For example, an analysis by Federal Reserve staff reveals that long-vacant housing units tend to be concentrated in a small number of neighborhoods that also tend to have high unemployment rates, low educational levels, and low median incomes.2 While some of these neighborhoods are in the inner cities, others are in suburbs.
However, determining the adequate risk premium as part of an interest rate is a highly difficult exercise. And central banks usually do not know better than market participants what the adequate risk premium or price should be. Coming from the private sector myself, let me add that central bankers should not even attempt to know better.