Few cities have experienced a sharper economic change of fortune than Detroit. It was one of the fastest-growing cities in the nation between 1900 and 1950. In the nearly 75 years since then, it has lost more than 60 percent of its population, becoming the defining example of a postindustrial city in decline.

Chronic population loss creates a significant mismatch in the housing market. An ongoing reduction in the demand for housing leads to an oversupply of vacant properties. Vacant properties can quickly deteriorate due to neglect, arson, vandalism and crime. Rehabilitating abandoned and neglected properties is often not possible. It can take just a few years for vacant homes to transition from being habitable to blighted.

What should policymakers do with the growing unwanted inventory? One option is to do nothing and wait for real estate developers to clean up the parcels and hopefully rebuild.

In the absence of private sector action, which often fails to take