New Jersey, like the rest of the country, has been hit hard by the economic downturn. According to Dr. James Hughes, Dean of the Edward J. Bloustein School of Planning and Public Policy, the state has lost more than 9,000 private sector jobs in the first five months of 2008. In addition, lenders across the country are tightening their purse strings, and Hughes said it's likely the country as a whole will continue to see recessionary or near recessionary conditions.
While this is bad news for consumers and borrows, it's good news for those who own multifamily rental properties. Hughes' research has found that home ownership in the state has dropped from its 2005 high of 70% to 68.3%, and he expects it to drop further to just under 65%.
Many people are joining the rental pool because New Jersey's high housing costs--housing in the state costs 52% more than the national average--and high property taxes combine to make renting an attractive prospect, especially in the current economic climate, in which homes are not appreciating in value as much as they used to. So says David Barry, president of Applied Development, who spoke in this session.
"New Jersey will be profitable and a good investment for multifamily developers," he said. "Rental housing is doing well. We've seen good rental rate increases and low vacancy rates."
Developing multifamily rental units seems like a good bet, but Peter Kasabach, executive director of New Jersey Future, was on hand to remind attendees that the state and developers need to consider the best way to build such units to maximize the benefit to New Jersey and its residents. "We have to pay attention to where and how we develop," Kasabach said. He urged attendees to concentrate development in areas that already possess the infrastructure to support it. His organization advocates building affordable, mixed-use communities in town centers or near transit hubs to limit sprawl, provide housing opportunities to people of all income levels and decrease dependence on cars.
New Jersey, however, is making some of that development difficult. Kasabach cited insufficient amounts of land zoned for high-density mixed-use developments, restrictive regulations and a lack of predictability in the development process as barriers to smart growth. New Jersey Future, he said, is working with the state to form an incentive program that will encourage municipalities to embrace concentrated, mixed-income smart growth. NJ Future is also hoping to improve the new Urban Hub Transit Tax Credit to benefit multifamily developers who build near transit hubs.
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