central connecticut state university department of...

Central Connecticut State UniversityDepartment of GeographyIntroduction to Planning

Lecture 6. Housing, Housing Markets, and Neighborhood Regeneration

Adjunct Lecturer:Donald J. Poland, MS, AICP

E-mail: [email protected]: www.donaldpoland.com

Housing and Housing Markets

www.donaldpoland.com 3

Fundamentals of Housing, Neighborhoods, and PlanningHousing and Housing Markets

Why is housing important?

Why are neighborhoods important?

What is the role of planning?


Fundamentals of Housing, Neighborhoods, and PlanningHousing and Housing Markets – Basic Concepts

Sector of Housing Tenure:Tenure: refers to the various ways in which residential units are secured and occupied (renter versus owner-occupied housing). Is title to the property held by a public entity or government agency or is the property privately owned? Conveyance: describes the pricing mechanism: Do markets set the prices and terms of occupancy, or are they established outside the markets? In the United States, 90 percent of housing is privately owned. Third-market housing: or social or nonprofit housing, contains units that are privately owned but are not conveyed by traditional markets.



Housing as a CommodityMarkets: Housing can be analyzed in terms of markets, like other commodities. Housing, unlike other commodities, is fixed, it is not movable. It is expensive, durable, and subject to strong neighborhood effects. Therefore, geographic immobility, introduce many complexities into our ability to understand housing.



Housing Demand: Housing demand goes beyond just counting the number of households and the number of housing units.

We must consider housing amenities: a dwelling’s features that determine its economic value.

Geographic location: Housing value also depends on the geographic location of housing (spatial decision).

(1) Site characteristics. (2) Relative location immediately proximate properties (use). (3) Position within your spatial configuration of your daily activities. All of these affect the market value of housing.



Housing Supply: Housing supply is a complicated subject with many facets.

(1) Produced on-site where it is used (production method is costly). (2) Affordability of Housing:One third of income, on average goes to housing. Low income households tend to pay more.

Housing Affordability Problems: Recent trends.


Fundamentals of Housing, Neighborhoods, and PlanningHousing and Housing Markets – Geographies

Urban Ecology and Housing Markets – Invasion and Succession:

Filtering and Vacancy Chains:

Life-Cycle Notions of Neighborhood Change:


Fundamentals of Housing, Neighborhoods, and PlanningHousing and Housing Markets – Urban Ecology

Invasion and Succession: According to ecological theory, cities’housing stock grows from the inside out. Invasion, the arrival of new immigrants causing existent residents to move further out (succession).

The spatial mobility into the next zone outward is propelled by the desire for social distance from the most recent arrivals, but is made possible by upward socioeconomic mobility and cultural assimilation into a non-ethnic mainstream.


Fundamentals of Housing, Neighborhoods, and PlanningHousing and Housing Markets – Filtering and Vacancy Chains

Homer Hoyt (1939), housing economist identified several patterns that he considered inherent to the spatial functioning of urban housing markets. Hoyt believed that cities grew from the outside in and that the highest income households propelled urban growth on the edge of cities (outward movement for new larger homes with greater amenities). Creating a household shift or successive vacancies, each one in a progressively smaller and older housing unit closer to the core of the city (vacancy chains). Filtering: The construction of one additional housing unit on the edge of the city for an upper-income household filters its way through vacancy chains to result in a vacant housing unit close to the core of the city, available to newly arriving low-income households.


Fundamentals of Housing, Neighborhoods, and PlanningHousing and Housing Markets – Filtering Applied to Neighborhoods

Hoyt explained that filtering applied to neighborhoods in the same sense that each new occupant of a housing unit was often of lower income and social standing than the departing household.

Thus, over time, the once fashionable in-town neighborhood built and initially occupied by a high-income urban gentry became out-dated in terms of the modern conveniences it offered.

The homes sold to families of lesser means with each sale creating a downward filtering of the neighborhood.


