To aid municipalities in regulating anonymous investor buying of 1-4 unit homes we drafted this model ordinance. A companion memorandum analyzes its legality and effectiveness under New Jersey law.
Read MoreContinuing CLiME’s work on regulating institutional investors of 1-4 unit dwellings in cities like Newark, this legal research memo explains and accompanies model legislation, showing cities exactly how to mandate transparency of ownership among anonymous LLCs.
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Few race-conscious public policies displaced African-American individuals and families like the federal urban renewal program from 1949 to 1974. Hundreds of cities spent millions of taxpayer dollars engaging in "slum removal" of entire neighborhoods only recently occupied by Blacks from the Great Migration. Their forced relocation—almost always without statutorily promised relocation expenses and assistance—was a harbinger of the modern ghetto and a blueprint for urban planning approaches that continue to this day.
As part of CLiME's Displacement Project, we began a broad inquiry into urban renewal in 2021. The results will follow in the form of academic papers, policy briefs and here, a growing archive of hard-to-find data on the program's implementation in select U.S. cities. CLiME Fellow and Bloustein graduate Erica Copeland assembled variables on the location, demographic variables and costs associated with primarily African-American displacement for a select period of time. We hope this contributes to a growing body of academic research on an under-appreciated aspect of systemic racism carried out by the federal and local governments at midcentury, whose wealth-retarding effects persist.
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Newark housing is too expensive for its residents.
CLiME’s Displacement Risk Indicators Matrix—or DRIM—originated in 2017 as a tool to measure the risk of Newark resident displacement as a result of gentrification. We found then and now that displacement risk continues to be a serious threat to housing stability in Newark as rents rise dramatically among a city of mostly renters. Yet the cause does not appear to be traditional gentrification, because the demographic profile of who lives in the city, their incomes, educations and poverty rates have not changed as dramatically as rents.
The DRIM is divided into three sets of variables set across the city as a whole, the five wards and, for the first time, neighborhoods: vulnerability, market dynamics and “gentrifier population.” Vulnerability variables ask about the economic stresses that households feel. Market dynamics variables ask about rental affordability and new construction. Gentrifier population variables ask whether the city is seeing an influx in the people whose race, housing wealth and educational attainment is associated with gentrifying populations in other cities.
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This report shows that the national trend in investor buying of 1-4 unit homes in predominantly Black neighborhoods is most acute in Newark, New Jersey where almost half of all real estate sales were made by institutional buyers. The trend grew out of the foreclosure crisis that wiped out significant middle-class wealth in particular Newark neighborhoods. Those neighborhoods became the targets of investors seeking passive returns from rents. Those largely anonymous outside companies now set neighborhood housing markets on terms that primarily benefit their investors.
While CLiME detected no illegal activity, the threats to Newarkers and government policy goals are significant. They include rapidly rising rents, decreased homeownership, higher barriers to affordable housing production goals, renter displacement and less stable communities. Sadly, this reality continues a long pattern of economic threats to predominantly Black and increasingly Latino neighborhoods in a state whose communities are among the most segregated in the country. 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’s analysis documents a dramatic increase in institutional investor activity in Newark’s residential market starting around 2013. As of 2020, almost half of all Newark’s residential sales were to institutional buyers.
Read MoreHousing markets rebounded after the 2007-2009 housing crisis, but homeownership rates never did. Research explains this by the rapid spread of investor buyers into housing markets following the foreclosure crisis. Large investors bought significant numbers of properties that were foreclosed on, at very low prices, frequently converting single-family (1-4 units) into rental properties. They often acquire properties in low-income and moderate-income neighborhoods. ¹
Coming out of the foreclosure crisis, these investor buyers created a new industry around large-scale single-family rental, and have been increasingly active in rental markets generally. These limited liability companies (LLCs), or “corporate landlords”, have reshaped the legal landscape of rental ownership, in part because they limit investor liability. ² Research shows they are less likely to take care of the properties, causing them to fall into disrepair or remain vacant. ³ They are also associated with higher rents and higher rates of eviction. ⁴ Meanwhile, several reports document that the largest among them (e.g.; Invitation Homes, Equity Residential) are making enormous profits even as we experience a profound housing affordability and eviction crisis. ⁵
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Orange, East Orange, and Irvington are Black working-class suburban communities. While home to just under 20% of Essex’s population, they are home to almost 40% of all Black residents and only 2% of White residents. These communities are also growing fast, with surging Latino and immigrant populations from the Caribbean.
These inner-ring suburbs are challenged by elevated rates of poverty and a growing unaffordability, and they have few resources to address these pressing needs. In 2020, Orange, East Orange, and Irvington residents generated only $30,000-$40,000 in tax basis for essential public services, such as police, education and sanitation. Meanwhile, nearby Summit residents generated almost four and a half times as many resources as any of these communities, and to serve a much smaller population.
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CLiME conducted an affordability and gap analysis of Newark's housing stock and found a severe gap in low-rent units. We estimate that the City needs an additional 16,234 units renting for about $750 per month to meet residents' existing needs.
CLiME’s approach to assessing affordability is rooted in the local context. We calculate a Newark Median Affordable Rent (NMAR) of $763 per month. This is $330 less than Newark’s median market rent, and more than $600 less than Fair Market Rent (FMR), created by the Department of Housing and Urban Development. We also develop a methodological innovation to integrate the City’s rental housing subsidies into the affordability analysis. This procedure, the first of its kind as far as we know, provides a much closer picture of affordability in a City where at least 28% of all units are subsidized.
