The New Jersey Housing Opportunity Act aims to enhance housing production by mandating revisions to municipal development regulations. Specifically, it requires each municipality to adopt at least one of three options within four months of the bill's enactment: setting a minimum lot size of no more than one-quarter acre for single-family residential development, allowing the development of a two-unit dwelling on each lot in single-family residential districts, or permitting accessory dwelling units on each lot in those districts. The bill defines "accessory dwelling unit" as a self-contained residential unit with independent living facilities located within or on the same lot as a primary dwelling.

If municipalities fail to comply with these requirements, the default regulation of a minimum lot size of one-quarter acre will automatically apply, overriding any conflicting local regulations. However, the provisions of the bill do not extend to dwellings in historic districts or to residential lots bound by pre-existing covenants or restrictions. This legislation is designed to promote more flexible housing options and increase the availability of residential units across New Jersey.