Fundamentals of Housing, Neighborhoods, and PlanningHousing and Housing Markets – Life-Cycle Notions of Neighborhood Change

Other urban theorists have developed several similar life-cycle or stage models of neighborhood change.

Each agreeing with Hoyt that as the housing stock in neighborhoods ages and becomes more out of date with contemporary tastes, the neighborhood inevitably decays, both physically and socially.

This process was held to be inevitable because it was natural byproduct of properly functioning economic markets for housing.



Hover and Vernon Five Stages of NeighborhoodsStage 1. Initial Urbanization – typically occurs on the edge of the cityStage 2. Transition – population growth continues, density increases, and multifamily housing begins to be built.Stage 3. Downgrading – older housing stock is converted to multifamily use, densities continue to increase, and the housing stock physically deteriorates.Stage 4. Thinning – population declines, household size shrinks, housing units become vacant and are abandoned.Stage 5. Renewal – obsolete housing is replaced with multifamily buildings, and the intensity and efficiency of the land use increases. Renewal was thought to often require public sector involvement.



Anthony Downs – Neighborhood Stages 1981Stage 1. Healthy and viableStage 2. Incipient declineStage 3. Clearly decliningStage 4. Accelerating decline with heavy deteriorationStage 5. Abandoned and nonviable

A continuum—neighborhoods move up and down



David Boehlke and Charles Buki –Neighborhood Typology

Distressed Neighborhoods

In-Transition Neighborhoods

Healthy Neighborhoods


Fundamentals of Housing, Neighborhoods, and PlanningHousing and Housing Markets – Debates on Equal Access to Housing

Real Estate Agents and Differentiated Access:

Discrimination in Lending:

Accumulated Impacts of Housing Market Discrimination:


Fundamentals of Housing, Neighborhoods, and PlanningHousing and Markets – Real Estate Agents and Differentiated Access

Several forms of discrimination are experienced in housing market transactions (renters and owners) and was routine and overt in the early twentieth century. Steering: defined as “behavior that directs a customer towards neighborhoods in which people of his or her racial or ethnic group are concentrated.” Three steering techniques: (1) racially differentiated neighborhood recommendations, (2) racially differentiated inspections of housing units, and (3) racially differentiated commentary or editorializing about neighborhoods. Three forms of steering: (1) information steering - whites are given information about a wider variety of neighborhoods than minorities, (2) segregation steering - whites are encouraged to take housing in more predominantly white neighborhoods (reverse is true), (3) class steeringoccurs when whites are directed towards more affluent neighborhoods (reverse is true).


Fundamentals of Housing, Neighborhoods, and PlanningHousing and Housing Markets – Discrimination in Lending

Redlining: a practice by lenders where neighborhoods were deemed unacceptably risky due to racial or ethnic compositions were often bounded by red on maps used in loan approval and appraisal processes. Subprime lending: is a segment of the lending market that provides specialized loan products to consumers who need credit but have flaws in their credit history. Not all subprime lenders are predatory lenders, who use unscrupulous marketing tactics to generate business from unsophisticated homeowners, often elderly. (Table 9.5, page 233)


Fundamentals of Housing, Neighborhoods, and PlanningHousing and Housing Markets – Impacts of Discrimination in Housing

1. Restricts minority households’access to housing by reducing the number of units they see.

2. Makes the search process more unpleasant for minority households, increasing the efforts (time and money) required of them.

3. Increases the difficulty in finding appropriate financing (minorities are given less assistance in locating lenders and in making sure applications meet minimum requirements).