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Land banks are government-created institutions whose mission is to return vacant, abandoned and tax-delinquent properties into productive use. Land banks are empowered to acquire land, eliminate back taxes and tax liens attached to a property in order to create a clean title, maintain the land in compliance with local and state ordinances, and convey the property back into active use. As a mechanism for expediting the disposition of city-owned and/or abandoned properties, land banks can be a significant local government tool either for equitable growth or for more conventional economic development.
Read MoreBased on the previous DRIM analysis and updated 2017 DRIM analysis, three Wards have been analyzed and found to be Displacement-Risk Neighborhoods: The Central Ward, the South Ward, & the East Ward.
To better understand the trend of displacement that has occurred between years 2000, 2015, & 2017, we conduct a baseline study to analyze the specific displacement risk indicators for one Ward: The Central Ward.
Read MoreWith the increased use of public land for the sake of economic development, cities across the U.S. are facing an urban construction boom. Through the 1980s and 1990s, Newark’s construction boom focused on land-use policies, especially the tax abatement strategies for bringing about capital-intensive projects. Simultaneously, Newark’s shift to a more neo-liberal solution led to a decline in public housing and section 8 vouchers.
As Newark experiences unprecedented growth potential, Newarkers express more and more anxiety about the prospects of housing displacement brought on by the processes of gentrification that have transformed urban neighborhoods across the United States.
Read MoreBased on the previous DRIM analysis and updated 2017 DRIM analysis, three Wards have been analyzed to be considered as Displacement-Risk Neighborhoods.
To better understand the trend of displacement that has occurred between years 2000 and 2017, we conduct a baseline study to analyze the specific displacement risk indicators.
Read MoreFrom the perspective of many low-income families, gentrification is the ultimate social injustice; where “wealthy, usually white, newcomers are congratulated for "improving" a neighborhood whose poor, minority residents are displaced by skyrocketing rents and economic change.”
A social injustice promulgated by local government action, gentrification is no longer confined to our big cities and is increasingly impacting smaller cities and towns as municipalities seek to increase their tax base by luring wealthy residents in search of urban amenities and replace low income residents in the process.
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Making Newark Work for Newarkers is the full report of the Rutgers University-Newark Project on Equitable Growth in the City of Newark, written by CLiME and incorporating research conducted in conjunction with a university working group whose work began last April. We viewed the goal of equitable growth first in the context of housing issues before expanding to think about the fabric of community life and economic opportunity in the city.
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As Newark experiences unprecedented growth potential, Newarkers express more and more anxiety about the prospects of housing displacement brought on by the processes of gentrification that have transformed urban neighborhoods across the United States. Given the recent history of other cities in its metropolitan neighborhood—New York, Hoboken and Jersey City—Newark would seem poised to attract the kind of global capital that has accelerated so much economic development among …
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The City of Newark is undergoing rapid transition, with creative political leadership and development cranes dotting its sky. In February 2016, CLiME launched a comprehensive study of housing trends in the City. In May 2016, CLiME led a Rutgers University-Newark anchor initiative that researching laws and policies that might promote more equitable growth in the City as it changes. This Housing Research Brief represents the first installment of our almost year-long work. It provides quantitative snapshots …
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The Rutgers University-Newark Project on Equitable Growth was formed as a team of university researchers led by CLiME to provide research and recommendations about spreading the benefits of potential economic growth to all wards and neighborhoods in the City of Newark. Although housing and housing-related issues dominated our work, we viewed the task more broadly and asked: How does a working-class city in the midst of economic interest from a fast- growing metropolitan region harness …
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Each year, psychological trauma arising from community and domestic violence, abuse and neglect brings profound psychological, physiological and academic harm to millions of American children, disproportionately poor children of color. This Article represents the first comprehensive legal analysis of the causes of and remedies for a crisis that can have lifelong and epigenetic consequences. Using civil rights and local government law, it argues that children’s reactions to complex trauma represent the natural symptomatology of severe structural inequality—legally …
Read MoreWhat would an equitable DC look like? Communities of color have faced decades of systemic racism and discriminatory policies and practices. These actions have barred people of color from certain jobs and neighborhoods and from opportunities to build wealth, leaving a legacy that persists today. If the nation’s capital were free of its stark racial inequities, it could be a more prosperous and competitive city—one where everyone could reach their full potential and build better lives for themselves and their families.
Washington, DC, is one of most racially segregated cities in the United States, stemming from public policies and private actions that once limited where black residents could live, whether they could secure mortgages, and whom they could buy homes from. Today, Wards 4, 5, 7, and 8 on the east have a majority of black residents, and Wards 2, 3, and 6 on the west are majority white. About half of Hispanic residents live in Wards 1 and 4.
Read MoreHomeownership is one of the most esteemed values in American society. As such, homeownership is heavily promoted and subsidized by both federal and local governments in the form of tax credits, tax deductions, federally subsidized loans, and federal mortgage insurance from the Federal Housing Authority. The rationale for these subsidies is that homeowners make better citizens, which has been substantiated by researchers using measures such as local voting and church attendance.
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