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Maps & Data

Market Strength and Foreclosure Risk

Data updated December 2013

Resources | Importance | How to use | Additional resources
Resources
  • Market Strength and Foreclosure Risk Matrix for Excel (ZIP file) - Excel 2010 or Older Excel versions
  • Data layers on maps of market strength [link] and foreclosure risk scores estimated to the census tract level [link
    (See the section "How to use these resources" for more detailed instructions on using the mapping tools)
  • Setting Priorities for Neighborhood Stabilization: A Guide to Using Foreclosure-Response.org Indexes [pdf]

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Why the data are important

Appropriate solutions for neighborhoods depend on their market strength as well as their level of foreclosure risk. In neighborhoods with fairly strong real estate markets, a recovering private sector may address the foreclosure problem without a need for public intervention. At the other extreme, in neighborhoods with very weak markets, public efforts to rehab distressed properties might well be unworkable.

In neighborhoods with a weak housing market, there will be insufficient demand from home buyers and other investors to purchase the rehabbed properties and operate them sustainably, and available subsidies are nowhere near sufficient to cover the full costs (capital and operating) over the long term. For these types of neighborhoods, demolition and land-banking may warrant more consideration.

Alternatively, neighborhoods in-between, sometimes called "warm" markets, may be the ideal place for agencies to use NSP or other funding sources to try to spur rehabilitation since fairly modest public investment may be enough to overturn the risk foreclosures present to the neighborhood and revive self-sustaining property ownership.

The implication of the examples above is that neighborhood-level data on market strength as well as foreclosure risk are essential for designing effective stabilization strategies. However, very few localities have had access to such data. To address this need, Foreclosure-Response.org is now providing indexes of both market strength and foreclosure risk, developed by the Local Initiatives Support Corporation (LISC), that localities can use to set their neighborhood stabilization priorities.

Values for both indexes have been estimated for all census tracts in U.S. metropolitan areas. For more information on the index, see the methodology information below.

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How to use these resources

The resources listed in the top section of this page provide local planners with the following strategic targeting tools:

  1. A "market strength/foreclosure risk matrix" for the metropolitan area that overlays ten housing market strength categories with ten foreclosure risk categories.
    The matrix shows the number of local census tracts in each cell formed by cross-referencing the 10 market strength categories and the 10 foreclosure risk categories. For example, you can see how many tracts are in both the 2nd highest 10% according to foreclosure risk and the 5th highest 10% according to market strength. To access this matrix, download the ZIP file (either for Excel 2010 or older Excel versions) from the section at the top of this page.
  2. A map of housing market strength for all census tracts within the metropolitan area.
    The map shows the index ranges broken into 5 categories from the weakest to strongest markets, relative to the rest of the metropolitan area. Similar to the foreclosure risk maps, you can click on any tract and its exact percentile on this index will pop up. To view the map, click here and change the data layer to the "LISC Housing Market Index."
  3. A map of foreclosure risk for all census tracts within the metropolitan area.
    The map shows the index ranges broken into 5 categories from low to high risk, relative to the rest of the metropolitan area. You can click on any tract on the map to see its exact percentile. To view the map, click here and change the data layer to the "LISC Composite Foreclosure Risk Score."
  4. Lists showing the identification numbers of the census tracts that fall in each cell of the matrix.
    This allows you to pinpoint the census tracts' locations on local maps and view the actual values of both indexes. To access these lists for your custom-selected census tracts, download the Excel file in the section at the top of this page and follow the instructions to select your metropolitan area and filter the census tract list to just your targeted areas.

More information on how to use these materials is provided in our guide, Setting Priorities for Neighborhood Stabilization: A Guide to Using Foreclosure-Response.org Indexes. Basically, the process entails three steps:

  • Step 1 – Find out where neighborhoods fall in relation to market strength and foreclosure risk. This step entails an initial review of the housing market and foreclosure risk matrix (available for download above) to gain an understanding of how many and which census tracts in your metropolitan area fall in different places on the matrix. For example, which tracts have fairly high foreclosure risk and very weak market conditions, which tracts fall into the middle range of both foreclosure risk and market strength, etc.
  • Step 2 – Apply local knowledge and data to define zones for different targeted actions. The next step requires local research and consultations so you can calibrate the matrix to local market conditions. We suggest holding meetings with knowledgeable local practitioners (e.g. planning officials, Realtors, and housing specialists). In the meetings, participants would, from their own local market knowledge, estimate the level of the critical market strength and foreclosure risk thresholds for the metropolitan area and, using the matrix, review which tracts are grouped in key cells around these thresholds. For example, how high of a local foreclosure risk level is the most critical for intervention, and which census tracts have a risk level near that threshold? What level of market strength divides the census tracts where market-oriented rehabilitation is likely to be viable versus those in which market-oriented strategies are unlikely to be viable? The answers to these questions will help to define zones where different types of targeted actions are appropriate.
  • Step 3 – Use the targeted action zones to select census tracts for priority action. The great benefit of the matrix is that it groups tracts together in each cell that are likely to justify similar priorities and programmatic treatment so you do not have to try to develop approaches for tracts one-by-one. The consultations above are likely to lead the participants to a good sense of which cells warrant the highest priority and the general stabilization approach appropriate for the tracts in these cells. You do not need to devise strategies for all cells in the matrix. Rather, the data help you select the census tracts (probably a small group) that should be the focus of stabilization work in the short term.

For more guidance or to download tools that can help in setting neighborhood stabilization priorities, use the resources in the box on the upper right of this page. Since understanding the combination of market strength and foreclosure risk in neighborhoods is crucial for strategic targeting, the downloadable files available here contain both indexes.

Older versions of the matrix as well as a separate file for the housing market index can be provided upon request.

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Methodology and additional resources

Our methodology is outlined in the paper, A HMDA-Based Housing Market Index to Track Neighborhood Change [PDF]. The LISC Housing Market Index is newly developed and cannot be tested until it gets into circulation. We have made it publicly available both to encourage comments from the public and to assist communities engaged in neighborhood stabilization planning. We invite people to send comments on how well the index seems to work in their on-the-ground applications. The index will be continually tested and updated periodically. Any comments can be sent to us via the contact form here.

Presentations and case studies about innovative and strategic uses of data for neighborhood stabilization may assist policymakers thinking about how this matrix can help guide program development and resource targeting. The Federal Reserve Bank of Richmond’s December 2011 Strategic data use conference [link] provides a wealth of ideas with lasting relevance.

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Note: We gratefully acknowledge the support of the Annie E. Casey Foundation in allowing us to prepare these materials. Any opinions or errors are those of the authors alone.