Simplified Market Types and Strategic Approaches

If you do not have the benefit of a rich set of data, you might consider a simplified method for determining neighborhood market type and choosing a general strategic approach that is sensitive to that type. We present two of these methods here.

Three Market Types and Strategic Approaches (adapted from Alan Mallach)

1. Market Correction:

 
• Typically strong neighborhoods despite declining prices.
• Strong intervention not necessary.
• Little or no acquisition – allow the market to correct itself, but be vigilant about property standards, preventing further foreclosures and facilitating new buyers.

2. Market Destabilization:

• Perhaps the neighborhoods with the best opportunities for leveraging stabilization with focused intervention strategies.
• Use acquisition and selective demolition to create opportunities for reuse and neighborhood stabilization: rehab for homeownership, infill development, etc.
• Be aggressive about property maintenance and foreclosure prevention.

3. Market Collapse:

• Potentially the most challenging neighborhoods to address due to dramatic collapse in market conditions.
• Use acquisition to land bank for future opportunities; demolish to reduce oversupply of stock; rehab selectively for ownership or rental; consider alternative uses.

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