Community Progress Blog

Slumping Housing Markets: Challenges and Opportunities

Written by on June 13, 2011

As fallout from the mortgage foreclosure crisis continues to weaken even the nation’s strongest and steadiest housing markets – economically diversified cities like Dallas and Denver – it’s time for a new perspective on what those falling home prices mean for all of us … and what we should do about them.

It’s easy to see the direct, individual impact that living next door to a single abandoned home can have on a family.  You might worry about crime, about the risk of fire, and certainly about the decline in value of your own property.  Multiply this out across a neighborhood and the stresses associated with a dozen or more vacant properties can have a pernicious effect on an entire community.  Those empty parcels are a blight not only on their immediate surroundings, but on a wide surrounding area.  They depress property values, to be sure, further undermining the real estate market.  Beyond this, though, they can also impact the broader economy of a place – and its overall vitality and sense of itself.  When people are concerned about the health of their neighborhoods, they go out less, putting less money into local businesses.  They interact less with their neighbors, making streets less safe.  They put less effort into community projects and spend less time volunteering.

Our efforts to work with communities need to be equally comprehensive – targeting not just the immediate challenge of a wave of foreclosures, but also the systems that support the private market and the legal tools that help communities manage problem properties over the long term.  Enhanced code enforcement ordinances and creditor responsibility laws set strict standards for how properties must be maintained and who is responsible for meeting those standards so that vacant homes do not become blighting influences on their neighbors.  Land banks, and other government and quasi-public entities, can acquire, manage, rehab and re-purpose vacant land, often with a focus on addressing community needs and development plans.

Most traditionally “strong market” cities have shied away from large-scale responses to the foreclosure crisis – seeing it as a situation that will be corrected by the inevitable economic recovery.  Such thinking is dangerous.  If the so-called “strong-market” communities intend to stay strong, a comprehensive approach is necessary – and urgently so – to keep a neighborhood problem from becoming an economic crisis.

Dan Kildee is President and CEO of the Center for Community Progress

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