By Eric Seymour

 

Corporate ownership of housing has been on the rise in the U.S. over the past decade, raising concerns about the impacts of this shift for both renters and would-be homebuyers. This trend encompasses large apartment buildings as well as smaller housing types like one-to-four family homes. There are multiple reasons for this trend, many of them related to the foreclosure crisis of the late 2000s and its aftermath. The foreclosure crisis gave investors an opportunity to buy large numbers of homes at substantial discounts; demand for rentals skyrocketed as it became more difficult to secure mortgages; historically low interest rates facilitated corporate acquisition; and new technologies made it easier to identify, purchase, and manage multiple small properties. These factors combined to make residential real estate a particularly attractive sector for corporate investment. Corporate ownership accelerated during the COVID-19 pandemic, with corporate entities accounting for historically high amounts of home purchases across the U.S.[1]

This trend raises a number of concerns. Corporate investors with institutional lines of credit can purchase homes outright, making it difficult for ordinary households to compete with them and to realize the benefits of ownership, including the ability to build equity with housing payments.[2] Corporate investors also increase challenges for tenants. Corporate landlords are more likely than individuals to maximize profits, including by raising rents and adding fees and withholding maintenance. Corporate landlords may also be more likely to file for eviction, since they are less likely to know or want to work with their tenants, and they view eviction as a way to coerce payment, add additional fees, and establish higher baseline rents in tight housing markets.[3]

Much of the research on corporate ownership has been focused on cities like Atlanta and other locations across the Sun Belt, where major corporations have purchased large numbers of single-family homes. But corporate ownership is also on the rise in states like New Jersey with very different housing stock and development patterns. A 2022 study by the Rutgers Center on Law, Inequality, and Metropolitan Equity found that corporate investors owned a substantial amount of housing in Newark.[4]

Our project will investigate this phenomenon across the state of New Jersey, building on our recent research on seven case study municipalities across the state funded by the Robert Schalkenbach Foundation. Our research team, including Will Payne, Kathe Newman, Lauren Nolan, and myself, will be investigating the neighborhood-level scale of corporate investor ownership and examining the association with housing market dynamics and demographic data to understand: 1) the logics driving corporate acquisition, 2) where in the state corporate investor ownership is primarily occurring, and 3) who may be affected by these changes in ownership and in what ways. These findings are likely to have multiple policy implications, from enhanced tenant protections in affected areas to policies for promoting homeownership for moderate-income New Jerseyans. While corporate interest in housing may bring valuable investment to some communities, in others it might exacerbate existing problems of housing affordability, lead to eviction, and make it more difficult for working-class families to attain homeownership.

 

References:

[1] https://www.washingtonpost.com/business/interactive/2022/housing-market-investors/

[2] https://www.huduser.gov/portal/periodicals/em/winter23/highlight1.html

[3] https://www.huduser.gov/portal/periodicals/cityscpe/vol20num3/article9.html

[4] https://www.clime.rutgers.edu/publications-filtered/who-owns-newark