The Hidden Costs of Vacant Properties—and the Big ROI of Revitalization

National Vacant Properties Campaign, HUD Exchange
Original Source Date: August 1, 2005


Impact Highlights


Annual ROITime HorizonConfidence
31.0% 10.0 years
ActivitiesOutcomesIndicators



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Article Details


Vacant and abandoned properties are more than just eyesores—they’re expensive burdens on communities. According to a report from the U.S. Department of Housing and Urban Development (HUD), these properties quietly drain local budgets, reduce property values, increase crime, and deter economic development. The good news? Proactive investments in reclaiming and reusing vacant properties offer a high return on investment (ROI) for cities and states.

The Cost of Doing Nothing

Many communities underestimate how much vacant properties truly cost. Cities lose tax revenue when property values drop. They also face increased costs for public safety, fire protection, and code enforcement. The HUD report estimates that just one vacant property can cost local governments up to $34,000 in direct and indirect expenses over time.

In neighborhoods with high concentrations of vacancy, the ripple effects are devastating:

    • Crime increases, leading to higher police costs and reduced public safety.

    • Property values in surrounding areas decline, affecting municipal revenue.

    • Community morale drops, making it harder to attract new residents or businesses.

The ROI of Revitalization

Despite the high cost of inaction, the flip side is encouraging. The report highlights cities that have generated significant financial returns by turning blight into opportunity. For example, a $3.5 million investment in land banking and code enforcement in Flint, Michigan, resulted in $112 million in preserved property values—a return of over 30 to 1.

Other cities have used strategies like land banks, rehabilitation programs, and green reuse (such as turning lots into parks or gardens) to reduce vacancy and revitalize neighborhoods. These efforts increase surrounding property values, grow the local tax base, reduce crime, and spark private investment.

Equitable and Sustainable Development

Reclaiming vacant properties isn’t just about economics—it’s about equity. Low-income and minority neighborhoods often bear the brunt of vacancy. By prioritizing redevelopment in these areas, communities can foster inclusive growth, reduce disparities, and improve quality of life.

HUD emphasizes the importance of coordinated planning, data-driven strategies, and community engagement to ensure revitalization is sustainable and equitable.


Annual ROI of Reclaiming Vacant Properties

Let’s break down the return on investment from revitalization efforts using the Flint example:

Example:

    • Public Investment: $3.5 million

    • Value Preserved (Impact): $112 million

    • ROI = (Gain – Investment) ÷ Investment

    • ROI = ($112M – $3.5M) ÷ $3.5M = 30x return, or 3,100% total ROI

Simplified Annual ROI (Assuming Benefits Over 10 Years):

    • Total ROI: 3,100% over 10 years

    • Annualized ROI ≈ 31% per year

That’s far higher than traditional economic development tools, making vacant property reuse one of the most impactful strategies for public return on investment.


Final Thought:
Vacant properties silently erode community health and local budgets. But strategic investments in reuse, rehab, and redevelopment can pay off handsomely. With returns as high as 30 to 1, cities that prioritize vacant property solutions not only save money—they create stronger, safer, and more prosperous communities.


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