Young People are Leaving New Jersey: Exploring Potential Explanatory Variables

June 22nd, 2022 by Tim Evans

With the youngest members of the demographically large Millennial generation (roughly, those born between 1981 and 1996) aging into young adulthood, the number of people between the ages of 25 and 44 increased nationwide by 3.5% between 2015 and 2019.¹ In New Jersey, however, the population in this age range declined by 1.2% over the same time period, with high housing costs appearing as a major motivating factor. New Jersey is not producing enough housing, and in particular, not enough of the kind of housing that young adults are looking for–that is, alternatives to the single-family detached home. The lack of supply relative to demand is pushing housing prices and rents upward, causing young adults to leave New Jersey in search of cheaper housing elsewhere.

That is the conclusion of a report prepared by students in a Princeton University class titled “Wall Street and Silicon Valley: Place in the American Economy.” Aaron Shkuda, Project Manager of the Princeton-Mellon Initiative in Architecture, Urbanism, and the Humanities, was the instructor for the class. Tim Evans, New Jersey Future’s Director of Research, served as class advisor.

The students examined the change in New Jersey’s young adult population between 2015 and 2019 compared to the national rate of change and to changes in a selection of other states, chosen to represent both states with housing markets similar to New Jersey’s and less-expensive states that are attracting in-migrants from other parts of the country. In addition to New Jersey, the states included in the study were California, Colorado, Connecticut, Massachusetts, New York, North Carolina, Pennsylvania, Texas, and Washington.

The students also conducted an analysis at the metropolitan level, comparing the seven metropolitan areas that are partly or entirely contained within New Jersey with major metropolitan areas from the other states included in the state-level analysis, plus Atlanta, Chicago, and Washington, DC. Every one of New Jersey’s 21 counties is included in a metropolitan area. The following metropolitan areas contain the listed New Jersey counties:

New York—Newark—Jersey City, NY-NJ-PA: Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Sussex, Union
Philadelphia—Camden—Wilmington, PA-NJ-DE-MD: Burlington, Camden, Gloucester, Salem
Allentown—Bethlehem—Easton, PA-NJ: Warren
Trenton—Princeton, NJ: Mercer
Atlantic City—Hammonton, NJ: Atlantic
Vineland—Bridgeton, NJ: Cumberland
Ocean City, NJ: Cape May

In exploring potential reasons for differences in the growth rates in the young adult population, the students looked at the following variables from the 2015 and 2019 iterations of the one-year American Community Survey:

Total number of housing units
Number of housing units of a type other than single-family detached
Median home value
Median rent

In each case, New Jersey and its component metropolitan areas lagged the nation in terms of housing production, with the result that its housing costs are well above the national average. The pattern was similar in other Northeastern states and in California, where constrained housing supplies are keeping prices high and appear to be incentivizing young adults to move out of state. The analysis points to a need for New Jersey to supply more housing, and specifically more of the types of housing that young adults can afford. Otherwise, young adults will likely continue to move to other states in search of lower housing costs.