All of us in Jersey City share a desire for housing policy that creates broader affordability, increased urban vitality, better economic opportunities for residents, and setting the city on a firm fiscal footing that allows it to provide the level of services residents deserve. There is compelling evidence that expanding housing supply of all types is necessary to prevent the displacement that comes with gentrification when housing is in short supply. As quality of life improves and regional housing pressures increase, more people will want to live in Jersey City. And more housing supply ensures that it continues to be affordable. 

To that end, we will be publishing a series of articles exploring affordable housing policy, evaluating the success of programs in other cities, and, finally, evaluating Jersey City’s own successes and failures in affordable housing. 

The goal of this first post in the series on affordable housing and housing affordability is to help educate our readers on a complex and often confusing area of urban economics and public policy. We have compiled and summarized the latest economic research to inform the discourse around housing policy. We (hopefully) can help policy makers craft the best housing policy possible for Jersey City despite the raft of popular but ultimately misguided ideas frequently floated by Hudson County politicians. Any assertions made here are supported by peer-reviewed economics research that uses real-world data. 

Collective action problems in housing construction mean urban areas with high demand continue to be undersupplied (e.g. city governments blocking housing to appease vocal NIMBYs who want it built “elsewhere”). New York, until the passage of “City of Yes,” was the worst offender [New York Comptroller]. But other surrounding municipalities have been slow to increase housing supply over the past decade. While Jersey City cannot solve the broader New York metropolitan area’s housing crisis on its own, research suggests doing our part to encourage market-rate construction still puts downward pressure on rents and eases displacement at the neighborhood and local level.

Despite other cities’ unwillingness to reform zoning and land use to permit more housing, Jersey City has adopted some policies that have marginally improved housing affordability. There is more it can do on that front, but the city also runs the very real risk of adopting policy positions that will make housing affordability and availability dramatically worse despite policymakers’ good intentions. 

It is our objective to provide a guide to how Jersey City’s in-coming administration and new city council can adopt policies that maximize income-restricted affordable housing production without sacrificing broader market-rate affordability that the majority of renters in Jersey City rely on, since applicants for income-restricted affordable housing must win a lottery and earn less than 80% of area median income (AMI), which is less than $75,040 for a single-person household and $107,200 for a family of four. 

New Housing Production Contributes to Affordability Overall

It’s worth highlighting upfront that all new supply – even so-called “luxury housing” – contributes to affordability for all. All else equal, growing cities that increase supply see lower rates of rent increases (or outright declines in rents) than cities that do not increase supply.

Jersey City’s population has grown considerably because of its proximity to Manhattan’s strong job market and its relative affordability compared to its neighbors. And Jersey City has remained affordable relative to similarly situated neighborhoods in New York City because it has continued to produce more housing per capita than almost any other locality in the region. Although much of the new housing production in Jersey City has been expensive “luxury” apartments, even this new construction has helped to 1) meet market demand for new housing and 2) put downward pressure on existing, older housing supply. Every market-rate apartment built in Jersey City means one less higher-income renter bidding up the rent for an older apartment, which decreases the risk of displacement for lower-income tenants in the region.

Economists refer to this phenomenon, where market-rate construction frees up apartments for lower-income households, as moving chains. Multiple real-world studies have validated the moving-chain effect. Using comprehensive change-of-address records from 11 US cities (Atlanta, Austin, Chicago, Denver, Los Angeles, New York City, Philadelphia, Portland, San Francisco, Seattle, and Washington, DC),  Asquith, Mast & Reed (2023) found that “new buildings decrease rents in nearby units by about 6% relative to units slightly farther away … and they increase in-migration from low-income areas.” A study by Bratu, Harjunen, and Saarima (2021) in Helsinki found that “the supply of new market rate units triggers moving chains that quickly reach middle- and low-income neighborhoods and individuals. Thus, new market-rate construction loosens the housing market in middle- and low-income areas even in the short run. Market-rate supply is likely to improve affordability outside the sub-markets where new construction occurs and to benefit low-income people.”