4. Increases the chances that mortgage loan applications will be denied.

5. Increases the actual cost of moving.

Government Policy and Housing


Fundamentals of Housing, Neighborhoods, and PlanningGovernment Policy – Market Realities, Government Involvement

Securing Home Ownership Through Loan Guarantees:

A New System of Housing Finance - The Secondary Mortgage Market


Fundamentals of Housing, Neighborhoods, and PlanningGovernment Policy – Homeownership Through Loan Guarantees

Home Owners Loan Corporation: Homeowners Refinancing Act (1933) early in the Depression to provide immediate relief to home-owning households. Federal Housing Authority (FHA) (1934). New program, rather than directly providing loans, the FHA provided incentives for private market lenders to increase lending for home ownership by providing guarantee to the lender on behalf of the homeowner.Federal guarantees had several important features: (1) longer amortized payback periods (20, then 25, then 30 years), (2) smaller down payments were required (20 percent), and (3) interest rates were dramatically reduced because the feds bore the risks.Together, the new programs significantly reduced the total and monthly costs of buying houses. The feds also allowed mortgage interest to be deducted from income tax. These programs opened up homeownership to many more households.


Fundamentals of Housing, Neighborhoods, and PlanningGovernment Policy – A New System of Housing Finance

1940 to 1960 saw dramatic increases in homeownership. In the 1930s two privately held corporations had been chartered to facilitate the sale of mortgages back by the FHA and VA.Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac). Authorized to purchase government-secured mortgages from institutions that originally made the loans, keeping mortgage capital flowing. Later, there charters were expanded, allowing them to purchase conventional loans not guaranteed by the government. They could then package mortgage together and sell then again on the new: Secondary Mortgage Market: to investors seeking a return on their investments. Given theirimportant role in facilitating the circulation of capital through housing markets

We now refer to Fannie Mae and Freddie Mac as government-sponsored enterprises (GSEs).


Fundamentals of Housing, Neighborhoods, and PlanningSprawl and the Suburbanization of Housing

Antecedents and Preconditions of Post-World War II Suburban Sprawl:

Postwar Sprawl:

Supply and Demand Factor:

Sprawl and the Federal Government – Housing Finance:

Sprawl and the Federal Government Automobiles and Interstate Freeways:


Fundamentals of Housing, Neighborhoods, and PlanningAntecedents and Preconditions of Post WWII Suburban Sprawl

Shift in the geography of housing that took place several centuries ago during the Industrial Revolution. With industrialization, urban dwellers increasingly lived in areas distant from their shops. The work/home separation was an essential precursor to suburbanization. Urban expansion based on the forms of transportation. Streetcar suburbs focused on downtown employment. The introduction of the automobile in the first decade of the twentieth century, had a tremendous impact on metropolitan regions. Local governments shifted their transportation investment from fixed system to paving roads. Existing neighborhoods had to be retrofitted to accommodate cars. Households either converted existing outbuildings into garages, built garages and carports, or found parking on streets that increasing seemed crowded and narrow.


Fundamentals of Housing, Neighborhoods, and PlanningPost War Sprawl

Supply and Demand: Economic prosperity unleashed decades of pent-up housing demand. Fordism and Consumerism -opportunity to buy homes. Demographics: returning military, marriages, kids, and families. Many families sought out homes with a new amenities considered conducive to raising children. “The American Dream.”



Housing Financing: Most of the new home built were in suburbs based on government programs:

(1) FHA/VA programs intensified the demand for housing, (2) programs had a geographic bias, directing most benefits to new housing located in the suburbs, (3) to prevent substandard housing programs were geared toward new construction, not existing buildings, (4) redlining had a geographic bias for the suburbs.



Automobiles and Interstate Freeways: The Federal-Aid highway Act of 1956 called for a national network of highways connecting all major urban areas. Impact:

(1) Providing easier, quicker and cheaper long-distance travel. (2) Linking the core areas to the hinterlands. (3) Economic boon to trucking and a decline in heavy rail transport. (4) Opened up areas further out to residential development. (5) Automobile provided flexibility in commuting--lower density auto-oriented residential housing development.


