Understand Foreclosure and Market Dynamics in Your Region and Neighborhoods
- To make informed choices about stabilization strategies, it is important to understand the patterns of market dynamics in your metro or regional area. Strategies must focus on building stronger markets and drawing consumer choice. Building stronger markets is the target foreclosure related outcome in the 5th step of your place-based plan for stabilization.
- Research shows that foreclosures and vacancies are impacting different neighborhoods in different ways, and the most rational approach to stabilization includes developing an understanding of the patterns of foreclosures and the market conditions in neighborhoods throughout each community, and tailoring strategies accordingly.
- Experts support the idea that community stabilization are not one size fits all. Efforts need to be targeted in order to account for differing market realities and to create enough concentrated activity to have an impact.
Fundamental realities affecting weak regional markets
- ‘Weak’ regional markets have low demand for housing, declining home prices and rents, population and job losses, and other symptoms of disinvestment.
- Most older industrial cities have lost population, and many continue to lose population.
- These cities have a surplus of housing and more vacant land than can be absorbed by redevelopment.
- Population loss is accompanied by gradual impoverishment, a greater threat to urban viability than population loss itself.
- Limited citywide or regional housing demand limits neighborhood options.
- Resources are likely to be severely limited relative to demand.
Fundamental realities affecting strong regional markets
- ‘Strong’ markets refer to markets which have strong homebuyer and renter demand. Strong regional markets generally have healthy economic fundamentals including job and population growth.
- Strong markets may have a shorter ‘recovery’ period to look forward to.
- Strong markets may still experience strong demand for housing even though home prices have fallen. This continued demand can help these markets to ‘cure’ some foreclosure-related issues on their own.
- These markets may also experience strong interest from investors. A frequent challenge is to help homebuyers compete with investors to purchase foreclosed properties.
- Particularly in markets where affordability is expected to remain an important issue, foreclosed properties may provide an opportunity to create affordable housing with long-term affordability restrictions.
- However, strong markets whose economies were tied significantly to rapid growth in housing may experience persistent deflation of housing values.
- Experts are particularly concerned about subdivisions built with lengthy commutes to city centers or job centers.
Regional Markets vs. Neighborhood Markets
- Different “zones” or submarkets exist within city and regional markets.
- Even cities with weak real estate markets have neighborhoods where market demand remains high. Similarly, cities with thriving real estate markets include neighborhoods with weak or less desirable markets.
- Local neighborhoods are nevertheless interrelated and experience ripple effects from their central city and/or edge cities.
- Most metro areas are not clearly weak market nor strong market: It’s more critical to know how weak and strong markets are distributed within the metro area.
- Weak markets are not just “inner city” anymore. You may find suburban neighborhoods or rural villages experiencing high levels of disinvestment.
- Weak market areas offer particular challenges for market-driven neighborhood change strategies. Yet regions that experienced significant market failure in the wake of foreclosures – many of which were strong market regions – will also have to consider stabilization factors in light of the new uncertainty of the housing market.
- The following mapping analysis, prepared by the City of Cleveland, identified “strong” neighborhood markets – markets that consistently show strong demand (in blue) among homebuyers and renters for housing in those neighborhoods - even within a “weak” regional market that has declining population, jobs and home prices:
- Many metro areas have created data analysis and mapping projects in order to understand the market dynamics in their communities. Visit these sites to learn about how these projects operate as well as to see examples of the market research that has been conducted:
- National Neighborhood Indicators Partnership
- Metropolitan Philadelphia Indicators Project
- Memphis Center for Community Building and Neighborhood Action
- Providence Plan
- NEO CANDO (Northeast Ohio Community and Neighborhood Data for Organizing)
- Numerous communities have conducted market research to prepare applications to the Neighborhood Stabilization Program (NSP) or otherwise strategize about how to handle foreclosures.
- One example is a report called An Opportunity to Stabilize New York City’s Neighborhoods by the Furman Center at New York University.
- A market study looking at a number of distressed neighborhoods in Rhode Island was prepared for an NSP II application.
- Many helpful courses are offered at the NeighborWorks® Training Institute, including:
- Stabilizing Neighborhoods In a Post-Foreclosure Environment (Course number NR 231)
- How to Find and Use Data for Your Revitalization Work (NR 145)
- GIS Mapping (NR 146)
- Reading a Neighborhood: What a Walk Around the Block Can Tell You (NR 124)
Resources: Additional Data Resources
- See our discussion on What do we need to know about our housing market? for data on specific topics
- These resources have a variety of data that can help you with multiple topics:
- www.census.gov - in addition to the decennial Census, the Census Bureau prepares a very wide range of reports and data on demographics, housing, and economic trends
- www.huduser.org provides data on rents, income limits
- Policymap.org is an online mapping data system that includes significant data relevant to understanding foreclosures and other market dynamics. A basic version is free.
- Community Economic Development “Hot Reports” provide quick access to reports at the County level covering basic demographic, economic development, housing, transportation, and education data:lehd.did.census.gov/led/datatools/hotreport.html
- Federal Reserve Bank offices have helped local communities with data analysis.
- Local Universities may also be a good resource for help.
Resources: Private Data Vendors
- A number of private vendors offer data for sale that may be helpful for market analysis. This data includes loan-level data, ZIP code level house price indices, economic and demographic estimates and forecasts, and lists of foreclosed properties. We list several potential resources below. Stablecommunities.org does not endorse or promote any particular data vendor.
- First American Core Logic-wide variety of data on residential real estate and foreclosures
- Lender Processing Services - loan level data on mortgage performance and characteristics
- DataQuick - property valuation data
- RealtyTrac - listings of foreclosed properties and foreclosure statistics
- ESRI - demographic estimates, market segmentation, crime data, geographic data
- Claritas - demographic estimates and forecasts, market segmentation
- Demographics Now - demographic estimates and forecasts
- Woods & Poole Economics - demographic and economic projections at state and county level
- Moody’s Economy.com – economic forecasts
- Zillow.com – house price data
- Reis - multifamily rental market data
- Toro Wheaton - rental market data and forecasts
“Map Your Community” is a mapping interface developed by PolicyMap and provided by the Federal Reserve Bank of Philadelphia that allows users to easily create custom maps for user-defined locations. These custom maps provide a snapshot of current and historical economic and demographic conditions and can be used to conduct data analysis for community development activities. Information is available for many socioeconomic variables, including, but not limited to, poverty levels, census tract income levels, post office vacancies, and educational attainment. Use the interface below.