A Rutgers study found that nearly half the 2,500 single or multi-family homes bought in Newark from 2017-2020 were by corporate investors.
Newark Mayor Ras Baraka announced measures to counter the increasing purchase of residential properties by corporate investors, a trend revealed in a new report from Rutgers Clime during a press conference at City Hall in Newark on May 2, 2022.Purchases of residential properties in Newark by corporate entities has caused rents to rise and owner-occupancy to fall, according to a new Rutgers study, prompting city officials to announce countermeasures.
Other consequences of corporate ownership could include physical deterioration of the property and tenants’ living conditions and a readiness to evict tenants with delinquencies, said David Troutt, director of the Rutgers Center on Law, Inequality, and Metropolitan Equity in Newark, which released the study on Monday.
Troutt said growing corporate demand for residential properties, like any increase in demand, drives up prices. Large institutional investors have a distinct advantage over would-be owner-occupants in bidding on properties because they can borrow at lower interest rates and bid higher purchase prices. Or, Troutt points out, they can pay cash, which is typically attractive to sellers., hosted a City Hall press conference on Wednesday to address the issue.
“These folks are anticipating being able to get the kind of rents that they previously couldn’t get in Newark,” Baraka said. Baraka said deed restrictions would be placed on city-owned property and property owned by Newark’s nonprofit Land Bank to ensure they are developed by purchasers as affordable housing and stay that way.
At the same time, Troutt said that a third of the sellers during the years surveyed were also corporate entities, implying that many transactions were between corporate buyers and sellers and not simply a matter of LLCs outbidding individual homebuyers.