Fundamentals of Housing, Neighborhoods, and Planning‘Blight’ and the Fate of the Inner City

Housing construction lagged during the Depression and stalled during the war. Postwar, housing construction boomed. At the same time,inner-city neighborhoods were undergoing a transformation, often involving a bulldozer.Blight and Growing Redevelopment Pressure: Much of the urban housing stock in the first half of the twentieth century consisted of overcrowded and physically deteriorating neighborhoods. These areas grew more crowded and conditions worsened during the War. The housing stock in some areas was truly dangerous and could not bereadily repaired. Thus, demolition appeared to be the only antidote.

Beginning with the Housing Act of 1949, the solution increasingly took the form of bulldozers. Through the 1950s and 60s and into the 1970s billions of dollars were spent on urban redevelopment schemes in the downtown areas. Many of these areas had been residential and were labeled as blighted, torn down, and often replaced with large-scale projects (some were never redeveloped and are still vacant today).



The Housing Dynamics of Redevelopment: Several problems confronted urban redevelopment: Where would displaced residents live? What kind of developments would replace the old overcrowded neighborhoods? How would financing and responsibility be allocated? The solutions were complex programs. Government condemned older neighborhoods designated as blighted and obtained property through eminent domain. Once obtained, properties were cleared of existing structures and available to private developers for new constructions.

The blight designation became problematic. In some cases, poor, yet economically viable neighborhoods—gateways for immigrants—were designated as blighted, creating a self-fulfilling prophecy. Once designated as blighted, these neighborhoods deteriorated very rapidly.What to build to replace these neighborhoods was shaped by localinterests—seeking to retain the attractiveness of downtown areas for suburban consumers, most cities pursued development that would not be occupied by the poor. For example, Constitution Plaza:


Fundamentals of Housing, Neighborhoods, and PlanningFront Street and Constitution Plaza



Displacement and Public Housing: Cities turned to public housing as a partial solution for displacement and in the process co-opted what at the time were only nascent efforts to provide publicly financed housing.

The first public housing was built in 1935—intended and designed to be temporary and aid people in difficult times. Postwar, it was utilized to address housing affordability and supply for returning soldiers. Public housing was not stigmatized in the way it is today—most people thought of it as a well-deserved benefit for veterans. Unfortunately, public housing was co-opted by downtown redevelopment initiatives to provide a political solution for displacement. No longer was public housing to be a temporary/transitional form of housing. It was to become a place to house the most disadvantaged residents displaced by urban renewal. Sitting public housing became a difficult issue. Many of housingprojects came to be located in marginal areas with little perceived economic value—in or adjacent to old abandoned industrial areas or in areas cut off by railroads or newly constructed interstate highways.


Fundamentals of Housing, Neighborhoods, and PlanningNeighborhood Revitalization and Gentrification

Despite their apparent blight, many inner-city neighborhoods have enjoyed a remarkable turnaround in recent decades. Gentrification: the trend in some neighborhoods for predominantly white, middle-class residents to purchase and restore or revitalize housing in poor minority neighborhoods. This can result in the displacement of low-income minority households. Gentrification stimulates very contrary responses. Supports applaud the return of the middle-class, government benefits from increased property values and taxes, and problems associated with concentrated urban poverty are reduced or eliminated. Critics contend that gentrification is another example of exploiting the poor. Planning and Housing


Fundamentals of Housing, Neighborhoods, and PlanningPlanning and Housing

What are some of the issues with housing?

Adequate supplyAffordabilityQualityLocation

Why are housing issues important?

Provides physical shelterMajor land use in any townCritical factors in economy of regionsPrimary investment for most citizensHousing quality can affect neighborhoods and cities


Fundamentals of Housing, Neighborhoods, and PlanningPlanning and Housing

Community Housing GoalsSafe/Efficient PlacesSafe/Efficient DesignsHousing AestheticsPositive Economic ImpactsLimit Community CostsEquitable Access


Fundamentals of Housing, Neighborhoods, and PlanningPlanners and Housing

Planners influence housing by influencing its…

Design Placement

And via planning for…Land UsePublic FacilitiesTransportationHistoric PreservationEconomic Development


Fundamentals of Housing, Neighborhoods, and PlanningKey Issues in Planning and Housing

AccessHousing AffordabilityHousing and low income populationsHousing and the poor

QuantityHousing Shortages

QualityBlight

Impact of Land Use Planning on HousingFailed Federal Housing ProgramsHousing and Neighborhoods


Fundamentals of Housing, Neighborhoods, and PlanningParticipants in the Housing Market

What are their motivations?

