New Jersey lawmakers are set to vote on the state's fiscal year 2026 budget, a $58 billion plan that marks a 2.5% increase from the previous year's spending. A key issue in the proposed budget is a $10,000 hike in the real estate transfer fee for homes priced over $1 million.
James Hughes, an economist and dean emeritus at Rutgers University's Edward J. Bloustein School of Planning and Public Policy, explains why housing costs are high in New Jersey. He notes that the state is densely populated with scarce and expensive land that is heavily regulated. "All these regulations are needed in terms of environmental protection, public health and the like, but at the end of the day, they have a significant cost attached to them," Hughes said.
Hughes contrasts today's situation with the period between 1950 and 1970 when abundant land led to the construction of a million housing units. Now, however, different conditions prevail.
He warns that housing costs could rise further if federal immigrant deportations persist due to builders' reliance on immigrant labor. "The builders are heavily dependent on immigrant labor, particularly roofing, so they’re facing significant labor shortages," he stated.
Additionally, tariffs could exacerbate price increases depending on their outcomes. "We import a lot of lumber, we import a lot of drywall, a lot of washing machines, appliances and the like," Hughes mentioned.
