Corporate Homeownership On The Rise In Union County: Report

UNION COUNTY, NJ — Institutional and corporate homeownership is on the rise in Union County, and the state is seeing a major shift in who owns the homes its residents live in.

According to a report released by the New Jersey Department of Community Affairs last week titled “Buying New Jersey: The Rise in Institutional Ownership of Residential Properties,” Union, Hudson and Ocean Counties have by far the highest average shares of institutionally-owned properties. Read the full report here.

Over the past decade, nearly every town and city in New Jersey – about 96.4 percent – has seen an increase in the share of residential properties owned by real estate firms, business entities, trusts and banks.

The report states that around 6 percent or 1 in 17 residential properties were institutionally owned in 2020 — a 2.5 percentage point increase over 2012. The number of these properties nearly doubled over that eight year period, the report states.

In addition, about 71 percent of these institutionally-owned residential properties are owned by corporate or business entities, followed by trusts at 22 percent and banks at 4 percent, according to the report.

The DCA found that distressed neighborhoods within urbanized communities tend to experience the greatest rises in institutional homeownership.

"Areas targeted by corporate buyers tend to be lower income, more distressed, and have a resident
population consisting mostly of renters. These areas tend to have less available inventory for purchase and much faster growth in home prices," the study states.

In 2020, Union County had the second highest percentage of institutional residential properties at 9.3 percent. Hudson County had the highest percentage in all of New Jersey at 10.6 percent.

But compared to other counties, Union did not have the greatest percentage increase in these properties from 2012 to 2020, according to the report. Since 2012, the report shows that Union County had a 2.1 percent increase in institutionally-owned properties, whereas areas like Hudson County had a 3.6 percent spike.

Overall, the DCA found that central cities have seen the fastest growth in institutional property ownership, followed distantly by urban suburbs. Rural communities and new suburbs have had the least growth

Out of all the towns and cities in Union County, Elizabeth had the most institutionally-owned properties at 1,352 in 2020.

The DCA said that this trend of rising corporate ownership of real estate poses a risk for lower income homebuyers, as "housing stock available to them in their home communities is steadily shrinking."

As a remedy to this problem, the DCA recommends that municipalities should be incentivized to sell municipally-owned, vacant and abandon residential and mixed-use properties to community non-profit organizations and urban homesteaders.

The DCA also recommends incentivizing development of affordable housing through the NJ Affordable Housing Trust Fund, particularly in communities with a high rate of institutional homeownership.