Conflicting motivationsOwnersRentersBankersBuildersReal EstateGovernment

Goals, Profit, Risk


Fundamentals of Housing, Neighborhoods, and PlanningHousing and Markets - Predatory Lending

Sub-prime lending, risk, and foreclosures

Foreclosures as a risk-not desired resultForeclosures most common in marginal group

‘Predatory’-Foreclosure as desired result

Excessive interest ratesPrepayment penaltiesBalloon paymentsAdjustable ratesMisrepresentation of loan termsFlipping-excessive refinancingFee packing


Fundamentals of Housing, Neighborhoods, and PlanningWhat happened to people priced out of the housing market?

Public HousingPublic Housing vs. Affordable HousingPublic Housing Problems

Design problemsVested interestConcentration of povertyLocation problems

Solution StrategiesHome Ownership ProgramsScattered Site HousingReconstruction


Fundamentals of Housing, Neighborhoods, and PlanningPlanning and Housing Quality – Shortages and Surplus

Why do shortages occur? Where do they occur?

Excess demandLoss of existing units-RedevelopmentLimits on new development

What is the impact of housing shortages?Who is impacted most?Solutions

New DevelopmentIncreasing Capacity of Existing Units

Surpluses?


Fundamentals of Housing, Neighborhoods, and PlanningConnecticut Affordable Housing Act

C.G.S. Section 8-30g15% of homes in a development must be “affordable’ for 40 years to families earning 80% of median income and 15% of homes must be affordable to families earning 60% median incomeAppeals to a “housing court”that determines whether reasons for rejection overweigh the need for affordable housingRural/suburban towns are particularly happy about this


Fundamentals of Housing, Neighborhoods, and PlanningAddressing Affordability - Housing Subsidies

Ways to fill in for hosing market failuresSeveral ways to do this

Pay subsidy to needy households

Housing vouchers, Section 8Administered locally, funding from HUDHighly competitive

Pay subsidy to builder via tax credits

Homes must remain “affordable” for 30 yearsCan be used by private, non-profit, government


Fundamentals of Housing, Neighborhoods, and PlanningAddressing Affordability – Inclusionary Zoning

Requires the inclusion of affordable units in new developments

Offer a “density bonus” to developer, orMandatory percentage of development

May focus these areas in specific zones, or town-wideIn Maryland, developments of 50 units or more must provide 15 affordable units


Fundamentals of Housing, Neighborhoods, and PlanningConnecticut and the Affordable Housing Problem

DefinitionDetermining what is AffordableThe Connecticut Problem

Costs, Profitability, Taxes, Zoning

ImpactSolutions

Institute affordable housing legislationMake it cheaper to buildMake it cheaper to buy/rent


Fundamentals of Housing, Neighborhoods, and PlanningPlanning and Housing Quality and Blight

Planning and housing safetyPlanning and housing appearancePlanning and housing location

What is blight? What are its causes?The Problems of Old Structures

Deterioration & Obsolescence

Neighborhood-Wide ImpactsNeighborhood value cycleThe Prisoner’s Dilemma


Fundamentals of Housing, Neighborhoods, and PlanningBlight and the Inner City – Why is it a problem?

Neighborhood Decline (Starts with out migration)

Falling land valuesRents/Sale prices fallLandlords increase density to deal w/falling pricesProduces overcrowding & degradation of buildingsPushes values even lowerPushes residents away(Starts the cycle over again)


Fundamentals of Housing, Neighborhoods, and PlanningBlight Responses?

What to do with vacant/abandon property?

