Newark Trying To Boost Housing Market With No-Interest Loans

NEWARK, NJ — Only one in five Newark households are currently homeowners. But as the coronavirus crisis drags on, the city is trying to jumpstart the local housing market by offering no-interest loans.

Earlier this week, the Newark City Council unanimously approved an ordinance that would increase available funds for the Live Newark program. A final vote is slated for April 27.

The program, which has been running on a “small scale,” provides no-interest loans for new homeowners who want to buy a property in Newark, or existing homeowners who need to make improvements or repairs.

Applications for the Live Newark program and more detailed descriptions can be found online here after April 27.

Here are some of the changes the ordinance would make:

• Live Newark Closing Cost Program – Would provide $10,000 no-interest loans to first-time homebuyers to purchase a home in Newark. Over a five-year period, 20 percent of the loan is forgiven for each full year in which the recipient has lived in the home.
• Live Newark Façade Improvement Program – Would provide up to $20,000 no-interest forgivable loans for owner-occupied homes. The loans may be used for repairs or improvements to the property’s exterior which are intended to beautify the community and may also satisfy code violations or threats to the health, safety and welfare of the occupants or the surrounding community. Over a five-year period, 20 percent of the loan is forgiven for each full year in which the recipient has lived in the home.
• Live Newark Municipal Employee Housing Assistance Program – Would provide city employees with an up to $10,000 no interest forgivable loan for closing costs to purchase their home as first-time homebuyers in Newark. Over a five-year period, 20% of the loan is forgiven for each full year in which the recipient has lived in the home.

As reports of a red-hot real estate market in New Jersey heat up, the ordinance would help boost the local market and aid recovery from the coronavirus pandemic, officials say. And that would be a welcome development in a city where only 22 percent of households are homeowners.

“The COVID-19 crisis has made it harder for Newark residents to become homeowners and for existing homeowners to avoid losing their property,” Mayor Ras Baraka said. “Expanding the Live Newark program is one of the ways that the city will be working to increase home ownership and enable residents to repair and enhance their homes in these very difficult times.”

According to officials, funds for the Live Newark program come from the city’s share of HOME funds received from the U.S. Department of Housing and Urban Development, as well as from local sources.

So far, it’s providing a good return on the investment, officials said. Over the past five years, the average annual income of new homeowners benefitting from the Live Newark Closing Cost Program has been $54,000, and the average price of the homes they bought has been $235,386. The program has enabled the purchase of homes in all five wards of the city.

Meanwhile, the Façade Improvement Program has helped residents in every ward. Roughly 54 percent of them were over the age of 62, officials said.

“Owning a home provides families with stability as it builds wealth,” said Allison Ladd, deputy mayor and director of the Newark Department of Economic and Housing Development.

“Homeownership creates stable active communities,” Ladd said. “That’s why it is so important to make Live Newark available to more residents and with higher loan amounts.”

• See related article: Newark 'Land Bank' Hopes To Boost Homeownership, Beat Blight
• See related article: Newark Affordable Housing Project Is 'American Dream' In Action
• See related article: Long-Awaited Newark Apartments Will Be 100% Affordable Housing

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