Killing the American Dream: Report finds large corporations are buying homes, blocking middle-class buyers
Rutgers University-Newark and Newark Mayor Ras Baraka have turned their attention to an issue that has become more dramatic in the Brick City than anywhere else in the nation. Large corporations are buying thousands of one- to four-family homes and forcing out the middle class.
“They’re taking this money, they’re flipping it and they’re buying everything in the neighborhood,” says Newark resident Q Little.
Up and down the block on Columbia Avenue in Newark’s Vailsburg section, one can hear different versions of the same story. Little says that she sees local residents wanting to buy a home, but not being able to compete with the deep-pocketed buyers who are flush with cash.
Resident Edward Debarros says that he now pays his ever-rising rent to an anonymous corporation he says is slow to respond to problems like a broken doorknob.
“You’re supposed to submit an email and they add it to a work order and maybe a couple of months later a guy comes by and looks at it. Maybe,” he says.
Walter Brahan says he keeps getting letters and visits from people working for corporations looking to buy the home his family has owned since 1972.
“We’re going to be selling soon,” he says.
It is all part of a phenomenon detailed in a paper by two Rutgers University-Newark professors entitled “Who Owns Newark?” It is a report about the explosion of home purchases by large anonymous corporations. Between 2017 and 2020 researchers found that 47% of all sales of one- to four-family homes were made by institutional buyers using opaque limited liability corporations – a threefold increase since 2010.
“Far and away leading the nation in this disturbing trend,” says David Troutt.
Troutt co-authored the report for the Rutgers Center on Law Inequality and Metropolitan Equity. He says that this practice squeezes renters with ever-rising rents and shuts prospective middle-class buyers completely out of buying a home.
“Where investor buyers are coming in and buying exactly the homes that you and I would think of as being the basis for family intergenerational wealth and housing stability,” Troutt says.
It’s happening all over Newark. Herb Williams says that he and his wife live in a home that has been in his wife’s family for years. They recently tried to buy a home around the corner but were outbid by a corporation.
“We used to want those people to own their own homes. Now investors want those people to be paying rent in perpetuity. That's really an inversion of the American Dream,” says Troutt.
Mayor Baraka issued a statement on the report saying, "in cities and suburbs across America, institutional investors are eroding the American Dream of homeownership."
His office says he will announce a series of measures tomorrow to mitigate the effects of the trend.