Infill HousingHomesteadingGentrification Incumbent Upgrading (pre-abandonment)Shift to non-residential usesDemolition and land bank


Fundamentals of Housing, Neighborhoods, and PlanningHousing in the Inner Suburbs

Dealing with Adversarial Land Use CombosComing to Grips with ‘Build Out’Maintaining the Housing Stock


Fundamentals of Housing, Neighborhoods, and PlanningHousing and the Urban Fringe

Placing Housing in Suitable LocationsCreating Positive EnvironmentsPreventing Adversarial Land Use CombosPreventing Problems with New Housing

Healthy Neighborhoods:Creating Neighborhoods of Choice in

Weak Market Cities and Suburbs


Fundamentals of Neighborhood RegenerationConventional Approaches to Community Development

Neighborhood Redevelopment Strategies:

Affordable Housing Production

Homeownership Programs

Public Infrastructure Investment (Streetscapes)

Rehab Loan Funds

Code Enforcement Strategies

Neighborhood Plans


Fundamentals of Neighborhood RegenerationNeighborhood Redevelopment Strategies

Affordable Housing Production:

Low Income Tax Credits

Appraisal Gap Financing

Historic Tax Credits


Fundamentals of Neighborhood RegenerationAffordable Housing Production

Distressed Neighborhoods (Existing Conditions):Supply exceeds demands.

Residents with the means to leave do.

Neighborhood image is so poor it cannot attract outsides with choices to move in or invest.

Existing or remaining residents are mostly low-income with little means and few or no choices of neighborhoods or housing.

The neighborhood does not have social, political, or financial ability to fend off threats or leverage resources.


Fundamentals of Neighborhood RegenerationAffordable Housing Production

Distressed Neighborhoods (Adding Supply):Supply increases but demand stays the same.Few if any new residents are attracted from outside the neighborhood since no new demand is created.New units attract existing residents with the greatest means or the most savvy to move into the newest and best housing units they can afford within the only neighborhood they can afford.Housing rental shift occurs. Residents upgrade.The weakest and most distressed housing units in the neighborhood become abandoned since no new demand is created.


Fundamentals of Neighborhood RegenerationConventional Neighborhood Redevelopment Strategies

Homeownership Programs:

Wealth Creation and the American Dream

Homeownership Education – Buying NOT Owning

Weak-market Neighborhoods and Equity

Unintended Neighborhood Impacts


Fundamentals of Neighborhood RegenerationHomeownership Programs

Typical Program Structure:Objective is to increase homeownership to create greater neighborhood stability.Buyers most often must be income qualified (Low/Mod).Provide homeownership education (teach how to buy a home).Provide below market financing, down-payment assistance, and closing cost assistance.Program geography is often citywide or scattered site and in already weak market neighborhoods.


Fundamentals of Neighborhood RegenerationHomeownership Programs

Homeownership - Unfortunate Outcomes:Measure numbers (education enrolment, units, purchased, families served).Can afford to buy home, but often cannot afford to own and maintain the home. (Maintenance deferred)Housing stock and neighborhood suffer from deferred maintenance.Often a weak-market neighborhood to start. Neighborhood becomes weaker from lack of property investment. Property values stagnate or decline. Little or no equity realized. No wealth creation.


Fundamentals of Neighborhood RegenerationConventional Neighborhood Redevelopment Strategies

Summary of Other Approaches and Strategies:Public Infrastructure Investment(Streetscapes): Based on the belief that investment in public spaces will improve market conditions and change neighborhood. Outcome should be to leverage and investment and improve neighborhood image.Rehab Loan Funds: Income qualified requirements (low/mod) and basic construction standards (HQS-HUD). Outcome should be to create investment, reduce/eliminate deficiencies, add value, and improve housing stock on display.

