Transcript Slide 1
Maximizing the impact of the neighborhood stabilization program Alan Mallach Non-Resident Senior Fellow The Brookings Institution Prices in Miami-Dade have plummeted The median home price in Miami-Dade is down 43% from its 12.06 peak (Case-Shiller Index January 2009) Between January 2004 and December 2007 nearly 300,000 purchase mortgage loans were made in Miami-Dade County (HMDA) Today nearly every one of these mortgages is under water Many areas are losing value even faster Area Median sales price Change from same (12.08-2.09) period year before Little Haiti $ 63,000 - 74.8% Upper east side $162,000 - 58.9% Allapattah $108,000 - 55.0% Flagami $140,000 - 50.4% West Little Havana $169,000 - 33.7% East Little Havana - 33.4% Source: Trulia.com $142,500 Prices have not hit bottom Miami Area House Price Index 300 200 Miami price Δ 150 CPI Δ 100 Year 20 13 20 11 20 09 20 07 20 05 20 01 19 99 19 97 19 95 19 93 19 91 19 89 0 Best case – additional loss of 21% in value before stabilizing In 2010 20 03 50 19 87 Change (January 2000 = 100) 250 Foreclosures are at epidemic levels 58,000 properties in Miami-Dade are in the foreclosure process (RealtyTrac, 3.11.09) 7,500 new lis pendens were filed in Miami-Dade in March 2009 Nearly 2,000 foreclosure sales are scheduled for April 2009 Miami-Dade Lis Pendens Filings 2008-2009 8000 7000 7546 in March 09 Number of filings 6000 5000 4000 Lis Pendens 3000 2000 3544 in1000 Jan 08 0 Jan Feb Mar Apr May Jun Jul Aug Month Sep Oct Nov Dec Jan Feb Mar Foreclosures affect neighborhoods unevenly • Foreclosures are unevenly distributed – some areas are far more heavily impacted than others. • Spatial distribution of foreclosures can change over time What is neighborhood stabilization about? Neighborhood stabilization is about building confidence and market demand fostering market recovery. Foreclosures and abandoned properties may have been the trigger to destabilize the neighborhood – dealing with those problems alone may not be enough to restore stability. What are the goals of a neighborhood stabilization strategy? Reduce the link between foreclosures, disinvestment and vacancy Get properties back into productive use Prevent future foreclosures Address other forces working to destabilize neighborhoods Restore confidence and foster market recovery How can you achieve these goals? Target enough resources to selected areas to make a real impact Design strategies and expectations to align with market realities. Focus on the forces driving destabilization, not just the properties. Assemble enough delivery capacity to carry out plans Bring everyone to the table The challenge Neighborhood destabilization in the Miami area is a moving target. It is particularly difficult to design a program to affect a process that is still under way – like trying to fix storm-damaged properties while the storm is still raging. The challenge Miami-Dade and Broward counties and cities are getting over $150 million in NSP funds This will only deal with a small part of the problem facing the two counties. The question is how to use these resources to gain the greatest effect Three key themes: Target resources strategically Adopt cost-effective and highimpact NSP strategies Link NSP activities to a larger public/ private strategy Target resources strategically Target areas where market conditions make impact possible or where strategic location or assets make it critical. Target areas where organizational capacity exists to carry out strategy. Target resources strategically Use NSP funds in ways that will reach the greatest number of properties Leverage other resources in target areas Make sure each target area receives enough investment to make impact possible Use NSP funds for maximum impact Understand market dynamics – some key features: – Increasing flow of REO properties coming onto market – Prices continuing to decline – growing number affordable to moderate income buyers – Potential pool of homebuyers – many may need help to buy Use NSP funds for maximum impact Strategy options – Help qualified homebuyers buy REO properties? – Acquire REO properties, rehab and sell? – Acquire REO properties for lease-purchase or rental? – Demolish properties? – Land bank? Use NSP funds for maximum impact How to evaluate these options? – Number of properties directly affected – Impact on surrounding properties – Impact on neighborhood market – Direct subsidy cost per property – Delivery cost/capacity requirements – Time to implement Link NSP activities to larger strategy NSP activities at most will help slow down neighborhood destabilization and help lay groundwork for market recovery Other activities may be as or more important toward achieving that goal. Minimize foreclosure impacts Keep properties occupied – Protect tenants/prevent evictions – Encourage lenders to allow owners to remain after foreclosure as tenants Keep properties maintained – Enforce codes – Impose responsibility on lenders/servicers – Use nuisance abatement authority Address neighborhood quality of life issues Leverage other activities to promote stabilization and market demand – Crime prevention – Foreclosure prevention – Strengthen neighborhood quality of life – Build stronger neighborhood social fabric – Build market demand Leverage resources Leverage tools and resources to promote stabilization and market demand – Property acquisition tools – Code enforcement and nuisance abatement – Public/private sector housing assistance and mortgage financing – Legal tools to minimize foreclosure impacts and prevent future foreclosures Build partnerships Multiple public agencies (housing, code enforcement, public safety) CDCs and non-profit service providers Real estate industry (developers, realtors, contractors, appraisers) Local and regional institutions (colleges, hospitals Residents and civic organizations Use partnerships to implement strategy Leverage capacity of real estate industry and non-profit community for acquisition, rehab and reuse Leverage institutional resources Integrate other community stabilization strategies with NSP activities Work with residents and civic organizations to build community confidence Engage all parties in framing neighborhood stabilization plans, not just implementation. Alan Mallach PO Box 623 Roosevelt NJ 08555 609.448.5614 [email protected]