By Peter S. Reinhart
The Mount Laurel doctrine was born in New Jersey in 1975 and the Council on Affordable Housing was created in 1985. After COAH was rendered moot by the New Jersey Supreme Court in 2015 and the courts again took control of the affordable housing process, there has been some recent discussion about state government reasserting itself into the affordable housing arena. Some legislators are discussing potential legislation to take back the affordable housing process from the courts. Since 2015, over 340 towns have been involved in the court process and over 280 signed settlement agreements have been reached. Superior Court Judge Jacobsen in Mercer County has determined the statewide need to be about 155,000 units and experts project that about 50,000 of those will be created by 2025. Frankly, the court process is way too far down the road to try and move it back to COAH or another state agency. But that is not to say there are not some issues worth discussing as we move forward.
For one, the original premise of the Mount Laurel doctrine, to integrate the suburbs through zoning in order to move lower-income people out of the poverty-stricken urban areas, has been turned on its head. The fastest-growing municipalities in the state are now the urban areas like Jersey City, Hoboken, West New York, even Newark. Growth in the formerly fast-growing suburban and rural counties has slowed, or in some cases turned negative.
This has created another problem in the growing gentrification in those now-thriving urban areas. The “inner cities” that had no shortage of low-cost housing for decades in the 1950s to early 2000s are now seeing urban redevelopment of those areas with high rents and home prices at the expense of residents who were living in the affordable apartments. That housing “need” number is growing as these gentrified people are forced out of their neighborhoods. That is not to say that this urban redevelopment should stop. Just that a way needs to be found to provide affordable housing for the former occupants.
At the same time, as prices and rents in the cities are climbing, home values in many of those older suburban/rural areas have been stagnant. This is due in large part to the demographic shift from the baby boomers as the dominant housing force to the Gen Xers and millennials as the now largest home buying group. The younger buyers seem to prefer a more urban vibe and are less interested in the larger single-family home on a big lot that dominated the New Jersey housing market for a long time. A recent Morgan Stanley nationwide study projects that housing demand from the younger generations will increase by 7 percent. But at the same time, the housing supply will grow by 43 percent as the baby boomers look to sell and move down. That is a bad mix, particularly for New Jersey with its historic dominance of single-family detached homes on larger lots.
Builders serve the market. They know what the younger buyers are looking for and where they are looking. This new generation of home buyers is starting to take a look at the suburbs, particularly those in close proximity to transit. But they are not much interested in the older housing stock. Towns need to recognize this if they want to be able to attract the younger buyers and maintain their fiscal stability. If new buyers are unwilling to move to a town, the pressure on property taxes will only worsen.
As was done in the 1980s, when homebuilders showed towns what inclusionary developments could look like and dispelled the concern that they would look like the monolithic low-income projects of the 1950s and 1960s, the homebuilders today should show towns how beautiful and interesting affordable housing in mixed-use developments can be.
Towns need to work with the builders to create communities that are relevant and desirable to these younger buyers. Mixed use, higher density, relevant open spaces, cultural opportunities and the like are what is needed. For those buyers seeking the large single-family home, there are plenty of existing homes ready for purchase, renovation, tear-down or anything in between.
New Jersey’s entire affordable housing solution is premised upon a hybrid approach. Government, including the judicial branch and the local governmental bodies, determines how much and where the housing is supposed to go. But it is the building community that actually constructs the housing. As the court settlements are reached, it is now up to the builders working with the towns to build it. But builders will not build homes that they know will not sell. That is where the towns’ mothers and fathers need to be educated on where the market is going.
It is also time to get younger people involved on the town governing bodies and planning and zoning boards. The baby boomer generation needs to start to give way to the Gen X and Gen Y people who will be charting the future course of New Jersey. As with any organization, fresh blood is needed to keep the organization vibrant and innovative. Having the same people repeat the same old ways is not a path to progress.
It is time for the building community to step up its leadership role in helping towns absorb the new inclusionary mixed-use communities and the younger generations that will shape New Jersey for many years to come.
Peter S. Reinhart, Esq., is the director of the Kislak Real Estate Institute at Monmouth University and the chair of New Jersey Future.