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Who Owns Newark? Rutgers-Newark Study Finds Troubling Rise in Corporate Buying of City Homes

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MEDIA CONTACT
Carrie Stetler
Assistant Director of Media Relations
Rutgers University-Newark
cjs281@rutgers.edu


Within three years, nearly half of Newark’s residential property was sold to corporate buyers, a model designed to enrich investors through returns from rent collection, and a nationwide trend that can displace residents and impede home ownership, according to a Rutgers University—Newark report titled Who Owns Newark? 
 
The Rutgers Center on Law, Inequality and Metropolitan Equity (CLiME) found the city has the highest rate of corporate buyers in the nation, although numbers are rising throughout America. This is especially true in mostly Black neighborhoods, like Newark’s South and West Wards, where corporate property ownership is most prevalent. 

Find the study here. 
 
“What has happened in other cities is happening in Newark—but on a scale unmatched anywhere in the country,” according to the report. 
 
Between 2017 and 2020,  2,500  homes – more than 47 percent of the city’s one-to-four unit buildings – were sold to institutional buyers. In Newark, many of the properties were bought by completely anonymous investors, prompting the title of CLiME’s report, Who Owns Newark? Transferring Wealth from Newark Homeowners to Corporate Buyers.
 
Corporate buyers often purchase large batches of single-family homes in one neighborhood and lease them, paying investors with money collected from rents. The practice is part of a nationwide trend that began when limited liability companies, often backed by large-scale equity investment, became active in residential real estate after the foreclosure crisis in 2010, which especially impacted communities of color.
 
But it springs from decades-old government policies, like exclusionary zoning, that have barred Black Americans from home ownership and left them vulnerable to exploitation, according to the report.
 
“Sadly, this reality continues 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 country,” the report states. “From racial exclusion to predatory lending, from foreclosure to the extraction of rents, Newark’s experience demonstrates what can happen when local economies ignore equity.’’ 
 
CLiME found no illegal conduct in its Newark analysis. “Real estate investing is constitutionally protected activity,’’ the report noted. But it warned of potentially harmful consequences.
 
“These trends demonstrate the strong probability of rapidly rising rents, lower homeownership rates, a diminished Black middle class, market challenges to building affordable homes, and even more housing instability for low- and moderate-income Newarkers and displacement,’’ according to the report. 
 
Corporate buyers thwart Newark’s goal of increasing home ownership because they outbid the city’s community development corporations, which work to purchase properties to sell to first-time buyers and to keep rents lower, according to one of the authors, David Troutt, a Rutgers law professor and founding director of CLiME.
 
Home ownership is a primary source of generational wealth and research shows it deepens community ties, increasing public safety and neighborhood autonomy, according to Troutt.  “Traditionally, Americans believed homeownership to be the individual path to collective security. Corporate buying up of the residential market forecloses all of that,’’ he said. 
 
CLiME proposed several measures that could mitigate the impact of corporate buying, such as a tax on rent increases that would augment Newark’s Affordable Housing Trust Fund and state laws prohibiting sales of bundled foreclosed homes to a single buyer.
 
It also recommends city and state mandates requiring public disclosure of investor principals and the development of community trusts so that residents can own shares and invest in land.
 
For those who invest in corporate buyers, CLiME recommends educational programs on the harms of large-scale institutional home purchasing. 
 
“It could diminish the market for people who think they’re just investing in a real estate fund and don’t explore what that’s doing on a cumulative level to neighborhoods across the country,’’ said Troutt. “Most of them don’t live in neighborhoods of renters and will protest vehemently against renting out single family homes in their own communities. The hope is if they realize their money is tied up in turning other places into those neighborhoods, they’ll find better places to put their money.’’
 
The lack of transparency among buyers can make it hard for residents to advocate for themselves and harder for corporate owners to be scrutinized by watchdog groups and the city. 
 

“If we’re going to be a company town, 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 - 3:30 pm and Tuesday, 5/3 from 1:00 - 3:00 pm.

About CLiME
Founded in 2011, CLiME is a multidisciplinary research and advocacy center based in the Rutgers Law School in Newark and committed to public scholarship on issues of structural inequality through public engagement with the aim of public impact. 

About Rutgers-Newark
Rutgers University–Newark (RU-N) is a diverse, urban, public research university that is an anchor institution in New Jersey’s cultural capital. It has a remarkable legacy of producing high-impact scholarship that is connected to the great questions and challenges of the world. It is in and of a city and region where its work, undertaken with partners from many sectors, resonates powerfully throughout our urbanizing world.