Oh, the problem here isn’t that the homes are so expensive - it is that the taxes are so high people aren’t willing to pay much for them (unless they intend to convert the former single-family homes of Americans into 2- or 3- family homes, which adds a bunch of kids to the schools). These conversions are often “undocumented”, so the whole town bears the costs of those kids (instead of that homeowner alone). If they don’t move families into the new units but childless adults instead, then parking is a nightmare; homes without driveways really suffer price-wise. Someone earning $60K could buy a home here; they’d just lose it because of the property taxes (not the bank loan itself, which wouldn’t have to be very high).
The Alternative Minimum Tax was set up initially to prevent millionaires from hiding income from taxation through legitimate means (excessive but valid deductions in the government’s eyes); what has happened here is that the high cost of living is pushing more and more middle class people into that category. When the property tax deduction is five figures (even in areas that aren’t very “nice” or wealthy, and you add on mortgage interest, medical, and charitable giving deductions, you may easily find yourself subject to that Alternative Minimum Tax.
You raise a good point about high cost of living pushing people into higher tax brackets, etc. That hypothetical couple earning $60K here would be eligible for modest Obamacare subsidies. If they moved to NJ they would lose the subsidies if they earned $80K. An older couple might even need $90K+ to break even.