Code Enforcement Strategies: Force poorly maintained properties to comply with basic code requirements. Ignores weak market conditions, often the reason for poor property maintenance and the lack of investment. Results in minimal investment to address code issues. Poor quality construction and maintenance.Neighborhood Plans: Focus on eliminating negative conditions from the neighborhood. Rely on land use and codes to create change. Recommend other strategies mentioned here. Outcome should be to reposition neighborhood to attract and create investment

An Alternative to Conventional Neighborhood Reinvestment


Fundamentals of Neighborhood RegenerationThe Healthy Neighborhoods Approach

David Boehlke & Charles Buki

Asset Based – Market Driven ApproachBuilding from StrengthCreate Demand for HousingCreate Investment Where There is LittleTargeted Investment and StrategiesBuilding Community - Not Just Housing


Fundamentals of Neighborhood RegenerationConventional Vs Healthy Neighborhoods

Issue Conventional Healthy Neighborhoods

Purpose Make houses safe and code-compliant. Restore real estate market values so people can invest confidently.

Strategy Repair as many houses as possible in as large an area as possible.

Select properties for maximum visual market impact.

Consumer Focus on houses and households with greatest needs.

Respond to severe problems, but focus on houses and diverse homeowners with good potential for strengthening prices and raising housing maintenance standards.

Programs Use government subsidies to create standardized programs and to distribute grant dollars by regulation.

Develop a variety of flexible incentives for residents to achieve specific outcomes and to serve the desired market segment.

Standards Enforce minimum standards. Create expectations of quality rehabilitation and good design.

Support Assist borrowers with debt problems, affordability, and subsidy needs; provide classes on budgeting and home repair.

Provide all needed consumer support services; market the neighborhood; and encourage block projects, pride in community, and resident leadership.


Fundamentals of Neighborhood RegenerationWhat is a Healthy Neighborhood?

A Healthy Neighborhood is a place where:

It makes economic sense for people to invest time, energy, and moneyWhere neighbors have the capacity to successfully manage the day-to-day issues in the neighborhoodWhere neighbors feel confident in their investment and the future of the neighborhood


Fundamentals of Neighborhood RegenerationNeighborhood Typologies – Neighborhood Characteristics

Distressed NeighborhoodsResidents who can leave, doNon-residents shun the neighborhoodHousing supply is over-abundantFew investments flip oriented or highly speculativeUsually a plethora of low-income housingNeighbors lose nearly all fights against threatsMost problems linger, creating new normsProperties characterized by social and economic disinvestmentAlmost no properties can generate enough equity to leverage reinvestment



In Transition (Middle) NeighborhoodsResident’s behaviors are not fully confidentResidents and outsiders have a “wait & see “ attitudeSupply & demand bounce back and forthReal estate values rise & fall slightly periodicallyMarket appears to “urban pioneers” as a good “buy low” opportunityNeighbors win some & lose some fights against threatsProperties communicate a mixed degree of careProperties are inconsistently invested inMost properties don’t generate enough equity to leverage reinvestment



Healthy NeighborhoodsResidents are confident about the direction of the neighborhoodOutsiders think the neighborhood is a good place to live and work, even if they don’t live or work thereSupply is less than demandHousing prices rise at rates better than the regional medianIn-movers are always at least as good or better for the neighborhood as out-moversLittle or no speculation – high entry pricesNeighbors manage change & threats – problems solved quicklyProperties continually receive investmentIt makes social & economic sense to invest in the market


Fundamentals of Neighborhood RegenerationCreating a Neighborhood Reinvestment Strategy

Buki - How do we Grow Demand?1. Read neighborhood to determine what’s working and what’s not

working in terms of decisions to invest, or not and why

2. Set realistic outcome and measures for healthy neighborhoods

3. Choose tactics (strategies/programs) that will best achieve these outcomes

4. Assess and strengthen capacity to deliver strategies

5. Implement strategy – Adjust as need

6. Measure progress towards outcomes – Not Activities

7. Develop new approaches as market improves


Fundamentals of Neighborhood RegenerationWhat’s Not Working?


