DCA Issues Report on Institutional Homeownership
- Posted on: 12/01/2022
Report Finds Institutional Homeownership Is Rising, Contributing to Less Housing Inventory and Higher Home Prices for Regular Homebuyers in New Jersey
TRENTON, NJ – The New Jersey Department of Community Affairs (DCA) today 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.
“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. Governor Sheila 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 is posted on the DCA website.
DCA offers a wide range of programs and services, including local government management and finance, affordable housing production, fire safety, building safety, community planning and development, disaster recovery and mitigation, and information privacy.
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