From the Record:
Powered by a surge in multifamily construction, home building in New Jersey is on track for its strongest year since 2006.
Builders have taken out 23,738 building permits through October, up 18 percent from the same period last year, according to data released this week from the U.S. census — and more than 60 percent of the permits have been for multi-family units. The multifamily percentage is the highest since 1964, said Patrick O’Keefe, an economist with CohnReznick, an accounting firm in New York and Roseland. As recently as the 1990s, multifamily projects accounted for about 15 percent of the home construction in the state.
O’Keefe expects builders to start more than 27,000 housing units in the state this year — coming close to the long-term averages above 30,000 a year, after dipping to lows averaging around 13,000 a year during the housing bust.
Rentals are leading the way, especially along the Hudson River. Bergen and Hudson counties have accounted for about 30 percent of the state’s home-building activity so far this year, heavily weighted toward multifamily construction.
Rentals are in demand because tight mortgage standards and flat incomes have pushed homeownership out of reach for many. In addition, many households — especially millennials and downsizing baby boomers — like the flexibility of renting. And after watching home values plummet during the housing bust, some people are “skeptical about the wisdom of using a house as your primary investment asset,” O’Keefe said.
While multifamily builders are moving forward, single-family builders are being more cautious, and not building houses they may not be able to sell, O’Keefe said.