Actually, I think this is one of the better ideas to come out of the nascent (and probably failing) obama regime, reducing the housing stock in areas where it is already poorly regarded.
Something like this was done back in the early days of the LBJ “Great Society”, when it was called “Urban Renewal”, when whole blocks of older residences were summarily described as “blighted”, and bulldozed, opening up a whole new opportunity for land use change.