Housing development within the New York - New Jersey - Connecticut metropolitan region has been insufficient to meet the needs of its residents. As housing supply has become constrained, available homes for workers, young people, and low and moderate-income households have declined. The region’s failure to build enough housing has resulted in overcrowded apartments, increasing homelessness, and rents and home prices that have been rising faster than income and inflation. This lack of housing has hampered economic growth, accelerated environmental degradation, and worsened health outcomes. These conditions, and the ways in which the regional housing market has evolved, have been largely dictated by economic forces and policy choices made in each of the three states.
Since 1990 median house values in the region have increased by approximately 21%, and median gross rents by 22%. Consequently – and in pair with rising income inequality – the share of homeowners and tenants that are cost burdened by mortgages and rents has increased by approximately 68% and 29%, respectively. Public opinion polls reflect this reality, where the high cost of living and the inability to find affordable housing have been consistently identified as the biggest threats to the region.
To better understand how the region arrived at this crisis - and where it might be headed - Regional Plan Association (RPA) analyzed building permit data from the last three decades. Currently, there are 9.4 million housing units in the tri-state region; approximately 1.6 million (or 20%) have been built since 1990.
An examination of building permits from the last three decades shows a clear demarcation in 2009, when the number of new residential units in the region collapsed to its lowest point in recent history. This was a consequence of the mortgage crisis of 2007-2008 and the subsequent economic recession. Other recessions, including those in the 90s, early 2000s, and the impacts caused by the COVID pandemic, appear to have had comparatively modest effects on the overall number of units permitted and constructed in subsequent years. The year 2009 was an inflection point that marked important differences in quantity, distribution, and type of housing production within the region, and its effects are still with us over a decade later.
When comparing the pre and post-recession periods (1997-2009 vs 2010-2022) we observe the following:
- An incomplete recovery in housing construction
- A sharp decline in “missing middle” development
- An increasing housing gap between Long Island and the rest of the region
Last year, the New York Metropolitan Statistical Area (MSA) permitted 7.3 housing units for every 1,000 existing homes, a low rate that led the region to trail behind most other metros in the country. The New York MSA ranked 36 among the 51 most populated metros in the country. Unfortunately, the trend in the region has not been limited to 2022; slow pace in residential development has largely defined the years following the great economic recession.
The tri-state region has yet to recover from the steep decline in housing production experienced in 2009. During the 12 years of the pre-recession period from 1997 to 2009, the region permitted approximately 741,000 housing units. In the 12-year post-recession period from 2010 to 2022, only 684,000 units were permitted or 7.5% less. The difference between the two periods is even starker when population growth is factored in. During the post-recession period, the region permitted 13% fewer housing units per capita when compared to the years before (the region as a whole saw a net increase of 2 million people between 2000 and 2020, 1.3 million of which were added between 2010 and 2020). This change was most acutely felt in some parts of the region such as Long Island and the Mid-Hudson Valley, where the percentage reduction in housing units per 1,000 residents was 57% and 43%, respectively.
The region as a whole has seen a shift in the type of housing units being developed between the pre and post recession periods. Notably, the post recession period has seen a greater production of multi-family housing (68% increase), in comparison to the significant reduction in single family housing (51% decrease) and a steep decline in the middle density housing (69% decrease).
Mid-sized buildings with 2-4 housing units, generally described as missing middle housing, were in short supply pre-recession (1997-2009), but have become incredibly scarce in the post-recession era. The decline of mid-sized buildings partly explains the housing gap between the two time periods. Between 1997-2009 the region permitted 112,500 homes in mid-sized buildings, which comprised 15% of all housing permits. But permits for middle density buildings were reduced by almost 70% in the post-recession period, where the region permitted only 34,700, representing just 5% of the total number of housing units. Two-thirds (almost 75,000 units) of these units were permitted in New York City during the pre-recession period, but that number dropped to just 15,000 units in the post-recession period. This decline in just New York City missing middle housing represents almost the entire decline in housing production overall between the pre and post-recession periods.
Bringing back the production of middle density housing should be an important policy goal for several reasons. This type of stock provides additional housing in a manner that fits existing communities’ structure, also known as “gentle density,” while assisting in providing units for a wide variety of price points and needs. In addition, the feasibility of these mid-sized buildings also enables smaller developers - often M/WBE firms or nonprofit housing providers - to access more opportunities and could help address the lack of diversity within the real-estate industry.
Over the past three decades, housing production in Long Island was not only significantly lower when compared to the rest of the region, but it also saw the greatest reduction in its share over time. Between 1997 and 2009 Long Island - which at the time represented 13% of the region’s population - permitted 62,000 units or 8.4% of the region’s total. From 2010-2022, production in Long Island shrank to just 27,000 units, representing a regional share of only 4%. On a per capita basis, Long Island permitted 57% fewer units in 2010-2022 compared to the 12 years prior. In contrast, New Jersey Metro Core saw an increase of more than 24% units per capita permitted over the same time period.
