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A blighted area is a term used to describe a section of a city that is full of dilapidated buildings, causing a negative effect of declining real estate prices.
The undesirability of property in the area can also be due to higher crime rates compared to other areas in the city, inevitably leading to lower occupancy rates.
This is not a volatile trend that moves up and down but instead, any reasonable person would be able to see that there is no recovery in sight in the short and medium term.
Often times, property do not meet current housing codes as homes are much older than the date in which new codes are updated.
The result of such an area declining is usually due to neglect by both property owners and the local government and the only way of recovering is via active intervention by governments or major corporations.
To regenerate such neighborhoods, older buildings might have to be demolished to be redeveloped to spruce up the area.
These can take years or even decades to come to fruition.
So investors need to take a real hard look at real estate located in these areas and estimate their investment time horizon before acquiring them.