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Managing Neighborhood Change: An Overview
Alan Mallach, Non-Resident Senior FellowThe Brookings Institution
Managing neighborhood change
Managing neighborhood change is a way of thinking about neighborhood change. It is based on three premises: The housing market is a central force in driving
neighborhood change That change can be positive or negative CDCs and local governments can play an active role
in influencing market behavior and outcomes
Managing neighborhood change
The more people choose to stay in or move into the area, the stronger the local housing market becomes.
Housing market strength translates into other positive community changes
Without a healthy housing market, creating a socially and economically healthy community may be difficult, if not impossible.
Managing neighborhood change
Housing market change can build stronger communities, but can also destabilize them: Foreclosures and vacancies destabilize a community
by undermining the vitality of its housing market Communities can also be destabilized by unmanaged
growth, leading to cost pressures and displacement
Managing neighborhood change
To create healthy, economically integrated communities, CDCs need to: Build the housing market, turning the area into a
community of choice that can draw and retain a diverse economic mix of residents
Combat forces undermining housing markets and destabilizing the community
Preserve opportunities for lower income people to remain in the community, and foster equitable redevelopment.
Managing neighborhood change The first step in building a
neighborhood housing market is understanding the area from a market perspective: What are its physical characteristics? What are its market conditions? Which way are they trending? What are the problems discouraging the market? What are the assets that can potentially help build
the market?
Managing neighborhood change
Philadelphia/Selected Census Tracts Price Trends 1997-2007
0
20
40
60
80
100
120
140
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Year
Med
ian
pu
rch
ase
mo
rtg
age
amo
un
t
Philadelphia
No Phila (169.02)
Port Richmond (186)
Oxford Circle (314)
Managing neighborhood changePhiladelphia/Selected Census Tracts Real Estate Sales 1997-2007
0
10
20
30
40
50
60
70
80
90
100
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Year
Ho
me
pu
rch
ase
mo
rtg
ages
per
1,0
00 d
wel
ling
un
its
Philadelphia
No Phila (169.02)
Port Richmond (186)
Oxford Circle (314)
Managing neighborhood changeOxford Circle Tract 314 Home purchases by occupancy
0
50
100
150
200
250
300
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Year
Occ
up
ancy
typ
e
Ow ner occupant
Absentee buyer
Managing neighborhood change
Hurley
KetteringUniversity
Flint River
CarriageTown
UM-Flint
Downtown
ASSETS
Managing neighborhood change
The second step is to begin building or rebuilding the housing market: Increasing the desirability of the community’s
housing stock Increasing community stability Increasing community amenity value and quality
of life These are all ways of influencing
consumer choices
Managing neighborhood change
Increasing the desirability of the community’s housing stock: Physical characteristics of housing do not reflect market
demand Cost to build or rehabilitate housing exceeds market value
of new or improved property Properties in area are not appreciating, or are losing value Potential buyers are unaware of availability of desirable
housing stock in area
Managing neighborhood change
Increasing community stability What is a stable neighborhood? A stable neighborhood is not one where
everybody stays in place, and everything stays the same.
A stable neighborhood is one where residents and potential buyers feel confident that their investment – psychological as well as financial – is secure.
Managing neighborhood change
Key actions contribute to neighborhood stability by preserving and enhancing residents’ and buyers’ confidence in their investment in the neighborhood: Reducing property abandonment Reducing foreclosures Reducing crime Increasing the homeownership rate Increasing property investment by owners
Managing neighborhood change
Foreclosures directly impact neighborhood stability: Foreclosures trigger disinvestment, vacancy and
abandonment Disinvestment, vacancy and abandonment reduce
the value of neighboring properties and undermine the neighborhood’s housing market.
Managing neighborhood change
Neighborhood stabilization is about market recovery – Identifying and tacking the factors destabilizing
the neighborhood – not just properties Rebuilding resident and consumer confidence in
the area. Rebuilding the housing market
Managing neighborhood change
Increasing community amenity value and quality of life: Improve area appearance (curb appeal) Enhance parks and open space Increase economic opportunities Improve transportation and access Enhance shopping and services Improve school quality
Managing neighborhood change
If markets improve, opportunities for lower income residents can be lost - How do you preserve their opportunities? Preserve and/or expand the affordable housing
stock Prevent or mitigate involuntary displacement Build resident incomes and wealth
Managing neighborhood change
Preserving and expanding the affordable housing stock: Preserve existing subsidized or affordability
controlled housing Preserve affordability in the private market
housing stock Convert private market housing into
affordability-controlled housing Create new affordability controlled housing
Managing neighborhood change
Preventing or mitigating involuntary displacement Homeowners Tenants in private market housing Tenants in publicly-assisted or affordability-
controlled housing.
Managing neighborhood change
Building resident incomes and wealth: Create jobs or bring jobs into the community Train people for jobs in region Increase access to regional job opportunities Grow small/medium businesses in the area
Managing neighborhood change
Timing is everything Each market building, stabilization or
equitable revitalization strategy will be a better or worse ‘fit’ for a particular area or neighborhood, depending on current market conditions and the changes taking place in the area.
Managing neighborhood change
For market-building activities, the starting point is: what are the current market conditions in the
area? For equitable revitalization, the starting point
is: what is the course of market change in the
area?
Managing neighborhood change How can one know whether and how a area is
changing? Track market change through indicators of
change: House price trends Incomes of new homebuyers Volume of real estate activity Vacancies/abandoned properties Tax delinquencies
Managing neighborhood change
Key questions to ask for any strategy: Is the strategy relevant? Does it address a real
problem? Is the strategy effective? Is it likely to yield the
desired results? Is the strategy efficient? Is the cost reasonable,
and the balance of costs and benefits better than alternative strategies?
Managing neighborhood change
Effectiveness/relevance of landlord assistance strategy
Efficiency
Managing neighborhood change
Change strategies as market conditions change Track community market change Change specific strategies and activities to reflect
change in community market conditions Change the mix of market-building and equitable
revitalization strategies
Managing neighborhood change
STRATEGY STAGE OF NEIGHBORHOOD CHANGE
0 1 2 3 4 5
Rehab grants and loans to landlords * ** * * *Rent control ordinance * * ** ** **Tenant right of first refusal ordinance * * ** *** ** *Acquisition of privately-owned properties * * *** ** *Land bank for future affordable housing * ** *** ** *Inclusionary zoning ordinance * ** ** ***
Equitable revitalization strategies and neighborhood change
Managing neighborhood change
Every community is different
Each community has different assets and problems that create conditions for market change and opportunities for equitable revitalization.
There is no one “right” economic mix for an area – different people and groups seek out different areas for different reasons.
In the end, the mix needs to be driven by the area’s characteristics and assets.
