Tag: gentrification

• Why is housing viewed so differently?

  Here is a study by three researchers out of California that asked Americans to predict the impact of a supply shock on various things, such as durable goods, commodities, labor, trade, and yes, housing.

  For basically all of these items, people tended to answer correctly. Usually by a factor of at least two to one. In other words, when asked what reducing the supply of new cars would do to the prices of used cars, the majority of people responded saying that it would lead to an increase in prices.

  However, when asked about the impact of a 10% increase in housing supply, about 40% said that it would cause prices and rents to rise. Only about a third believed they would fall (the correct answer). This is fascinating because it shows that housing seems to be an outlier. Most people don’t have the same intuitive sense.

  

  Why is this? Well, one commonly held belief is that building market-rate housing leads to gentrification, and that this ultimately leads to the displacement of existing residents. This might have been why some people responded saying that new housing will cause an increase in prices and rents. It’ll lead to all housing going up.

  However, there’s research to support that this isn’t the case. The problem isn’t outward displacement following new market-rate housing. The greatest driver of gentrification is actually “exclusionary displacement”, which is the inability of people to move into areas because of a lack of housing. (This study was based on 2010-2014 housing data from the UK.)

  The thing about housing supply is that it relieves pressure across the entire market. Instead of a high-income person buying an old home to renovate (and causing outward displacement), they can instead choose to buy a new home (and not cause any outward displacement).

  By doing this, they also leave behind a home that can then be absorbed by lower earners. One US study found that for every 100 new market-rate homes that are built, somewhere between 45 and 70 people move out of a below-median income neighborhood.

  

  It is for reasons like these that, time and time again, increased housing supply has been shown to moderate home prices and rents (see above regarding Minneapolis and the Midwest as a whole). So if you’re worried about the cost of housing, the answer is to build more. And if you’re worried about gentrification, the answer is also to build more.

  Our intuitions are telling us that this is true for most things. But for whatever reason, housing feels different. It’s not, though.

  Source: The charts and studies in this post are from this great FT article by John Burn-Murdoch.

  2023.09.16

• New ideas like buildings people don’t want

  There is a very common story that plays out in cities. It starts with an area that has seen disinvestment and is probably a little seedy and/or dangerous . This creates an environment where rents and real estate as a whole are relatively inexpensive. New, cool and creative businesses start to move in (attracted by said inexpensiveness) and the area begins to turn around. Eventually it becomes suitable for institutional-type investors, and this ultimately leads to everything becoming expensive as a result of demand outstripping supply. Gentrification complete.

  The great irony of this story is that you sometimes, or oftentimes, lose the very things that made the area cool and interesting in the first place. Here is an example from Miami:

  The result has been a property speculation boom that, when combined with the city’s relatively low wages, put many businesses and residents on the street. Asking rents for industrial space, for instance, went up by 53 percent in the last year alone. Nobody can afford to buy, let alone rent, adequate space for a music venue because so much land has been snapped up by outside investors with a predilection for grand, “world-class urban” designs. 

  And for some areas, it is arguably the result of a careful and deliberate plan that was put in place nearly two decades ago:

  Teele’s commissioner district in the early 2000s included both Park West and the historically Black neighborhood of Overtown. At the turn of the millennium the area was blighted and crime-ridden thanks to years of racist, regressive policy decisions from segregation to redlining. His plan was simple but incredibly effective. He spearheaded a campaign to revitalize the area by granting a limited number of 24-hour liquor licenses to clubs like Space. Dozens of venues rose up on and around 11th Street, including vast, multi-room clubs like Metropolis, live venues like Studio A and Grand Central, and more intimate spots like Vagabond. Sporadic police raids also gave the area a druggy, dangerous reputation, inadvertently raising its allure. 

  This reoccurring arc has led some people to conclude that cities and/or areas seem to want to follow a kind of binary outcome: they’re either dying or they’re too successful. Why can’t we just have urban homeostasis? I don’t think this is necessarily always the case. Cities go through cycles just like any other market. I also know that it’s complicated. But I do feel strongly that we need to be mindful that part of what makes cities such wonderful places is that they are factories for new ideas and creativity.

