The program had four key points that contributed to its success.
1 Truly low barrier to homeownership. Resident homeowners are the lifeblood of a city. Converting renters to homeowners, or attracting new resident homeowners from other locations maintains the vitality of a place. Investing in where you live is a heavy incentive to increase your involvement in community life.
2 Clustered properties. Since the City had purchased whole blocks of properties, it was possible to quickly improve large parts of a neighborhood. When an entire block of homes is renovated simultaneously, residents can see progress on a large scale being made daily, and the investment in homeownership creates financial rewards immediately.
3 Direct loans from the city. Of course, renovating a home costs more than a dollar. Since the city was selling the homes for $1, a prospective buyer didn’t need to come to closing with thousands of dollars in collateral to get an 80% mortgage on the property. However, there weren’t any banks that would finance the renovation loans under those circumstances. To provide the capital for renovation, the City issued bonds and loaned the resulting money to the new homeowners at + 1%.
Over the course of the program, not a single homeowner defaulted on a loan, and the city turned a handsome profit on loan interest. Read that sentence one more time.
4 A dedicated office. A dedicated advisory office was established to help guide the homeowners through the renovation process, as many had not been through it before. The office helped the homeowners connect with architects and reliable, licensed contractors, and provided a general resource for information and support.
http://dollarhomes.wordpress.com/2009/04/29/history-of-the-dollar-home-in-baltimore/ There are actually a number of other neighborhoods beyond those mentioned in this article. The first areas to get this treatment were those burned during the racial riots of the 1970s. They are, today, vibrant, vital neighborhoods. If you're interested in a successful series of programs, do some googling. There's lots of information out there - about the program and anecdotally about the participants. One of the best accounts was a National Geographic story from the mid to late 70s.