The Difference Between Affordable Housing and Housing that’s Affordable

By: Doug Tomson, New Jersey Realtors® Chief Executive Officer

The term “affordable housing” has picked up a lot of baggage on its half century-long evolution. That baggage — and the narrow framework that comes with it — doesn’t serve the broader conversation, particularly when it comes to first-time homebuyers and existing homeowners struggling to afford to stay in their homes.

While the conversation has two sides, “affordable housing” has become framed only through the lens of low-income housing and density housing in the suburbs. However, this limited definition, misses the crisis affecting middle-income buyers trying to enter the market or simply remain in it.

Affordable housing is often discussed in reference to public policy and programs that offer those with low- to moderate-incomes some type of subsidized housing from federal, state or local programs. In New Jersey, the Council on Affordable Housing (COAH) was established in 1985 after a series of court cases — known as the Mount Laurel rulings — that required municipalities to provide a “fair share” of housing for low- and moderate-income residents and established several rounds of obligations. COAH established parameters of what the “fair share” is and rules to meet the requirements.

However, in 2015, after decades of litigation and political discourse, the New Jersey Supreme Court dissolved COAH and affordable housing compliance was left to the municipalities to negotiate or litigate their remaining obligations. This history is where affordable housing became highly politicized as it hung in the balance between local control, development and the goal of housing equity.

What’s left out of the “affordable housing” consideration, which became painfully evident during the COVID lockdown, was the middle. Middle-income buyers trying to enter the market have been all but excluded from the “affordable housing” solutions that have been historically presented. These New Jerseyans make too much to be included in the affordable housing programs yet are priced out of an ultra-competitive market. If the goal of “affordable housing” is to provide safe, stable housing solutions to those challenged by the affordability of today’s market, middle-income earners must be included in the conversation.

Furthermore, even if a middle-income earner is able to make it through the market, their expenses don’t magically disappear at the closing table. At a minimum they’re then facing a mortgage payment, property taxes, homeowner’s insurance and likely private mortgage insurance — a monthly financial burden that is beyond traditional affordability. This doesn’t even account for the rising utility costs, necessary minimum maintenance to the house, internet connectivity and so much more. Each of these costs are critical to account for and yet are often left out of policy discussions and public conversations.

Affordability cannot just be about getting in the door but rather having the ability to stay there. New Jerseyans deserve affordability that accounts for access and long-term stability.

While there’s no silver bullet to ease the pain on the middle, there are elected officials of New Jersey who — regardless of their party, district or background — must understand the need for bold action. We respectfully ask the legislature to create the Housing Opportunities for Middle-Income Earners (HOME) to not only start the conversation, but get real work done. If New Jersey fails to address this, its average first-time buyers — now almost 38 years old by the time they enter the market — may never get the chance.