New Jersey faces a difficult balance between strong employment opportunities and worsening housing affordability. The state continues to attract high-wage industries, but housing costs have risen faster than incomes in most regions.
In fact, New Jersey leads the nation in home-price growth, and more than one-third of households are considered cost-burdened, spending over 30% of their income on housing. We must address our housing undersupply or we will continue to constrain economic growth in New Jersey.
A recent New Jersey Future analysis of employment, population and housing data from the mid-1990s to 2024 suggests a sustained drop in housing production since the Great Recession has constrained job growth.
Before the recession, New Jersey was generating an average of 28,000 residential certificates of occupancy per year. But in the wake of the recession, production dropped in half and never recovered. From 2008 to 2024, the state averaged fewer than 15,000 new units per year; 2024’s total was 13,800.
Given that housing growth and job growth tend to move in tandem — new workers need places to live — continued underproduction will keep housing prices high, discourage workers from accepting jobs here and artificially constrain economic growth.
The economic cost of undersupply
The U.S. Chamber of Commerce’s report, “The State of Housing in America,” quantifies the financial impact of our housing shortage. In New Jersey, the estimates are staggering. Since 2008, the state’s housing shortage has resulted in more than $12.5 billion in lost economic output, over $9 billion less in personal income and nearly 100,000 jobs not generated.
The report also highlights how housing shortages in high-growth areas force workers to live farther from their jobs, leading to longer commutes and reduced productivity.
High housing costs and chronic undersupply affect employers in New Jersey by limiting workforce availability, driving up labor costs, reducing competitiveness and undermining long-term business stability.
High costs make it harder to attract and retain employees at nearly every income level. For younger workers and families, housing affordability often determines whether they remain in New Jersey at all.
Even well-compensated professionals increasingly struggle with affordability near major employment centers.
Pressure on employers and workers
When housing costs rise faster than wages, employers face pressure to increase compensation simply to maintain a stable workforce. Housing scarcity effectively acts as an indirect business tax.
Teachers, nurses, police officers, municipal employees, service workers and entry-level professionals are often priced out of the communities where they work. States competing for corporate investment increasingly evaluate housing availability as part of their economic development strategy.
We must embrace policies that support greater supply at all levels of affordability to meet the needs of workers across sectors.
The types of homes we build also matter. We need a variety of housing options that expand choices for residents of all ages and household sizes. Younger workers may prefer walkable, mixed-use areas near transit, while working families may prefer smaller starter homes or duplexes that allow for multigenerational living.
Building homes of all types, sizes and affordability levels will strengthen the economy and make New Jersey a viable place to live for the current and future workforce.
Policy momentum and next steps
Momentum is growing to remove barriers that keep housing costs high and restrict what can be built.
Gov. Mikie Sherrill has signed several executive orders to streamline permitting and review processes that delay projects and add costs, and to evaluate publicly owned land that could be used for housing.
In the Legislature, Sen. Singleton and Majority Leader Greenwald have taken the lead on zoning reforms, including S1766/A3535 to facilitate redevelopment of vacant or underused commercial spaces into mixed-use housing, and S1786/A3567 to allow homeowners to build accessory dwelling units.
Housing policy is increasingly economic and workforce policy. For employers in New Jersey, housing is no longer just a social concern but a core competitiveness issue.
To overcome these challenges, elected leaders should continue pursuing strategies that enable more housing production, address affordability and create a stronger foundation for residents and the state’s economy.
Gualberto (Gil) Medina served as an attorney-adviser for the U.S. Department of Housing and Urban Development, a city councilman in Camden and New Jersey’s secretary of commerce. He chairs the New Jersey Chamber of Commerce and serves on the board of New Jersey Future.
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