NJ Municipal Housing Obligations: 2025 or Bust?

While affordable housing policy (or lack thereof) has had a profound impact on multifamily development in New Jersey over the past 5 years, it is becoming increasingly unclear what impact this will have on development in the next 5 years.

While the precise impact of affordable housing litigation is difficult to quantify, among many other forces impacting the multifamily market, consider this…. In 2016, the year immediately after the NJ Supreme Court took direct control over affordable housing regulations, the number of new multifamily starts jumped by almost 5K units or 50%.  According to the NJDCA Data, this wasn’t a fluke.  Between 2007-2015, New Jersey saw an average of nearly 8,000 statewide multifamily starts annually.  By comparison, between 2016-2021 (with court intervention) this number was 17,600 annually – or a 120% increase!

Admittedly, this data does not account for the impacts of the 2008 Recession, or the significant number of housing units constructed in municipalities exempt from affordable housing requirements – places like Jersey City, Newark, Montclair, and other “Urban Aid” municipalities.  That said, the impact of the Supreme Court’s intervention, especially upon wealthy suburban markets, cannot be ignored.

Multifamily developers haven’t been the only ones to notice the housing boom.  Suburban elected officials, once able to restrict new multifamily development through zoning, have been forced to accept hundreds of apartment units – typically in the face of local protest.  The current round of affordable housing regulations will “expire” in 2025 and there’s no clear plan for what comes next.  The stage is thus set for a high-stakes showdown – with housing advocates and developers on one side, and suburban elected officials on the other.

Some initial salvos in this battle have already been launched in Trenton, with legislators already introducing bills to hit the “pause” on regulations forcing new multifamily development. So, what’s the bottom line?  Developers and owners considering the sale of multifamily land, at the very least, need to stay abreast on this topic.  It also may not be too late to take a more active role.  Recent litigation in places like Madison and Morris Township demonstrates that, in some cases, the courts remain a viable option to force zoning amendments.  The experts at Blau & Berg are available to advise clients on this and many other complex development matters.