Fundamentals of Neighborhood RegenerationCommunity Investment Considerations

Essential Considerations for Investment Strategies:Choice: Understanding that people and businesses make choices as to where to invest, what to invest in, when to invest, and how much to invest. Competition: From other communities, areas, locations, and properties. It is not enough for a community to be a good place to live, work and play; the community must be able to attract residents and businesses even as its competitors change every year.Confidence: Older communities are often a confusing mixture of perceptions and behavior. Residents and businesses want confidence affirmed from others investing in their properties and community. Predictability in Community: Residents and businesses want predictability. New neighbors and businesses are considered good when they notice and abide by the prevailing norms.


Fundamentals of Neighborhood RegenerationKey Elements of Change

The work of community/economic develop must focus on:Image: A Positive Image that attracts investment – from businesses, residents, and governmentMarket: Real Estate Market will reflect confidence. The community or neighborhood or strip or center will make sense to key investors because property values (including rents) are rising. Will help investors (businesses and residents) who want to stay, invest, and benefit from reinvestmentPhysical Conditions: Public/Private buildings and spaces will reflect pride of ownership, pride of community, and high standards of maintenance. Public infrastructure will be maintained and improved to similar standards of locations viewed as betterNeighborhood (Community) Self Management: Investors (businesses and residents) will have the capacity to manage the day-to-day activities on their blocks. Investors are comfortable being “neighborly” look out for each other, work together on problems, take action to reinforce positive standards and actions.


Fundamentals of Neighborhood RegenerationReading a Neighborhood – What’s Working and What’s Not?


Fundamentals of Neighborhood RegenerationReading a Neighborhood – Image

What’s Working?What are the assets?Is there a theme?Positive properties?

What’s NOT Working?Perceptions?Misinformation?Negative properties?


Fundamentals of Neighborhood RegenerationReading a Neighborhood – Market

What’s Working?Housing stock?Sales values?Location?Commercial?Employment?

What’s NOT Working?Over supply?Blighted properties?Lack of investment?Poor maintenance?Property value?Equity?Lack of Demand?


Fundamentals of Neighborhood RegenerationReading a Neighborhood – Physical Condition

What’s Working?Public building?Public infrastructure?Property repair?

What’s NOT Working?Deteriorating conditions?Decaying infrastructure?Property maintenance?


Fundamentals of Neighborhood RegenerationReading a Neighborhood – Management – Social Connections

What’s Working?Civic engagement?Resident relationships?Community organizations?Resident leaders?

What’s NOT Working?Neighbors don’t know neighborsLack of confidence?Negative norms?No sense of community


Fundamentals of Neighborhood RegenerationSetting Outcomes – Image

Outcome’sImproved Neighborhood PerceptionSocial norms communicate prideDecrease in blighted conditionsImprove the quality of housing on display

StrategiesMarket positives – newsletter, press releasesImprove standards for property maintenance through projectsProvide resources and encouragement for neighbors to reduce blight


Fundamentals of Neighborhood RegenerationSetting Outcomes – Markets

Outcome’sIncrease demand for housingReduce housing supplyIncrease off street parking for properties without onsite parking

StrategiesLimit new housing development – other than mix-income and market rateImplement tax foreclosure program and enforce blighted properties ordinanceConvert city owned vacant lots to parking


Fundamentals of Neighborhood RegenerationSetting Outcomes – Physical Conditions

Outcome’sHousing rehab and repair will be of high qualityPublic infrastructure will be well maintainedBlighted properties will be secure or demolished

StrategiesProvide low interests or no interest loans – no income requirementsUse CDBG funds to improve streets, sidewalks, and public buildingsImplement code enforcement program


Fundamentals of Neighborhood RegenerationSetting Outcomes – Management – Social Connections

Outcome’sMore residents will know their neighborsCrime will decreaseStreets and sidewalks will be litter free

StrategiesOrganize block meetings and social events (Not a Block Watch)Residents will keep eyes on the street – spend time outside, watch neighbors propertiesInstall trash bins, organize clean ups, residents will sweep sidewalk and street

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