a complex data - driven platform to identify targeted lowand moderate - income neighborhoods in the city, purchasing vacant properties, rehabilitating them through a local workforce development program, and converting them to rental. the ultimate goal is to ensure that the properties remain local neighborhood assets. to achieve this, the partnership is prioritizing rentals and sales to qualified local residents or nonprofits. such an innovative strategy seeks to complement local government and investor activity so that residents can share in the benefits of a housing recovery. the number of transactions financed with cash are calculated by subtracting the number of mortgage originations by zip code ( based on data gathered under the home mortgage disclosure act ) from the number of home sales by zip code reported by corelogic. federal reserve board. april 2012 senior loan officer opinion survey on bank lending practices ( pdf ). in response to a special set of questions on residential real estate lending practices, banks reported that they were less likely than in 2006, to varying degrees, to originate mortgages to any borrowers apart from those with the strongest credit profiles. bis central bankers ’ speeches “ low demand ” locations not all markets are equally attractive to private investors, so some governments are developing programs to attract private capital to “ low demand, ” high - vacancy neighborhoods. the city of baltimore, maryland provides a good example of such a program. baltimore is burdened with approximately 16, 000 vacant and abandoned buildings, about a quarter of which are owned by the city. much of this vacancy has been caused by population loss and suburban flight – baltimore city has lost nearly one - third of its population over the last 50 years. 18 however, not all parts of baltimore have a significant number of vacant properties. in fact, only 5 percent of census tracts in the baltimore metropolitan area have a long - term vacancy rate in the top decile of the national distribution. 19 the city of baltimore has recognized these micro - market distinctions and initiated an innovative data - driven program to identify areas with a high concentration of vacant properties and turn these properties into valuable assets. this initiative, called “ vacants to value, ” uses data and targeted housing code enforcement to foster redevelopment in areas where there is modest private investment interest. using a variety of real - time data sources, this program has developed market typologies down to the census block - group level so that it can accurately determine the needs of specific neighborhoods and apply targeted programs to best meet those needs. for example, the city is targeting approximately

what are the limitations? what innovations can create more effective, scalable solutions? with funding scarce, how can we identify solutions that will ultimately be most cost effective? to begin to answer some of these questions, i return to the typology of vacant properties introduced earlier. “ housing boom ” locations the first type, “ housing boom ” areas, has relatively high median incomes and new housing stock. these characteristics are attractive to investors, and many investors are reportedly purchasing vacant homes and converting them to rental. given the recent tightening of the rental market, such a strategy could be a win - win scenario for communities that need more affordable rental homes and suffer from an excess of single - family vacant units. in fact, in january, the federal reserve released a staff paper on housing issues12 that went into some detail about the potential benefits of converting foreclosed properties to rental, and in april, the board released a policy statement that outlines supervisory expectations for residential rental activities for certain banking organizations. 13 phoenix, arizona, is a good example of an area with many census tracts that fit into the “ housing boom ” typology. phoenix was one of the areas hit hard during the housing bust, with a peak - to - trough decline in prices of more than 50 percent. 14 more recently, however, prices in phoenix have rebounded with a double - digit increase over the 12 months ending in july. 15 reportedly, much of this demand is driven by investors who are converting vacant homes into rental properties. direct statistical evidence on investor activity at the local level is not available. however, since investors tend to finance their purchases with cash or other non - mortgage financing, the level of cash purchases can provide an indicator of investor “ the u. s. housing market : current conditions and policy considerations, ( pdf ) “ white paper ( washington : board of governors of the federal reserve system, january 2012 ). federal reserve board policy statement on rental of residential other real estate owned properties ( pdf ). april 5, 2012. data from corelogic. data from corelogic. bis central bankers ’ speeches activity. in the past two years, the fraction of home purchases financed with cash in the phoenix area was much higher than the national average. 16 this is an example of the private market stepping in to purchase vacant units and in turn increasing housing values. as encouraging as this trend may be, it is not a panacea. for example, it is possible that aggressive investor activity could crowd out potential home