With the housing market continually declining, maybe it’s time to review the current policies and programs in place to save the economy. Federal Reserve Bank of Boston president Eric Rosengren offers an opinion on effectively revising these.

At a Federal Reserve-sponsored conference last Thursday, named “REO and Vacant Property Strategies for Neighborhood Stabilization last”, attendees got to hear Rosenberg say that there is no absolute solution to the current market. According to him, the financial crisis and its effect can be more effectively evaluated by looking at the characteristics of each individual community. He goes on to say that the government should review how its public policy budget is being spent.

Framing the problem is the way to go about the solution.

If the government is to look at foreclosures and REO as a direct result of the housing crash, then accelerating REO disposition and reducing foreclosures are the most logical solutions. But if we look at it as an effect for the lowering housing demand, then it is but acceptable to lower prices or to establish sustainable home ownership through minimum down payment or new financing approaches.

There is another approach, though, that the government can still explore: looking at the housing crisis in the community-level. He expounds by saying that the high number of foreclosures and REO can be seen as a symptom of a number of problems that neighborhoods are facing: high unemployment, increased crime rates, and poor code enforcement.

To reiterate his point, Rosengren looked at his home region, New England, and tried to draw a correlation. He found out that at lower REE levels, there was little correlation between REO and price change – the relation, however, increases, as REO does. Rosenberg still emphasizes that this is far from conclusive, calling for more studies accommodating population density.

Another thing he found out is that areas with high REO concentrations, around four or more houses per square mile, also fare worse when it comes to measures of public safety, public health, and economic vitality. These areas see high unemployment, large numbers of low birth-weight babies, and weak small business activities.

Children are also seen as a big factor in the foreclosure rates. School difficulties are seen as determining factors in changing locations, and changing location may mean foreclosure. Children in communities with four or more REO per square have more tendencies to drop out or to fail the statewide math tests.

Rosengren reiterates that though the results are just based on New England situations, the government should consider adapting the same measures. He added that public policy spending should also be evaluated to ensure that the money goes where it is most needed.

He concludes his speech by boldly declaring that while it is commendable that actions are being taken to stabilize the economy, a review is in place. A ‘one size fits all’ policy can never account for all the problems the community is facing and a more holistic approach is needed. Profiling a problem and looking at it in the smaller scale of things attacks the problems from the roots rather than from the top.