In another example of how Newark is finding ways to increase the level of local homeownership while preventing outside companies from moving in, the city held the first Newark Homeownership Revitalization Program lottery, awarding seven properties at a cost of just $1.
To be sure, the properties need work.
But, that’s the point. The city is willing to hand over properties to those who are willing to fix them up and make them a home, rather than an outside entity that could use them to increase rents.
With one of the lowest percentages of homeownership of any major American city, Newark is utilizing the NHRP lottery as one strategy to expand homeownership, promote housing stability and build wealth among city residents. It is part of Mayor Ras Baraka’s focus on countering the effects of the purchase of owner-occupied homes by large-scale investors, which causes rents to rise and owner-occupancy to fall.
A recent study found that 47% of Newark home sales were to institutional investor buyers from 2017-2020.
The lottery — the first of many the city has planned — was overseen by Baraka, Deputy Mayor of Economic and Housing Development Allison Ladd, Invest Newark CEO & President Marcus Randolph and Neighborhood Assistance Corp. of America founder and CEO Bruce Marks.
Baraka said keeping ownership at a local level is key.
“Across America, LLCs are buying up owner-occupied homes and turning them into corporately owned, expensive rental units,” he said. “In Newark, where we work hard to expand homeownership, we have created a wide-ranging strategy to do everything possible to counter this dangerous trend.
“The ‘dollar sale’ initiative is an innovative way to help longtime Newark residents become homeowners at costs that they can afford — and thereby simultaneously close the wealth gap and increase equity and financial health for Newark residents.”
The pre-qualified bidders were required to be residents who have lived in Newark for five years or more — or have been displaced by gentrification. They must commit to reside in the properties for a minimum of 10 years.
The properties are deteriorated one-, two-, three- and four-family homes that will be rehabilitated into beautiful owner-occupied, multifamily homes.
As the nation’s largest Housing and Urban Development-approved national nonprofit homeownership and community advocacy organization, NACA serves as administrator of Newark’s lottery program and participants are required to become prequalified NACA members.
Officials connected to the program said the selection of Newarkers approved to participate is based upon their ability to carry out financial and other necessary obligations for successful homeownership.
All accepted applicants are eligible for NACA’s Best in America mortgage that requires no down payment, no closing costs, no fees and no mortgage insurance at a below-market fixed rate, without consideration of one’s credit score. The mortgages will be used to cover the cost of rehabilitating existing deteriorated homes or building new ones.
Accepted applicants also receive guidance and instruction from NACA’s HUD-certified counselors to become well-informed homebuyers and owners who can successfully redevelop their properties.
“This partnership will set the national standard for affordable homeownership on a large scale,” Marks said. “Homebuyers nationwide will be demanding the Newark model to purchase city-owned properties for $1 to renovate or build on these vacant lots with NACA’s Best in America mortgage.”
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