-term viability of the state is
affected, which will impact tax revenues, employment and growth, which
is not so attractive as an outcome."

"In the future, we are not likely to see the job growth we've seen
historically, and particularly in the high-paying jobs," Otteau noted,
adding that New Jersey ranked 44 out of the 50 states in a recent
survey on attracting jobs.

The 'new' New Jersey

One only needs to cross the Delaware to see where New Jerseyans are
headed.

The movement of the population westward from New York that has been
responsible for the state's extraordinary growth rate -- and that has
led to residential sprawl in the exurbs as farmland is gobbled up at a
rate of 50 acres a day -- has now made the leap across state lines.

As New Jersey's housing becomes more expensive and its land
increasingly scarce -- and as more jobs move farther out -- residents
are taking on longer commutes to live more affordably in Pennsylvania
in what one observer has called "middle-class flight."

Roger and Gwen Noel, who work as consultants to a Bridgewater
pharmaceutical company, sold their three-bedroom town house in
Franklin, Somerset County, in September for $350,000 and bought a 4-
year-old, four-bedroom, two-and-a-half bath Colonial on a quarter-acre
lot in Bethlehem Twp., Pa., for $335,000.

"The town house (which they purchased for $186,000) nearly doubled in
value in the five years we owned it, but although it was beneficial to
sell we had to leave the area and find somewhere better to buy if we
were going to make good on that appreciation," Roger Noel said.

In addition to paying $15,000 less for their new home, the Noels also
cut their property taxes from $6,000 to $4,000. Roger Noel figures
that a similar house in a comparable Somerset County community would
have cost $200,000 more and carried a property tax bill of $9,000 or
more.

"Welcome to the new New Jersey -- it's Eastern Pennsylvania," Seneca
said, noting that wherever a highway offers easy access between
Pennsylvania and New Jersey -- be it Interstates 80, 78 or 276 -- the
result has been an explosion in growth.

In 2004, Somerset County ranked 27th nationally in the median value of
owner-occupied housing, at $385,614, according to the U.S. Census. In
terms of median household income, Somerset ranked second nationally
after Fairfax County, Va., with a median household income of $84,892.

Higher standard of living

By contrast, Northampton County, Pa., ranked 128th nationally in
median value of owner-occupied housing, at $162,001, and Lehigh
County, Pa., ranked 145th at $149,205. In median household income,
Northampton County ranked 109th at $48,720 and Lehigh County 130th at
$46,540.

The message is clear: By buying a Pennsylvania house on a New Jersey
salary, buyers can make a quantum leap in their standard of living,
especially those who already are working in Central Jersey and can
thus keep their commute within reasonable bounds.

"Those who work in the pharmaceutical industry in Somerset and
Middlesex counties used to move 17 minutes out to Stewartsville (in
Warren County, near Phillipsburg); now they're moving 35 minutes out
to Pennsylvania," said John Bendall, owner of the ReMax Classic Group
offices in Branchburg and Berkley Heights.

For Roger Noel, the downside is the commute, which takes 45 minutes to
an hour, but the upside is a more spacious house; a yard for their
sons, ages 2 and 4, to play in; an excellent school system; and a
slower-paced lifestyle that even extends to road etiquette, he said.

"In New Jersey, if you turn on your blinker to change lanes, the car
in the other lane will speed up to block you; here, they'll slow down
to let you in," Noel said.

According to the U.S. Census report on state-to-state migration for
1995 to 2000, the most recent year for which statistics are available,
110,436 people moved from New Jersey to Pennsylvania, making New
Jersey-to-Pennsylvania one of the top migration flows in the country.
(The top was New York-to-Florida.)

"The activity in the Lehigh Valley is very strong," said Joe McDonald,
regional vice president of Weichert Realtors, whose territory, in
addition to four Central Jersey counties, includes Pennsylvania
offices in Easton, Bethlehem and Allentown.

The migrants include young families such as the Noels who can afford a
bigger house for their money in Pennsylvania as well as retirees who
find it cheaper and more attractive to buy a ranch house on a small
piece property in Pennsylvania than a unit in an age-restricted
housing development in South Jersey, real estate agents said.

Sometimes the two trends are connected. "People follow their kids,"
McDonald said.

Baby boomer migration

The beginning of the 70-million strong baby boomer generation turns 60
this year, and more than 100,000 New Jerseyans a year -- or close to
300 a day -- are turning 55, Otteau said. They are the first wave of
what is expected to be an exodus as empty-nesters downsize in
preparation for the next stage of their lives.

In contrast to previous generations, which often moved to the Sun Belt
states, however, the baby boomers want to stay "within striking
distance" of their original residences, Otteau said. A third of baby
boomers looking to downsize are planning to buy in the same county,
while 60 percent want to stay within 50 miles, he said.

By moving to Pennsylvania, retirees living on fixed incomes can cut
their housing and car insurance expenses by about half, while still
staying near their families across the Delaware, Ettere said.

Indeed, the growth in Pennsylvania also includes New Jersey retirees
who have moved south and then decided to move back to be closer to
their families, she said. Because rising prices have put their former
communities out of reach financially, they are forced to Pennsylvania
as a default destination.

Nationwide, about half the retirees who move to the Sun Belt states
eventually return north to be closer to their families, said Gopal
Ahluwalia, an economist for the National Association fo Home Builders.

"Once you leave New Jersey, it's hard to buy what you left behind --
even if you've only been gone for two years," Ettere said. "It's
almost devastating. But you go to Pennsylvania, and there it is."

In addition, returning retirees are forced to the cheaper alternative
because their limited financial resources have often been depleted by
the closing, moving and set-up costs associated with selling their
home in New Jersey, moving to a home in the South and then moving back
again, she said.

If retirees leave New Jersey with $400,000, they may come back with
$100,000 less as a result of such expenses, Ettere said.

In addition to being able to afford a bigger house in Pennsylvania,
another attraction for New Jersey residents is the availability of new
construction. "People like new construction," McDonald said.

Because of the density of New Jersey's population -- it is expected to
be the first state in the nation to be built out, which New Jersey
Future, an environmental organization, predicts will occur in 20 to 40
years -- there is little new construction and the available new homes
are too expensive for most because of high land prices.