Made an animation to explain moving chains
byu/newsocks1382 inyimby

Another recent empirical study using a comprehensive dataset of rent rolls in New York City showed that new construction reduces rents and displacement even for low-income renters within a neighborhood [Li (2022)]. The researchers found that for each 10% increase in housing, rents decrease by 1% in properties within 500-feet of the new construction and sale prices also fall. Rollet (2025) extends Li’s rent-roll dataset and uses it to look at the effect of new construction in New York City. His work broadly corroborates Li’s findings, and additionally uses modeling methods to find that the lowest-income households would benefit the most from increased new market-rate construction in New York City, as a percentage of their household income.

Pennington (2021) found that the risk of displacement falls by 17% for households that live within 100 meters of a new project in San Francisco. Another study in the nine-county San Francisco Bay Area finds that “in the Bay Area’s gentrifying neighborhoods (neighborhoods with fast-rising incomes and an influx of high-income or highly-educated residents), new market-rate housing construction neither worsens nor eases rates of moving out” but that “it increases rates of people moving in across all socio-economic groups, particularly high-socio-economic residents.” [Chapple et al. (2022)]. In other words, new construction makes neighborhoods not only more attractive for richer people but more affordable to poorer people as well.

Jersey City has seen a similar effect. While Jersey City has seen substantial growth in high-income households, it has also seen an 11% increase in households that earn under $75,000 a year. Of all the surrounding municipalities, Jersey City saw the largest increase in moderate-income households from 2018 to 2023, which runs counter to the narrative that new development results in socio-economic displacement.

Many opponents of new housing construction implicitly understand that new housing supply puts downward pressures on rents and property values. NIMBY condo owners are among the most frequent and vocal opponents to new housing, showing up at planning and city council meetings to protest new building approvals. Other people simply confuse correlation with causation. Their “lived experience” tells them that rents are getting more expensive but they mix up that housing is being built in response to rising rents rather than causing rents to rise. Those critics typically try and cite two papers, both of which have problems.

The first, an unpublished working paper by Damiano and Frenier has been interpreted as contradicting the findings of all the rest of the empirical research on the effects of increasing local housing supply. The study’s authors divided buildings near new construction in Minneapolis into quintiles based on the rents, and found that new buildings in Minneapolis lowered rents for most nearby buildings, but increased rents for the cheapest buildings.  However, a literature review by researchers at UCLA notes that “Damiano and Frenier do not adjust the rents in their study for inflation, which is an unusual decision, and one that makes the rent increases they report look much larger than they actually were.” Adjusted for inflation, rents near new buildings declined by 7 percent overall, and increased by only 0.2 percent for the cheapest buildings.

The other common citation is to another unpublished paper by Condon and Kroeker that studies Vancouver, Canada. Here, the authors also failed to control for inflation or control for confounding factors in their analysis and, perplexingly, excluded much of the metropolitan region in their analysis. 

Neither of these papers are considered credible due to those problems and the overwhelming consensus among economists and housing market researchers is that new housing supply is necessary for broad affordability.

Summary

Housing markets are complex. There are many confounding factors at play beyond simple supply and demand, but the research is clear. More supply is needed to make housing more affordable in the midst of our regional housing shortage. We summarize how it works below:

• Collective action problems occur when local governments across the region make new housing construction difficult, relying on other towns to “solve” the housing problem.
• New supply provides the most affordability benefit to the surrounding neighborhood, decreasing surrounding rents by 6%.
• For every 100 new apartments that are built, 70 older and more affordable apartments free up as people move into newly vacated units
• New housing construction makes neighborhoods more attractive for richer households and more affordable for poorer ones.
• The risk of displacement falls 17% for residents within 100 meters of a new apartment building.

New housing supply built in Jersey City has enabled the city to grow across socio-economic groups. Despite new construction helping to improve broader affordability, it is critical to acknowledge that housing developers cannot build brand new market-rate units that are affordable to low and very-low-income households, especially in high-rise apartment buildings where the costs of construction are too high. What can policymakers do to solve that problem?

In our next installment, we will look at the following questions: what makes housing “affordable housing,” who qualifies for it, and how do we build it?