  I can’t remember when or exactly how he said it, but YouTuber Casey Neistat once described New York City as an incredible island (Manhattan?) where misfits from all over the world come to do whatever the hell they want. And that part of the reason for this is that nobody cares what you do, because everyone is just so damn busy. You could certainly argue that New York isn’t what it used to be. But the lesson here remains the same: Cities are at their best when they allow humans to create, build, experiment, and express themselves.

  And oftentimes a great place for that is in a space that nobody else wants.

  2022.12.10

• What gentrification looks like

  One criticism that you will sometimes hear about development is that the construction of new housing can spur gentrification. The thinking, I think, is that when you create new market-rate housing, richer people will then move in and the area will begin (or continue) its ascent upwards.

  If on the other hand, one were to just stop developing new housing, then the neighborhood would remain stable and static and the fear of gentrification would simply go away. But the flaw in this line of thinking is that it assumes no infill development equals some sort of urban homeostasis.

  Cities are constantly changing. The reality is that what we are talking about, particularly in the case of low-rise single-family areas, is that we want the physical character of neighborhoods to remain more or less the same. But what happens on the inside is whatever.

  Here’s an example:

  https://twitter.com/LenniBug/status/1593645422370848777?s=20&t=goCZ5T0V7CX6VEclAdMnNg

  What you are seeing here are 4 electricity meters, meaning that at some point this structure housed 4 separate homes. But 3 of the 4 meters have now been removed, which presumably means that this structure has been converted (probably back) to a single-family home. So this is 4 homes being reduced to 1.

  I don’t know what this place looks like on the outside, but I’m going to guess that not much has changed in terms of its physical character. It probably looks about the same. But this is still gentrification; it is still an example of a neighborhood moving upmarket.

  The irony is that we tend to be generally okay with this change. We are okay with reducing the number of homes in a neighborhood so long as it happens in a largely inconspicuous and convenient way. But what we are (sometimes) not okay with is increasing the number of homes in a neighborhood. Apparently that creates too much pressure on the existing housing stock.

  2022.11.20

• Why housing is so expensive

  A friend of mine sent me the above podcast episode this morning (click here if you can’t see it embedded above). I’ve only listened to a bit of it, but I plan to finish it up over the long weekend. Here are the topics it covers:

  We discuss why the states with the highest homelessness rates are all governed by Democrats, the roots of America’s homelessness crisis, why economists believe the U.S. gross domestic product could be over a third — a third! — higher today if American cities had built more housing, why it’s so hard to build housing where it’s needed most, the actual (and often misunderstood) causes of gentrification, why public housing has such a bad reputation in the U.S.; how progressives’ commitment to local democracy and community voice surprisingly lies at the heart of America’s housing crises, why homeownership is still the primary vehicle of wealth accumulation in America (and the toxic impact that has on our politics), what the U.S. can learn from the housing policies of countries like Germany and France, what it would take to build a better politics of housing and much more.

  2022.07.29

• Philadelphia readies new inclusionary zoning policy

  

  When I was living in Philadelphia as a graduate student, new development was seen as a bit of a gift. I remember developers telling me that it costs the same to build in Philly as it does in New York, except that the rents are obviously a fraction in the former relative to the latter. So it was tough to make projects pencil.

  At the same time, Philadelphia had a 10-year residential tax abatement program in place. I think it’s still in place, but it may have been modified since I was there. Either way, it was essentially an incentive to develop or redevelop existing residential properties. In the case of a renovation, the taxes associated with any improvements were what got abated for the 10 years.

  Put differently, it was an invitation to gentrify. Come buy an old row home, fix it up, and then don’t pay any additional property taxes on those improvements. This was the way things felt at the time. So it was interesting to learn today that Philly’s current development boom is about to get throttled down with a new mandatory inclusionary zoning policy that will take effect later this year. Gentrification, it would now seem, is a problem.

