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Analyzing the Neighborhood Stabilization Program


  • The NSP was designed to arrest spillover effects from foreclosures.
  • Abt evaluated the second round of program funding.
  • There was little evidence that NSP2 activities significantly affected key neighborhood outcomes.
The Challenge

The housing crisis caused widespread home foreclosures. That raised the prospect of contagion: declining home prices in nearby neighborhoods. Congress authorized $6.9 billion in grants under the Neighborhood Stabilization Program (NSP). The NSP was designed to arrest the negative spillover effects from the recent national housing foreclosure crisis. The underlying fear was the “contagion effect” of foreclosures—the rash of foreclosures would reduce the sales price or assessed value of neighboring homes or send a negative signal about the future stability of the neighborhoods.

The Approach

Abt evaluated the second round of funding (NSP2). The evaluation faced challenges, too. The property selection process made measuring impact hard. For example, grantees faced limitations on the supply of properties and competition from investors, which created unobserved differences between NSP2 properties and potential comparison groups. The NSP2 expenditure deadline may have been too early to detect NSP2’s effects since nearly 27 percent of the investments were not complete or had just been completed.  

The Results

The study’s findings provide little evidence that NSP2 activities significantly affected key neighborhood outcomes. At the neighborhood level, price increases were modest in the seven largest counties that received intensive NSP2 treatment, but the effects differed considerably across counties. At the property-level, NSP2 activities transitioned investor-owned properties to homeowner-occupied units. The study found no systematic, property-level effect of the program on nearby housing sale prices. Learn more.