Despite Long Island’s scant production and lack of available land to sprawl further, post-recession permits were overwhelmingly issued for single-family units: 20,300 single-family units compared with 6,500 units in multifamily buildings of five units or more. In comparison New Jersey Metro Core permitted 53,500 units in single family buildings and 160,000 in multifamily. As a whole New Jersey also saw a larger population percent growth during the post-recession period in walkable neighborhoods served by transit stations. Some of this might be attributed to the state’s proactive efforts to revitalize surrounding areas of NJ Transit stations, encourage walkable neighborhoods, and multifamily buildings served by transit.
Meager housing production in Long Island has coincided with a recent population decline, and the trend may be linked to the Island’s limited housing options. In contrast, greater housing production in New Jersey has coincided with faster population growth, as well as a swift post-pandemic job recovery. Mercer, Middlesex, Monmouth, and Ocean counties in central New Jersey are booming, having recovered all pre-covid jobs while adding almost 50,000 additional ones, well above the national pace. Meanwhile, other parts of the region with slow housing production are falling behind. Long Island is still 13,400 jobs short of its pre-pandemic level, while Hudson Valley is yet to recover more than 23,000 jobs.
Changes in median rents, home values, and overcrowded housing units, also show worsening metrics in Long Island when compared to the rest of the region. Since 1990 the median gross rent in Long Island has grown from $1,691 to $2,153, representing a 27% increase or 5% more when compared to the region as whole. Similarly, median house values have increased by 47% since 1990, compared to 21% in the region. As a result, the share of overcrowded households in Long Island has increased from 23,000 units in 1990 to almost 30,000 in 2021. This is contrasted by an overall decrease in the tri-state by approximately 12,000 units that are no longer overcrowded.
Greater suburban density, if well-designed and near transit, can be good for the region as well as for Long Island. Vibrant downtowns can concentrate growth in walkable transit-oriented areas, thereby reducing pressure on existing residential neighborhoods and the need to further develop open space. Suburban downtowns can also support new businesses, adding to community vitality. Long Island can and should play an important role in facilitating growth for the region as a whole. Under RPA’s aspirational vision – developed to inform recommendations of the Fourth Regional Plan – Long Island’s population would grow by 16%, and represent almost 13% of the overall population increase in the region in the year 2040.
The housing market in the U.S. has largely been shaped by policy choices made almost a century ago. But the pace, type, and disparities of more recent housing development in the region have largely been influenced by more constrained loan volumes for real estate development, and by the legal frameworks governing land use in each state.
Connecticut and New Jersey each have some form of a system requiring localities to calculate and meet affordable housing obligations. While not perfect, New Jersey is considered to have the most robust system, specifically since its enforcement was turned back to the judicial system in 2015. New Jersey’s fair share housing framework, known as the Mount Laurel doctrine, helped facilitate the state’s greater housing production, and affordable housing in particular. A recent analysis revealed that the last round of Mount Laurel is associated with adding 69,000 multifamily units between 2015-2022 across 349 municipalities (i.e., 12.4 units per 1,000 residents). In comparison multifamily, housing production during the same period in Long Island was only 4,800 units or 1.6 units per 1,000 residents, which represents 13% from what municipalities participating under Mount Laurel in New Jersey produced.
The state of Connecticut has a different type of framework known as the 8-30g statute. While the program has not delivered the same amount of housing production as in New Jersey – reflected by the overall number of housing permits issued – it has been a critically important tool in helping expand the stock of affordable housing in the state. Unfortunately, recent proposals would carve back–or even repeal–the framework.
New York State does not have a comparable system, which has allowed locally-controlled restrictive zoning to remain unchecked. New York stands alone among its peer states–coastal states with high housing costs and healthy regional economies–in giving its local governments such broad authority over land use and housing production. A recent analysis from the Eviction Lab at Princeton University quantified how difficult it is to build under the zoning codes of different cities and towns, and concludes that New York ranks second among the most restrictive metropolitan areas in the country. The lack of housing production and the enormous disparities between the city and its suburbs are a result of New York having the most exclusionary zoning in the region.
Adopting ambitious land use reforms and enforcing and improving existing housing obligations will be key to addressing insecurity and constraints in housing supply. Left unchecked, housing problems will only continue to get worse. While New York City is leading by example through ambitious proposals as part of the “City of Yes” initiative, the suburbs are largely falling behind into inaction. The lack of progress during recent State Legislative sessions—in the tri-state as a whole but most notably in New York—should not be acceptable. State actions are urgently required, but legislators are failing to act on important policy choices that would improve the vitality and diversity of the region for generations to come.