  The policy requires that 20% of the units in any new housing development (with 10 or more units) must be affordable for at least a 50-year period. For rental households, affordability means 40% of the area median income (AMI). And for owner-occupied households, it means 60% of AMI.

  I have already said pretty much everything I can say about inclusionary zoning. But one of the unique things about Philly’s policy is that it is only going to apply to two of its Council Districts. It is not a citywide policy. This is going to create a strong disincentive to develop in these areas, and will likely force new development into surrounding ones. But maybe that’s part of the point.

  Photo by Dan Mall on Unsplash

  2022.02.21

• Gentrification in New York, San Francisco, and Chicago is not as it would seem

  

  Matthew L. Schuerman has a new book out called, Newcomers: Gentrification and Its Discontents. I haven’t read it. But in it, he argues that “gentrification is all around us.” Hence the title. Will Stancil has an interesting rebuttal to this position as part of his book review in the Washington Monthly. Here’s an excerpt:

  Schuerman settles on what he admits is a simple definition of gentrification: the process by which a neighborhood goes from having below-average to above-average incomes for its region. But he never really applies it. While he frequently asserts or implies that gentrification is exploding across cities, he doesn’t say how many neighborhoods actually meet his definition.

  As a demographic researcher, I decided to check. Using U.S. Census data, I looked at the share of people in New York, San Francisco, and Chicago living in places that met Schuerman’s definition of having gentrified between 2000 and 2016. In New York, it’s 3.1 percent of residents. In San Francisco, the number is 4.4 percent. In Chicago, it’s 4.8 percent. Needless to say, this does not represent a vast swath. Although the numbers might increase if the time frame were extended, change at a generational pace is far less disruptive than change that takes place over a few years. Using Newcomers’ own definition, the story of urban America is not a tidal wave of gentrification but creeping racial and economic transition.

  In fact, this aligns with the growing academic consensus that gentrification is much rarer than is commonly believed. This year alone, there have been no fewer than three national studies into the prevalence and location of gentrifying neighborhoods. (Disclosure: I authored one of these studies, for the University of Minnesota.) Despite using very different methods, all three studies roughly appear to agree that about 10 percent of neighborhoods in metro areas were gentrifying. Research has also tended to show that no matter how you measure gentrification in the urban core, it’s almost always more common to find neighborhoods afflicted by intensifying poverty. Out of the fifty biggest American regions, forty-four have core cities where the population in poverty has grown faster than the overall population since 2000. The only exceptions are New York City, Los Angeles, D.C., New Orleans, Atlanta, and Providence.

  This issue of concentrated poverty has come up before on the blog through posts like this one about Detroit. The data is pretty clear: The number of high poverty Census tracts in the US is increasing faster than the number of gentrifying Census tracts (i.e. Census tracts that are becoming wealthier).

  So could it be that the problem isn’t actually gentrification? It is that, paradoxically, gentrification isn’t happening enough and more broadly, and that it is leading to rising inequality across our cities. That strikes me as being the greater issue.

  Photo by Hardik Pandya on Unsplash

  2019.11.09

• Housing supply and displacement in San Francisco

  

  Joe Cortright recently wrote about a study by Kate Pennington (UC Berkeley), which looked at the impact of housing production on legal eviction in San Francisco. The goal was to figure out if new housing supply actually causes displacement.

  To do this, Pennington went block-by-block and looked at new housing projects, as well as over a decades’ worth of eviction notices. 

  The relationship between the two was found to be “statistically indistinguishable from zero.” In other words, the “monthly probability of an eviction notice” does not change when new housing supply is completed nearby.

  Some have been critical of her findings and some have questioned whether legal eviction notices are, in fact, the right proxy for displacement.

  But I agree with Joe Cortright in that this still feels like a meaningful relationship to understand, especially when we’re talking about a tight housing market like San Francisco’s.

  Photo by Matthew Cabret on Unsplash

  2018.09.15

• How New York City became boring

  

  On the cover of the July 2018 issue of Harper’s Magazine is a picture of New York City – with Rafael Viñoly’s 432 Park Avenue as the focal point – and the title: Death of a Great American City. New York and the Urban Crisis of Affluence.

