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Creating opportunity: Lifting home values in slow recovery neighborhoods

4/20/2017

John O'Callaghan, President and CEO, Atlanta Neighborhood Development Partnership

Challenge: While economic opportunity has returned to some Atlanta neighborhoods, more than 90,000 homeowners still encounter blight and vacant homes in their communities. Those condition call urgently for a scaled response to stabilize neighborhoods and recover lost wealth.

A group of black children stand in front of a green slide

The housing crisis diminished the largest source of family wealth and destabilized neighborhoods in the metro Atlanta area. To assess the lingering impact of the crisis, the Atlanta Neighborhood Development Partnership (ANDP) examined the 113 zip codes in metro Atlanta. Fifty-four zip codes had a median negative equity rate of nearly 50 percent, compared to the other 59 zip codes with only 20 percent.

The low-equity communities represent more than one-third of the region and include 92,127 homes that lost $5.2 billion in home equity. Loss of equity traps owners in their homes and limits their ability to pay for college or participate in economic opportunities. These struggling neighborhoods need systemic change and catalytic intervention to stem plummeting home values and strengthen economic opportunity.

In 2010, ANDP created Piece by Piece (PBP), a regional foreclosure response initiative with 155 partner organizations. The leadership team includes Atlanta Regional Commission, ClearPoint, Enterprise Community Partners, Federal Reserve Bank of Atlanta, Greater Atlanta Home Builders Association, the Home Depot Foundation, the National Housing Conference and NeighborWorks America.

PBP focuses on expanding access to loan modifications and consumer counseling resources, lowering vacancy rates and addressing underwater homeowners. In 2015, more than 200 representatives attended our "Underwater Atlanta" event, connecting private and public organizations, neighborhood leaders, concerned citizens, federal and state program leaders and policymakers to discuss reduction of negative equity. The symposium resulted in a county-based negative equity initiative, local and national media coverage of the issue and the inclusion of Atlanta in FHFA's Neighborhood Stabilization Initiative.

Recognizing that housing recovery funds were diminishing, ANDP forged partnerships to increase its foreclosure redevelopment capacity, provide affordable homeownership opportunities and lift values in foreclosure-impacted communities. First, we piloted innovative partnerships with private equity developers to rehab homes at scale without utilizing government subsidies. Next, our loan fund partnered with the nation's leading Community Development Financial Institution, Reinvestment Fund, to increase community development capital in the region. Lastly, we are deploying federal HOME funds with three local governments to further single-family redevelopment and create economic opportunity for homeowners.

A black woman wearing a black dress stands in her newly-renovated homeOur pilot private-sector partnership has proven successful, with 26 homes redeveloped and additional acquisitions underway. Key successes of the program include: streamlining the development timeline while ensuring a quality rehab, and reducing days on market and connecting buyers to local and state down payment assistance. With new partners added, we are now on a path toward 50 homes in this program.

"My neighbors and I were worried about vandalism and squatting and how that could impact our home values, which were already falling because of the foreclosure crisis," says Tracey Powell, an Atlanta homeowner in a development that was foreclosed on before the community was complete. "But then ANDP bought the available homes and helped homebuyers with down payment assistance. It really changed our neighborhood outlook."

With underwriting from NeighborWorks America, we are working with community leaders to address neighborhood stabilization and help residents understand how to increase demand for homes to raise values. Focusing on code enforcement, mortgage modification programs and neighborhood branding ultimately attracts new homeowners and commercial development.

In 2015, we trained 100 neighborhood leaders on these topics and shared materials with hundreds more electronically. Several neighborhood leaders who attended our training participated in NeighborWorks' Community Leadership Initiative and subsequently provided valuable input for a June 2016 training event for 100 additional neighborhood leaders.  

We partnered with Douglas County and Epic Intentions, an interdisciplinary society at Georgia Tech, to review local sales and tax data. We discovered that a $2.3 million rehab investment in 53 of our homes lifted the value of surrounding homes by $14.6 million. As of late 2015, the negative equity rate in the targeted zip codes has fallen to 34.9 percent, compared to 11 percent in healthier metro Atlanta neighborhoods, 17.4 percent in Georgia and 13.1 percent in the United States.

The lesson learned through this ongoing initiative is that forging partnerships across business, government and nonprofit sectors and engaging neighborhood stakeholders is essential. Working with partners who share a mission commitment and willingness to tweak models, we've learned that good partners focus on the success of each other's mission and financial sustainability.

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