I live one county north of shoulder, in an area that has long been over-run with NYC refugees. Due to the way the cost of schools and government services are (not) paid for, by the state of Pennsylvania, my area has some of the highest R.E taxes in the nation, when viewed on a percentage of value basis. Consequently, home values are flat, and have been so since they hit bottom, in the great recession. As the years go by, and the locals head for retirement, they are ending up seeing little to no reduction in expenses as they pay their homes off. Thirty years ago they had a new mortgage and a total PITI payment of, lets say $800 a month. Thirty years later, the mortgage is paid off, the taxes are more per month than the mortgage was, and their expenses on a paid off home are climbing.
Oddly enough, the local economy still does fairly well, in part because of the fact that living here, and commuting back to the NYC metro area, is still a lot cheaper than living in the metro area or more rural NJ. I have read some interesting stuff about how CT. long ago, took the path of being a lot more conservative about keeping their local and regional governments from getting out of control, and as you state, the difference in home values and taxation are pretty stark. Personally, there is no way in hell that I would ever buy property in metro NYC, including NJ. Every government agency, from the state level on down to the countless local commissions, authorities, and boards have become exploding fountains of waste complete with massive, unfunded pension obligations. It isn't going to end well, and the property owners, as usual, are the ones who are going to get screwed.