Congress created the Neighborhood Stabilization Program to ameliorate the strains to cities, counties and states suffered after the mortgage and foreclosure crisis. The program, signed in late 2008, run by the U.S. Department of Housing and Urban Development (HUD), is designed to assist low-income buyers purchase homes in specified zip codes.
Because Phoenix was particularly hard hit by the crisis, areas of city have received about $115.5 million of the earmarked $6.9 billion. For homebuyers, the program provides incentives of a $15,000 loan for down payment or closing cost assistance and additional $40,000 interest-free, no monthly payment loan is available to homebuyers for improvements and repairs to purchased foreclosed homes.
The program allows the government the ability to purchase and rehabilitate foreclosed homes and multifamily apartment complexes. Other qualified lots can be demolished with plans to redevelop the land at a later date. The program has also been a popular partnering opportunity enabling third party developers to rehabilitate neighborhoods and buildings for resale and rent.
Already, several homes are “move-in ready.” These homes have been recently remodeled and feature energy efficient systems, improved design and curb appeal. By August 8th 16 properties have been sold and 50 are currently available for sale.
While the program is delivering on its promise of providing home buying opportunities, it is yet to be seen if this is resulting in increased purchases and rents of these rehabilitated and eligible properties. Phoenix’s housing market has left many homebuyers with opportunities to purchase properties at rates deflated 50% from market highs. Since the entire housing market is deflated those seeking to purchase a home may be seeking out opportunities in higher-income neighborhoods. The NSP communities and properties are in lower-income areas.