Creating affordable homes may not be the top priority for communities with large numbers of abandoned, vacant, and tax-delinquent properties, but the creation of affordable housing has an important part to play in the reuse of abandoned properties. Successful revitalization can lead to increased housing values and future affordability problems. Communities can plan for affordable housing by locking in some affordability while property values are still relatively low.
Click on the links below to learn why communities should focus on the creation of affordable homes when reusing abandoned properties:
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Photo courtesy of District of Columbia Housing Authority | Planning ahead
If successful, revitalization may lead to unaffordable homes in the future
Providing opportunities in strong markets
Scattered tax-delinquent properties can contribute to the affordable housing stock in strong housing markets
Creating supportive housing
Abandoned properties present an opportunity for much-needed supportive housing
Neighborhood revitalization
Affordable homes may also play a role in building stronger communities
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Planning ahead
After abandoned properties are redeveloped, demand for housing in the community will generally increase, leading to higher housing prices and property taxes. Communities engaged in revitalizing abandoned properties may want to take a long-run perspective on revitalization and include some affordable homes in the neighborhood plans, even if they are primarily focused on reusing abandoned properties for community development purposes. Failure to secure affordable homes for the future may reduce the area's economic competitiveness as low- to moderate-income workers leave to find homes elsewhere.
Timing is important here -- creating affordable homes
before revitalization makes good financial sense because it is easier to preserve affordability when land and housing prices are still low. Once a neighborhood has revitalized, it can be difficult for the government to create affordable homes.
Fortunately, identifying an area that will experience sharp housing price increases does not require a crystal ball. Community members can often spot the next hot neighborhood: it offers easy access to jobs and cultural amenities; housing is affordable compared with nearby neighborhoods; and government investments are fueling improvements. If officials heed the early indicators of housing price increases, they can invest resources early to convert abandoned properties in these communities into affordable homes. (Learn more about predicting and responding to housing price increases in
Dealing with Neighborhood Change: A Primer on Gentrification and Policy Choices. [PDF] 2001. A joint report prepared for the Brookings Institution and PolicyLink by Maureen Kennedy and Paul Leonard.)
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Providing opportunities in strong markets
In strong housing markets, there may be abandoned, vacant, or tax-delinquent properties scattered throughout otherwise stable communities. Isolated cases of abandonment present an excellent opportunity to add affordable homes to communities where land acquisition would otherwise be prohibitively expensive. To make the most of the opportunities presented by scattered abandonment, communities may want to think creatively about how to acquire the properties before their tax liens are purchased by investors. This is easier for communities with a
one-step tax foreclosure process, since tax liens do not get sold prior to going through foreclosure. To acquire abandoned or tax-delinquent properties in communities with a two-step tax foreclosure process, however, communities have more limited options, including using
eminent domain or creating an advance notification of tax sales for internal acquisition purposes.
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Creating supportive housing Although a community may have plenty of low-priced buildings, there may be a shortage of supportive housing for the homeless, elderly, persons with disabilities, and very-low-income families. Communities, even those with weak housing markets, may benefit from setting aside some properties to facilitate the development of service-enriched housing or affordable homes for families with very low incomes. By transferring abandoned properties to non-profit supportive housing developers, communities can reduce the direct subsidy needed to create quality homes affordable to people who had few prior housing options.
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Neighborhood revitalization
The development of quality, affordable homes in place of abandoned properties can lead to property value increases in the area and may be the first step in a full-scale comeback.
The External Effects of Place-Based Subsidized Housing [PDF], a 2005 report by a team of researchers at NYU's Furman Center for Real Estate & Urban Policy found that New York City's investment in 66,000 new, subsidized, owner-occupied housing units was linked with notable appreciation in property values in the surrounding area. Property values increased more in the area around the subsidized homes than in areas farther away. The researchers also determined that property value increases were not the result of existing price trends or a change in unit quality, but may instead be related to revitalizing abandoned properties. A study of the impacts of a smaller investment in subsidized housing in two Philadelphia communities, however, did not uncover a connection between the presence of quality affordable homes and changes in nearby property values, so the scale of the new investment seems to matter. [1]
Back to top[1] Affordable Homeownership: Measuring the Net Benefits for Low- and Moderate-Income Households in the City of Philadelphia. [PDF] 2001. By Jean L. Cummings, Denise DiPasquale, and Matthew E. Kahn. Boston, MA: City Research.
Reduce barriers to the reuse of abandoned properties
