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More NJ homes are owned by institutions, report finds. That's hurting affordability.
By
Karen Yi
Published Dec 4, 2022
Modified Dec 5, 2022
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By
Karen Yi
Published Dec 4, 2022
Modified Dec 5, 2022
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Institutions and corporations are increasingly buying up New Jersey homes, targeting distressed, renter-heavy neighborhoods and driving up housing prices, a new report finds.
The Department of Community Affairs' report traces the growing trend in institutional homeownership, finding 1 in 17 single- to four-family homes in the state are owned by entities, rather than households.
The report looks at property tax lists to find owners that weren’t single households between 2012 and 2020. It defines institutional owners as corporations, trusts, banks or governments, but said companies own 71% of institutionally owned homes in New Jersey.
“This report shows the challenges that exist for homebuyers, particularly those with lower incomes, to purchase a home in their communities when they’re competing against corporations and business entities for housing,” Lt. Gov. Sheila Oliver, who is also the DCA commissioner, said in a statement announcing the report’s release on Thursday.
South Jersey had the highest share of institutionally owned homes, followed by Central Jersey. But the trend is statewide: 96% of municipalities, or 544 of them, saw an increase in institutional buying in the eight-year period analyzed. Overall, there was a 2.5% increase in institutional ownership, the report says.
Institutional buyers have particularly eyed urban centers and municipalities along the Shore. Hudson, Union, Mercer and Ocean counties saw the biggest growth in those sales. Institutional ownership grew slowest in Bergen, Somerset and Morris counties, the report says.
In Trenton, almost one-sixth of properties were purchased by institutional buyers between 2012-2020 — the largest shift by a municipality in the years the report analyzed.
The report says when institutions scoop up residential properties in lower-income areas, that decreases the housing stock and drives up home prices much higher than in neighborhoods with fewer corporate owners. It finds that for every 1 percentage point increase in corporate-owned homes, the sales price increases by $7,891.
The proliferation of institutional ownership also means residents who are trying to buy homes are increasingly competing with corporations that can offer cash checks and a much quicker closing process to sellers, the report says.
The DCA’s findings follow an investigation by the Asbury Park Press in August that found LLCs were snapping up tens of thousands of homes and pricing out regular residents. The Press found LLCs accounted for 1 out of 8 home sales in the state in the last five years.
The Rutgers Center on Law, Inequality and Metropolitan Equity also issued a report that month looking specifically at the phenomenon in Newark, finding 47% of the city’s one- to four-family homes were sold to institutional buyers between 2017-2020.
In response, Newark Mayor Ras Baraka announced a series of initiatives to limit corporate buying, including proposing ordinances to bring more transparency and accountability to who is buying these properties.
Affordability has been a key issue for Gov. Phil Murphy and his administration in his second term. The report recommends that the state find ways to encourage municipalities to sell vacant and abandoned properties to nonprofits that can keep the homes affordable, and to incentivize development of more owner-occupied affordable housing.
“While institutional home ownership is just one of several factors contributing to the very difficult housing market for regular homebuyers, it is an important factor. Therefore, we hope the report can be a starting point that leads all levels of government in New Jersey to find ways to make sure homeownership remains accessible to low- and moderate-income residents,” Oliver said in her statement.
Tagged
economy
new jersey
housing
Karen Yi
Karen Yi covers homelessness and poverty. She joined the WNYC and Gothamist newsroom in 2020. Before that, Karen covered Newark for the Star-Ledger and spent almost a decade working for newspapers in New Jersey and Florida. She grew up in Miami and has a dog named Cashew. Got a tip? Email [email protected] or Signal 917-589-1460.
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Gothamist is funded by sponsors and member donations
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