  The long-form article is by Kevin Baker and it is an account of how New York City has transformed itself over the past few decades from a place of culture and character (and of cockroaches and discarded crack vials) into a place for the ultra-wealthy to buy ultra-luxury real estate that may or may not sit empty for more often than it is occupied.

  “As New York enters the third decade of the twenty-first century, it is in imminent danger of becoming something it has never been before: unremarkable. It is approaching a state where it is no longer a significant cultural entity but the world’s largest gated community, with a few cupcake shops here and there. For the first time in its history, New York is, well, boring.”

  This narrative and/or phenomenon is of course not unique to New York City, though it is surely more pronounced when you are one of, if not the, preeminent global city. In fact, I was sent this article by a reader who was wondering about the possible parallels here in Toronto. Thank you Natasha.

  The desire, which is how Baker ends his article, is that New York City should be a city of “workers and eccentrics” as well as “visionaries and billionaires.” It should be a place for “street photographers” and “hedge fund operators.” That sounds like a pretty cool place to me.

  But we all know how challenging this has proven to be for cities.

  Photo by Dean Rose on Unsplash

  2018.06.19

• Locals hate you

  BlogTO recently reported that “snarky anti-condo signs” have been popping up around Toronto. Here is one of them via Instagram. It reads (in all caps): Dear Condo Dwellers: Locals Hate You Go Fuck Yourself. 

  I find these posters curious, though it is obvious that they are a reaction to growth, intensification, and general change in this city.

  For one, it implies that condo dwellers and locals are mutually exclusive. In other words, “locals” don’t live in condos. Presumably the implication is that they live in low-rise grade-related single-family housing. Or maybe they live in rental housing? Is it a tenure thing?

  According to the latest 2016 Census data, just over 26% of private dwellings in Toronto are condominiums. And about 30% of people live in a building that has 5 or more storeys. If you include “apartments” less than 5 storeys, this latter number jumps to 40%. So many potential non-locals.

  However, it could be that these posters are primarily directed toward new condos and new condo dwellers. This poster seems to have been plastered in front of this recently completed condo building on College Street.

  If that is the case, then I wonder if there is a temporal cut-off for the hate. For example, the condo building that houses (at its base) my regular grocery store was completed in 1983. 

  The units are large and the demographic seems to skew a bit older. Are these condo dwellers – some of which may have been there for over 3 decades – to be hated? Are they non-locals? Or does urban myopia set in after awhile and they become locals?

  At the same time, it wouldn’t be unusual for the residents of an older condo building to oppose a new proposed condo building. So perhaps “local” isn’t about building typology and it’s more about who came first. That’s certainly a tricky one. Better end here.

  A curious poster that could use a bit more specificity. What do you make of it?

  2017.10.25

• Screw Toronto

  Hamilton, Ontario is on the rise. It’s no secret. 

  In fact, Toronto Life just ran a piece called The New Hamiltonians, where it profiled ex-Torontonians who have made the move west for more affordable housing and a higher quality of life.

  What stands out for me about the article is how there’s already growing resentment toward both developers and the local business owners who are helping to revitalize the city. Here is an excerpt:

  As builders encroach on Hamilton’s old neighbourhoods, a simmering resentment is building toward the upstart businesses that make rundown areas attractive to developers in the first place. Dave Kuruc, who owns Mixed Media, says that last year, the front door of his and neighbouring shops got slapped with a sticker that read “FUCK YOUR BOUTIQUE. DEFEND HAMILTON.” Last June, a bus tour for ­developers—branded “Try Hamilton!”—was interrupted by masked activists spraying sour milk out of water pistols and wielding signs that read “Developers + Investors = Predators.”

  So it’s not just developers. It’s also those damn boutiques. But the City of Hamilton eliminated development charges and put in place many other incentives for a reason. It wants to see more new construction. 

  Some people clearly aren’t happy about that.

  2017.06.23