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Multifamily: State Set for Multifamily Boom

Recent trends and economic woes make renting more appealing.

By Brianne Harrison | Updated on June 04, 2008

The economic downturn and plummeting house values have made people look more favorably at rental housing. The multifamily housing market is one segment that’s booming in the Garden State and elsewhere, although New Jersey could do more to encourage its growth.

According to research conducted by Dr. James Hughes, Dean of the Edward J. Bloustein School of Planning and Public Policy, 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%. Home ownership in the state is expensive—housing in New Jersey costs 52% more than the national average, and real estate taxes are notoriously high. In the wake of the bursting of the housing bubble and the ensuing credit crisis, lenders across the country are tightening their purse strings, making it harder for homebuyers to secure mortgages.

At the same time, the idea of living in an urban environment is beginning to appeal to two large demographic groups: the baby boomers and their children, the millennials. According to Laurie Volk of Zimmerman/Volk Associates, who spoke at a recent Newark Regional Business Partnership insiders’ forum, young singles and couples make up about 40 to 50% of the urban downtown rental market, and empty nesters and retirees account for 30 to 40%. The appeal of settling in multifamily space in a city is not a New Jersey phenomenon: people all over the world are moving back to cities in record numbers. But New Jersey has been somewhat slower than most other areas to adapt to the trend.

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