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Rethinking housing strategiesfor weak market neighborhoods
Alan MallachNon-resident Senior FellowThe Brookings Institution
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The market is the starting point forneighborhood housing strategies: Strategies need to be grounded in
understanding market realities Strategies must focus on building stronger
markets – drawing consumer choice Weak market areas offer particular
challenges for market-drivenneighborhood change strategies
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There are fundamental realitiesaffecting weak market areas: Most older industrial cities have lost
population, and many continue to losepopulation.
These cities have a surplus of housing andmore vacant land than can be absorbed byredevelopment
Population loss is accompanied by gradualimpoverishment, a greater threat to urbanviability than population loss itself.
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Population 1950-2006
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1950 1960 1970 1980 1990 2000 2006
Year
Popu
latio
n (0
00)
Cleveland
Detroit
St.Louis
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How do these realities affectneighborhood change? Neighborhood conditions reflect weak
market conditions in city and region, notonly neighborhood dynamics
Limited citywide or regional housingdemand limits neighborhood options
Resources are likely to be severelylimited relative to demand
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What do these conditions mean forneighborhood strategies? Strategies need to be framed in a context of
citywide slow growth or shrinkage Resources need to be strategically targeted to
have meaningful impact Drawing and building the middle class should be
a priority Abandoned and foreclosed properties are likely
to be a significant issue in any neighborhoodstrategy.
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Consumer choice is the startingpoint for neighborhoodstrategies: Homebuyers want a house that meets
their needs at a price they considerreasonable in light of the house and itssurroundings; an area that offers themthe quality of life they are seeking, whichthey perceive to have the stability thatwill protect their quality of life andpersonal investment.
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Healthy neighborhoods are thoseneighborhoods which meet homebuyers’ criteria, where: People who have enough income to
choose between neighborhoods chooseto move into the neighborhood
People who have enough income to leavethe neighborhood choose to stay
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Healthy neighborhood housingmarkets can be built by: Increasing the desirability of the
neighborhood’s housing stock Increasing neighborhood amenity value
and quality of life Increasing neighborhood stability
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Vacant and abandoned propertiesare a critical barrier to fosteringneighborhood stability: They diminish property values, act as
magnets for crime, increase fire risk andhealth hazards, reduce neighborhoodcohesion, and make the area less attractiveto prospective buyers.
Foreclosures exacerbate existing abandonedproperty problems in weak market areas.
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Foreclosures destabilize neighborhoods Foreclosures impose burdens on local
government Foreclosures diminish property values.
BUT… Most of the damage results from lack of
maintenance and/or abandonment, notforeclosure as such.
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Foreclosures are more likely to lead toabandonment in weak market areas: Creditors less motivated to complete
foreclosures Creditors less motivated to maintain property
during foreclosure process Borrower less motivated to renegotiate loan or
remain in property Neighborhood conditions increase risk of
property damage, deterioration and vandalism
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How can abandonment andforeclosure issues be tackled? Reduce the link between foreclosure,
vacancy, deterioration andabandonment.
Gain control of properties Invest strategically in ways that build
market demand.
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Reduce the link between foreclosure,vacancy, deterioration andabandonment Keep tenants in properties – eliminate
foreclosure as grounds for eviction. Allow responsible owners to convert to
tenants after foreclosure sale. Make creditors take responsibility for
vacant properties from beginning offoreclosure process.
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Gain control of properties Create effective, targeted code
enforcement strategies Develop nuisance abatement program
with capacity to collect for municipalcosts
Use tax foreclosure and other legal toolsto gain control of problem properties
Create land banking entity
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Why is land banking important? Minimize negative impacts of vacant land
on community Maximize long-term redevelopment
opportunities Foster beneficial uses, such as open
space or urban agriculture Allow the community to control its future
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Invest strategically to buildmarket demand: Target public sector investments around
market-based strategy in keyneighborhoods
Link investments – housing, schools,open space, transportation – aroundstrategy
Use HERA funds strategically
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Use HERA funds strategically: Direct resources to neighborhood stabilization
strategies, not scattered properties Let market inform what to acquire, when to
rehab and when to demolish Leverage HERA funds with other public and
private financial resources and capacity Integrate HERA activities with other
stabilization strategies such as codeenforcement and foreclosure prevention
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The bottom line for weak marketcities: Cities may shrink, but they can become
healthier smaller cities. Cities have assets that they can leverage
to become healthier cities Cities must both draw a middle class and
address the needs of their lower incomeresidents
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Hurley
KetteringUniversity
Flint River
Carriage Town
UM-Flint
Downtown
ASSETS
FLINT, MICHIGAN
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Key strategies Stabilize viable existing neighborhoods Build on unique assets to create new markets Develop long-term land banking strategies to
make possible long-term reconfiguration ofurban land
Address education and workforce needs oflong-term residents
Foster regional cooperation
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Alan MallachPO Box 623Roosevelt NJ [email protected]