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In NJ, a fight over whether to build affordable homes, or offer help buying one
By
Mike Hayes
Published Feb 28, 2025
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Rich Hundley III/NJ Governors Office
By
Mike Hayes
Published Feb 28, 2025
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It's a classic chicken-and-egg-type conundrum. In his final budget speech on Tuesday, New Jersey Gov. Phil Murphy proposed expanding a program that offers first-time homebuyers down payment assistance, along with bolstering other state housing initiatives.
But to do it, his plan would use money from New Jersey's Affordable Housing Trust Fund, which has aided in the construction of low-priced homes for the past 40 years. Many see it as integral to the state's goal of building 84,000 new affordable homes over the next 10 years.
According to some home builders and housing advocates, raiding the trust fund to provide money for down payments is misguided. The result, they said, is that there won't be any homes to place down payments on.
“If there's nothing affordable, the down payment assistance doesn't necessarily help,” said Liz DeCoursey, CEO of Greater Middlesex & Morris Habitat for Humanity, which is constructing hundreds of affordable homes. "[It's] not helpful if there’s nowhere for people to live.”
It’s still unclear how much trust fund money could be diverted away from construction. Murphy and the state Legislature will spend the next few months negotiating each line item of the budget. He's proposed putting $40 million into the down payment program, which so far has spent $125 million in total. Throughout Murphy’s seven years in office, the state's Affordable Housing Trust Fund has doled out more than $100 million to help finance the construction of affordable housing.
On Tuesday, Murphy, who is term-limited and will leave office at the end of the year, vowed that his final budget “will help families save money” as housing prices continue to “skyrocket.” Using money from the trust fund to help residents buy homes is a key component of that vision, he added.
A spokesperson for the governor, Tyler Jones, contested the argument that Murphy is taking much needed funds from home construction.
“The Down Payment Assistance Program has created pathways to homeownership for thousands of New Jerseyans. Our budget proposal appropriately balances building new affordable housing over the long term with providing immediate housing assistance,” Jones said.
Murphy’s initial budget proposal shows he wants to put another $40 million into the down payment program, which so far has spent $125 million in total.
It’s unclear how much of that $40 million would come from the trust fund. DeCoursey said funding programs that help people buy homes are “not helpful if there’s nowhere for people to live.”
She said her office has almost 300 homes in its pipeline.
“I can't express how critical it is that these funds are available to help us deliver those homes,” she said.
Although the homes Habitat builds are priced affordably for buyers, DeCoursey said the organization pays just as much as any other developer to build them. A typical three-bedroom home in New Jersey costs $400,000 to $450,000 in labor and materials to construct, DeCoursey said, but Habitat sells those homes for $100,000 to $200,000. She said the grant from the Affordable Housing Trust Fund is “crucial” to bridging that gap.
New Jersey is currently entering the fourth round of affordable housing obligations for towns what is known as the Mount Laurel doctrine, a series of court rulings in the 1970s that require each municipality in the state to build its fair share of affordable homes. Lawmakers have acknowledged an affordability crisis in the state. Last year, they passed legislation aimed at building or redeveloping nearly 150,000 homes priced for low- and middle-income residents over the next decade.
Beverly Brown Ruggia, the financial justice program director of New Jersey Citizen Action, said that drawing money from the Affordable Housing Trust Fund for other programs will have a direct impact on municipalities’ ability to deliver on their Mount Laurel obligations.
“It’s not the time to retreat,” Brown Ruggia said.
Peter Chen, senior policy analyst at the progressive thinktank New Jersey Policy Perspective, shared those concerns. He said the state will be under “increased pressure” from town leaders to ensure funding is available for construction projects.
“We shouldn't be in this scarcity situation where we're raiding one pot of affordable housing to fund some other pot of housing,” he said.
But he also praised Murphy’s budget for seeking to raise more revenue.
The state currently imposes a "mansion tax" of 1% on all homes sold for more than $1 million. Murphy wants to increase that additional tax rate on homes that sell for more than $1 million to 2%, and on homes that sell for more than $2 million to 3%. According to the governor's proposal, the increase would generate an estimated $317 million in fiscal year 2026 and bring his administration’s total collections to $554.2 million.
Murphy’s proposal would send that additional revenue into the state’s general fund, but housing advocates were hoping Murphy would funnel it directly into the Affordable Housing Trust Fund.
“It’s a great idea to use the revenue raiser, but they're not using it for the intended purpose,” said Matthew Hersh, vice president of policy and advocacy at the Housing and Community Development Network of New Jersey, which has pushed for the governor’s office on the measure.
He said his organization recognizes the importance of the down payment assistance program, but believes it should be funded differently.
DeCoursey of Habitat for Humanity said her organization will continue advocating for changes to the budget. The state Legislature and governor must finalize it by June 30.
She said she’d like to see a 4% tax on “super luxury” home sales over $2 million. In addition, she said, Habitat is pushing for “luxury landlord” corporate tax that would charge developers who build upscale buildings an additional fee.
A previous version of his story misstated the amount that the Murphy administration has spent through the Affordable Housing Trust Fund. It is more than $100 million in the seven years that Murphy has been governor.
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housing
Mike Hayes
Mike Hayes covers equity and access to opportunity in New Jersey. He joined WNYC and Gothamist in 2023. Before that, he worked as a freelance journalist writing about policing and criminal justice. He has written for ProPublica, CNN, HuffPost, BuzzFeed News and The Appeal. He is also the author of the book, “The Secret Files: Bill De Blasio, The NYPD, and the Broken Promises of Police Reform.” In 2019, he was a finalist for the Livingston Award for Young Journalists.
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