Who owns Newark? Rutgers-Newark Study Reveals Disturbing Increase in Corporate City Home Purchases | Rutgers University
Deputy Director of Media Relations
According to a Rutgers-Newark University report titled Who owns Newark?
The Rutgers Center on Metropolitan Law, Inequality and Equity (CLiME) found that the city has the highest rate of business buyers in the nation, although the number is growing nationwide. This is especially true in predominantly black neighborhoods, such as Newark’s south and west neighborhoods, where business ownership is most prevalent.
Find the study here.
“What happened in other cities is happening in Newark, but on a scale unmatched nationwide,” according to the report.
Between 2017 and 2020, 2,500 homes — more than 47% of the city’s one- to four-unit buildings — were sold to institutional buyers. In Newark, many properties have been purchased by completely anonymous investors, hence the title of CLiME’s report, Who owns Newark? Transfer of wealth from Newark owners to corporate buyers.
Corporate buyers often buy large lots of single-family homes in a neighborhood and rent them out, paying investors with money collected from rents. The practice is part of a national trend that began when limited liability companies, often backed by large-scale equity investments, became active in residential real estate after the 2010 foreclosure crisis, which particularly affected communities of color.
But it stems from decades-old government policies, like exclusionary zoning, that have barred Black Americans from home ownership and left them vulnerable to exploitation, the report said.
“Unfortunately, this reality perpetuates a long pattern of economic threat to predominantly black and increasingly Latino neighborhoods in a state whose communities are among the most segregated in the nation,” the report said. “From racial exclusion to predatory lending, from foreclosure to rent extraction, the Newark experience shows what can happen when local economies ignore equity.”
CLiME found no illegal conduct in its analysis of Newark. “Real estate investing is a constitutionally protected activity,” the report noted. But he warned of potentially harmful consequences.
“These trends demonstrate the high likelihood of rapidly rising rents, falling homeownership rates, a shrinking black middle class, market challenges for building affordable housing and more. more housing instability for low- and moderate-income Newarkers and displacement,” according to the report.
Business buyers are thwarting Newark’s goal of increasing homeownership because they are outbidding the city’s community development corporations, which are scrambling to buy properties for sale to first-time buyers and to keep rents lower, according to one of the authors, David Troutt, a law professor at Rutgers. and founding director of CLiME.
Home ownership is a primary source of generational wealth and research shows it deepens community bonds, increasing public safety and neighborhood self-reliance, according to Troutt. “Traditionally, Americans believed that home ownership was the individual route to collective security. Business buying of the residential market rules out all of that,” he said.
CLiME has proposed several measures that could mitigate the impact of corporate purchases, such as a tax on rent increases that would increase the Newark Affordable Housing Trust Fund and state laws prohibiting the sale of foreclosed houses grouped to a single buyer.
It also recommends municipal and state mandates requiring public disclosure of major investors and the development of community trusts so residents can own stock and invest in land.
For those investing in corporate buyers, CLiME recommends educational programs on the harms of buying large-scale institutional homes.
“It could narrow the market for people who think they’re just investing in a real estate fund and not exploring what it does on a cumulative level in neighborhoods across the country,” Troutt said. “Most of them don’t live in renter neighborhoods and will vehemently protest the rental of single-family homes in their own communities. The hope is that if they realize their money is tied to transforming other places in those neighborhoods, they will find better places to put their money.
The lack of transparency between buyers can make it difficult for residents to defend themselves and harder for business owners to be scrutinized by watchdog groups and the city.
“If we want to be a corporate city, we should at least know which company,” Troutt said.
David Troutt will be available via Zoom for press interviews today 5/2 from 2:00 p.m. to 3:30 p.m. and Tuesday 5/3 from 1:00 p.m. to 3:00 p.m.
Founded in 2011, CLiME is a multidisciplinary research and advocacy center based at Rutgers Law School in Newark and engaged in public scholarship on issues of structural inequality through public engagement with the goal of having a public impact.
Rutgers University–Newark (RU-N) is an urban, diverse public research university that is an anchor institution in New Jersey’s cultural capital. It has a remarkable heritage of producing high impact scholarships that are linked to the world’s major issues and challenges. It is in and from a city and region where his work, undertaken with partners from many sectors, resonates powerfully in our urbanizing world.