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Municipalities arguing that $500,000 McMansions are affordable for New Jersey working families

Posted by Laura Denker on April 20th 2016

CHERRY HILL — A four-bedroom house on Long Beach Island that sold for more than $700,000. A 5-bedroom Toms River McMansion with a fireplace, pool and a hot tub that went for more than half a million dollars. And a $500,000 4-bedroom home in posh Mendham.

These are just three of the more than 400 properties across New Jersey that have sold for $500,000 or more in recent years that a coalition of municipalities is arguing are affordable for working families.

These examples — and tens of thousands more — come from a housing study that more than 250 towns across New Jersey have submitted to the courts as they seek to artificially water down their housing obligations in order to deny homes to tens of thousands of New Jersey working families, seniors and those with disabilities.

The study, produced by Philadelphia-based Econsult Solutions, claims that nearly 20,000 homes that have sold for more than $300,000 in recent years meet New Jersey’s definition of affordable housing.

“If towns are arguing that half-million-dollar McMansions with pools and hot tubs are affordable to working families, then they’ve lost touch with reality,” said Fair Share Housing Center Executive Director Kevin Walsh. “We have been saying for a long time that central provisions of Econsult’s report won’t stand up to scrutiny. Towns that rely on this report will continue to be rejected by the courts.”

This analysis of Econsult’s report by Fair Share Housing Center is just the latest in a series of developments that demonstrate its deep flaws. A Superior Court judge has already rejected a key component of Econsult’s housing study and has forced the firm to make drastic revisions to its report that would more than double New Jersey’s housing need.

These examples come from an analysis Econsult conducted that purported to determine the number of homes in New Jersey that became affordable on their own. Through a process called “filtering,” New Jersey’s fair housing rules recognize that homes can become more affordable as they age and their property values depreciate in value.

Econsult’s filtering analysis, however, claims that nearly 20,000 homes that have sold for $300,000 or more in recent years meet the state’s definition of affordable. Of those, nearly 4,300 sold for $400,000 or more.

And even though filtering relies on prices declining for older homes over time, Econsult’s filtering analysis counts homes that have actually increased in value.

Some additional egregious examples of homes that Econsult improperly classified as affordable include:
• A four-bedroom Paramus home that is currently on the market for $999,000 and includes a “luxury whirlpool” and two walk-in closets.
• A four-bedroom mansion in Marlton featuring a Jacuzzi and swimming pool that last sold for $441,000.
• A two-bedroom condo in Washington Township, Bergen County, in an age-restricted gated community that last sold for $467,000. The unit features a private terrace.
• A Monmouth Beach home overlooking the bay that features three bedrooms and an in-ground pool. It last sold for $485,000.

In addition, many properties that Econsult cited as containing affordable housing were actually vacant lots or commercial buildings.

This analysis was completed just weeks after Econsult was forced to revise its own report in response to a ruling by Ocean County Superior Court Judge Mark A. Troncone, which found that Econsult had failed to account for 15 years of housing need in its initial analysis.

That ruling caused Econsult to more than double its initial assessment of New Jersey’s housing need for a 25-year period beginning in 1999 to 72,000 units.

Yet problems with this latest report are already becoming apparent. It falsely argues that enough housing stock depreciated in value in Bergen, Hudson, Passaic, Sussex, Essex, Morris, Union, and Warren counties that these areas of the state do not need to provide additional homes to meet the state’s needs from 1999 through 2015.

“Econsult’s report ignores the experience of thousands of New Jersey residents who have seen luxury high rises go up in North Jersey and along the Gold Coast,” Walsh said. “The most expensive counties have not accidentally created affordable housing. Towns need to start dealing with the real world, not a fantasy world in which working people can afford half million dollar homes.”