Association for Public Policy Analysis & Management

Nearly all U.S. communities were affected by the 2007-2009 housing crisis, but the depth of the crisis and strength of recovery have varied considerably across metropolitan areas and neighborhoods. One federal policy intervention adopted during the crisis, the Neighborhood Stabilization Program (NSP), was intended to improve housing market conditions in hard-hit neighborhoods by mitigating negative spillovers from foreclosed and vacant properties. This paper analyzes housing market changes for census tracts that received investments during the second round of NSP funding, focusing on seven large urban counties. Grantees used NSP to invest in tracts with high rates of distressed and vacancy properties, and tracts that had previously received other housing subsidies. The median NSP tract received quite sparse investment, relative to the overall housing stock and the initial levels of distress. Analysis of housing market outcomes indicates the recovery has been uneven across counties and neighborhoods. There is limited evidence in a few counties that NSP2 activity is correlated with improved housing outcomes.