KEY POINTS
- New Jersey had 84,536 corporate-owned parcels in 2022, up 138% from 35,537 in 2012.
- Asbury Park had the region’s highest corporate ownership rate, 18.1%, in 2022, up from 7.9% in 2012.
Corporate home ownership doubled in Monmouth and Ocean counties between 2012 and 2022, a Rutgers University report found, as investors snapped up properties in towns that had lower prices and a higher share of renters.
Investors have been rapidly snapping up affordable houses in South Toms River, and tenants say they are letting the homes fall into disrepair. South Toms River, NJ Friday, June 3, 2022 Doug Hood
Researchers said the increase in 1- to 4-unit homes owned by LLCs cut into the already-limited supply of affordable homes that could be purchased by lower-income individuals or families. The purchases added to substantial racial gaps in home ownership and wealth.
The expansion of corporate ownership in New Jersey “raises concerns related to safeguarding opportunities for moderate-income homeownership and preserving the affordability and quality of rental housing,” the authors said.
The report by Rutgers professors Eric Seymour and Will Payne looked at the change in corporate ownership over a decade, focusing on counties and municipalities where purchases by LLCs were most prevalent.
The study came as the housing markets in the two counties continue to see more buyers than sellers, pushing prices higher. In Monmouth County, the median price for a single-family home was $720,000 through the first 11 months of the year, up 5.6% from the same time last year. In Ocean County, the median price during that time was $600,000, up 6.2%, according to the New Jersey Association of Realtors.
Inventory has continued to dwindle. In Monmouth County, there were 1,102 single-family homes for sale in November, down 25.5% from the same month a year ago. In Ocean County, there were 1,330 homes for sale in November, down 9.8% from a year ago, the Realtors’ group said.
In their search for homes, consumers are facing more competition from corporate investors, who often have a leg up. Among the advantages: Corporate buyers are more likely to purchase with cash, and they typically have more access to credit, the Rutgers professors said.
Large corporate landlords are more likely to increase rent, add fees and pursue evictions. And their identities can be hard to trace since they are registered to LLCs, according to the report.
The Asbury Park Press previously found New Jersey had about 72,000 properties owned by LLCs in 2021.
The Rutgers study shows that number has only continued to rise.
Among the findings:
- New Jersey had 84,536 corporate-owned parcels in 2022, up 138% from 35,537 in 2012. It meant the total share of parcels owned by LLCs was 3.8% in 2022, up from 1.6% a decade ago.
- Monmouth County’s corporate ownership rate was 3.5% in 2022, up from 1.7% in 2012. Ocean County’s rate was 3.7%, up from 1.7%.
- Asbury Park had the region’s highest corporate ownership rate, 18.1%, in 2022, up from 7.9% in 2012. Only Trenton and Bridgeton had higher rates.
- Other Jersey Shore towns with high corporate home ownership rates included South Toms River (15.6%), Keansburg (13.8%), Red Bank (13.2%), Freehold (10.4%), and Long Branch (9.9%).
Corporate ownership grew fastest in towns that had more affordable homes and large renter populations, the researchers said, which often included towns with higher shares of Black, Latino and white working-class residents.
The Rutgers professors noted corporate investors can serve an important role in preserving rental housing, rehabilitating aging homes and returning abandoned properties to active use. But the researchers also called on state lawmakers to help moderate-income residents become homeowners.
Recent legislation hasn’t been without backlash. Lawmakers passed the Community Wealth Preservation Act almost two years ago to give foreclosed homeowners, their families and nonprofits the first chance to buy the home at sheriff’s sales. But investors said the law potentially deprives owners of money they could use to pay off lenders and get back on their feet.
Other pending bills would tighten restrictions on LLCs. One would require LLCs intending to rent a property to disclose the name of a registered agent on the deed. Another, a Senate bill titled “The Protection of Homeownership and Limiting Institutional Investor Acquisition Act,” would bar most institutional investors from purchasing single-family homes during the first 90 days they are on the market. And they couldn’t lease the homes for five years after buying them.
“Policies that give prospective homeowners and nonprofits a greater opportunity to compete for homes, such as exclusive bidding periods, directly address concerns about investors crowding out these buyers,” the authors wrote.
Michael L. Diamond is a business reporter at the Asbury Park Press. He has been writing about the New Jersey economy and health care industry since 1999. He can be reached at mdiamond@usatodayco.com.