TRENTON, NJ — On Dec. 1, the New Jersey Department of Community Affairs issued the report “Buying New Jersey: The Rise in Institutional Ownership of Residential Properties,” which examines recent trends in institutional homeownership and its impact on the ability of households to buy a home. The report was researched and written by DCA’s Office of Policy and External Affairs and finds that an increasing share of the state’s housing stock is shifting to institutional ownership.
The report includes a table of the number of institutionally owned residential properties by municipality organized alphabetically and a table of institutionally owned residential properties ranked by municipality. The report may be read at tinyurl.com/362rh9x6.
“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,” said Lt. Gov. Sheila Y. Oliver, who serves as DCA commissioner. “While institutional homeownership 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.”
In the report, institutional homeownership is defined as ownership by any entity that does not constitute a single household. The report studies one- to four-family housing stock and excludes multifamily properties with five or more units.
In the last decade, 544 municipalities, or 96.4 percent, have seen increases in the share of residential properties owned by institutions such as corporations, business entities, trusts and banks, which suggests it is a statewide trend that is not abating.
While the overwhelming majority of municipalities are experiencing a rise in institutional homeownership, the report finds the areas most targeted by institutional buyers tend to be lower income, more distressed and have a resident population consisting mostly of renters. The report states that this “may reflect a propensity to acquire property for speculation, investment purposes or to rent out.”
Some recommendations to possibly address the institutional homeownership trend are offered in the report. One is to find ways to encourage municipalities to convey municipally owned, vacant and abandoned residential and mixed-use properties to community nonprofit organizations and residents looking to revitalize neighborhoods. Another is to increase scoring for New Jersey Affordable Housing Trust Fund applications that involve developing owner-occupied affordable housing in communities with a high rate of institutional homeownership.
The report states that, in 2020, institutionally owned residential properties in New Jersey were at 5.9 percent. Essex County also scored at 5.9 percent. However, while the increase in institutionally owned residential properties from 2012 through 2020 was 2.5 percent in New Jersey, it was 2.7 percent in Essex County.
According to 2020 figures in the report, in Belleville, 4 percent of residential properties were institutionally owned, with an increase from 2012 to 2020 of 2.6 percent; in Bloomfield, it was 7.3 percent, with an increase of 2.1 percent; in Caldwell, it was 4.3 percent, with an increase of 1.9 percent; in Cedar Grove, it was 2.6 percent, with an increase of 0.8 percent; in East Orange, it was 15.1 percent, with an increase of 8.4 percent; in Essex Fells, it was 3.9 percent, with a decrease of 1.4 percent; in Fairfield, it was 2.8 percent, with an increase of 1.2 percent; in Glen Ridge, it was 1.9 percent, with an increase of 0.3 percent; in Irvington, it was 16.1 percent, with an increase of 10.7 percent; in Livingston, it was 3.5 percent, with an increase of 1.3 percent; in Maplewood, it was 2.6 percent, with an increase of 1.4 percent; in Millburn, it was 4 percent, with an increase of 0.8 percent; in Montclair, it was 4.9 percent, with an increase of 1.8 percent; in Newark, it was 17 percent, with an increase of 9.1 percent; in North Caldwell, it was 3.6 percent, with an increase of 1.8 percent; in Nutley, it was 2.6 percent, with an increase of 0.9 percent; in Orange, it was 16.6 percent, with an increase of 8.8 percent; in Roseland, it was 2.7 percent, with an increase of 0.7 percent; in South Orange, it was 4 percent, with an increase of 2.7 percent; in Verona, it was 3.5 percent, with an increase of 1.2 percent; in West Caldwell, it was 2.2 percent, with an increase of 0.6 percent; and, in West Orange, it was 4.5 percent, with an increase of 1.7 percent.