Anyone who’s tried to buy a home these days knows it’s a tough market, but a new report from the Asbury Park Press shows that New Jersey homebuyers are competing with others. We are not only fighting against multi-million dollar corporate investors.
Michael L. Diamond and Stephen Sterling dug into the numbers and found stories of LLCs demolishing tens of thousands of homes and discounting regular residents. Tenant cannot pay rent. Diamond and Sterling found that there are six times as many LLCs in the state as he owns from 1 to 4 homes, compared to 10 years ago.
Diamond joined WNYC’s Michael Hill on Thursday’s Morning Edition to find out why this is happening and what it means for regular buyers. The transcript of their conversation below has been lightly edited for clarity.
Michael Hill: Some of the numbers on your reporting site are really overwhelming. For example, in Newark, at least 40% of sales have gone to corporate buyers in recent years. Home buying for these companies seems to have skyrocketed a few years ago and is still very high. why is this happening now?
Michael Diamond: Yeah it seems like a lot of investors with a lot of capital are looking for a place to invest their money and they have found a good option in the real estate market. . They can rent them out for rental income. They can rehabilitate them and flip them over for a higher price. We also found that, especially on the Jersey Shore, investors are buying properties and turning them into short-term rentals like Airbnbs.
The data in the report focuses on New Jersey, is this a more common phenomenon in Garden State than elsewhere? What about other places like New York City?
New Jersey’s real estate market is very different from New York City due to the large number of single-family homes and small homes. We see it in New York City. I’ve seen many places become his Airbnbs and LLC’s buying units. It’s actually happening all over the country. Some of the larger institutional investors are buying properties in the South and some more affordable properties in the states. I was surprised to see so much activity going on here in New Jersey.
So what does this mean for buyers and what does it mean for renters?
yeah, it’s a pretty simple equation. As more and more investors buy properties, the inventory becomes less and both sales and rental prices start to rise. First-time home buyers, in particular, will be hit hardest as they try to compete in the market. And in many cases, an investor can have all the cash to present a lucrative offer to the buyer or avoid any surprises.yes [regular buyers] Prices are dropping.
and what kind of this is happening in the communityand what makes certain locations so attractive to these LLCs?
Most active in low-income areas such as Newark and Trenton. At Trenton, about 44% of his sales have gone to LLCs over the past five years. But it’s not just big cities. We’ve seen smaller towns like Ocean County, but Toms River has seen a significant increase in investors. And I think they’re finding the most affordable homes there.
Michael, is there anyone trying to address this issue? Are there any proposed legislation or policies that could or could make a difference?
Not very advanced. In Trenton, there is legislation that would require LLCs to disclose their members, increasing transparency. [to find who’s] I manage the property and the bill went nowhere. In fact, what we have found is that public policy has gone the other way. There were tax breaks available to LLCs federally and statewide.
So what options, if any, do homebuyers have?
Patience. they have to be patient. Searches are longer and require more effort. And at this point, prices could be higher or so high that investors don’t see as great an opportunity in real estate as they do elsewhere.