Housing Market Solution Could Help New Jersey

New Jersey might have just found a solution to its affordable housing crisis, and it involves the undeveloped land outside of its transit system.

The Regional Plan Association found 74,000 acres of land were underutilized around the commuter rail stations within New Jersey and New York.

Today, the median rent in New Jersey is $2,500, $470 more than the national median, according to Zillow data.

Already, land has been rezoned in Metuchen for mixed-use development, and this could continue into the larger area, according to Jay Muldoon, the former director of economic development in Metuchen.

"We have great neighborhoods in Metuchen, but we now have a more vibrant, engaging and inviting downtown, where 25 years ago it was a pretty much a dead downtown," Muldoon told NJ Spotlight News.

Around 150 transit stations in New Jersey could see rezoning and redevelopment that would bring more affordable housing to the area, but some challenges remain.

In Governor Phil Murphy's outlined $55.9 billion 2025 budget proposal, he also called for an Affordable Housing Trust Fund to help homeless veterans secure housing.

More than $32 million would also be used for residents needing down payment assistance and $10 million would work as incentives for cities to create new affordable accessory dwelling units.

"At a moment of economic uncertainty and unease, how do we, as a state, move forward?" Murphy said in a speech. "New Jersey is prepared to face our challenges confidently, capably and ambitiously. And we are prepared, because over the past six plus years together we have restored fiscal responsibility while remaining true to our values."

In order for the plan to gain traction, experts say tax credits and subsidies will need to make it more financially feasible for developers to build affordable housing in these areas.

"While New Jersey's plan shows promise, there are potential obstacles that could hinder its success," real estate consultant and Pavel Buys Houses founder and CEO Pavel Khaykin told Newsweek. "One major challenge is the high cost of land and construction in the state, making it difficult for developers to build affordable units without significant financial support."

Local communities might also come out against the new developments in their neighborhoods with concerns of safety or property value impact down the line.

Khaykin also said the plans so far do not address the root causes of housing affordability, which are inadequate wages and rising housing costs.

"If these underlying issues are not addressed, it could make it difficult for low-income individuals and families to afford even the newly created affordable units," Khaykin said.

National Problem

If New Jersey is able to get this plan implemented, however, it could stand as a strong example to other states on how to solve their own housing costs problems.

"The current state of affordable housing in America is dire," Khaykin said.

According to the National Low Income Housing Coalition, there is a shortage of 7 million affordable and available rental homes for extremely low-income renters.

"When people are spending a large portion of their income on housing, they have less money to spend on other essential needs, such as food and healthcare," Khaykin said. "This can lead to a cycle of poverty and hinder economic growth."

Altogether, average rents surged 22 percent from the fourth quarter of 2019 to the fourth quarter of 2023, according to the Federal Reserve Bank of St. Louis. Home sale prices also skyrocketed by 28 percent.

Each state faces unique challenges surrounding affordable housing, and the transit infrastructure might not be in place to replicate the idea entirely, True Tamplin, the founder and CEO of Finance Strategists, said.

"But the principle of integrating housing development with public transit systems is a universally beneficial model that can contribute to addressing the housing affordability crisis on a broader scale," Tamplin told Newsweek.