Why is strategic targeting so important for neighborhood stabilization?
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.
How can data help you target neighborhoods strategically?
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.
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