Increasing Neighborhood Stability

This is one of three strategic approaches for the goal of building a stronger market. Click here to read about all three in context.

Buyers typically start out by defining their housing needs and financial limits. In most regions, most middle- or upper-income buyers have many different neighborhoods in which they can find homes within their means. Where they search is defined by the information they have. Buyers will consider buying in certain neighborhoods, reject some areas, and not even consider others based on the information that they get about neighborhoods within the region. The choice they finally make is often based less on the desirability of a given house than on neighborhood stability and amenity value.

While “neighborhood stability” can mean many different things, it is used here to refer to those physical, economic or social features of the neighborhood that are associated with the preservation and potential increase in the value of a property-owner’s investment in a neighborhood.

Six factors that either promote or discourage neighborhood stability are:

Property abandonment
Foreclosure
Property investment by owners
Concentration of poverty
Crime
Homeownership rate

Four of these factors—abandonment, foreclosure, poverty concentration and crime – are negative, while two – property investment and homeownership rate – are positive and need to be increased in order to render the neighborhood more stable.