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.
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