Is Gentrification Really A Threat?

Should the social virtues of urbanism and new investment in cities get washed out in the hue and cry over gentrification? John Norquist, CEO of the Congress for the New Urbanism, examines the viability of inner-city development trends in this week's Op-Ed.

Photo: John Norquist

Cities in America have always had an image problem, mostly because they're continuously associated with problems. If it's not one thing it's another. Thomas Jefferson held up the agrarian ideal as preferable to urban life (why shouldn't everyone live on a plantation with a thousand slaves like he did?). Cities were associated with disease, crime, poverty, sin and degradation by reformers such as Jacob Riis, Jane Addams and evangelist Billy Sunday. After World War II, fueled by pro sprawl housing and highway programs, cities declined. Urban race riots made the decline even more apparent ("Will the last one to leave please turn out the lights?"). Even as late as 1991 when its murder rate peaked, New York City's real estate market and population looked like they might be on the way down. And so late 20th century urban policy focused on strategies to attract people and capital back to cities. When signs of revitalization appeared in the strongest of the big cities -- New York, Chicago, San Francisco -- the policy focus adjusted to include concern for a new problem, displacement of the urban poor by the affluent.

With urban living regaining popularity, reinvestment has spread to some of the smaller markets, as has the concern about displacement or gentrification. Actually, the concern about gentrification seems to be spreading even faster than real estate price appreciation. For example, it's spread to mid-size Midwest cities like Cleveland, Cincinnati and Pittsburgh that went decades with little private sector investment in new housing construction. While this market failure has many legitimate explanations such as redlining and racism, the fact was that demand to live in these cities was low. People, particularly middle-class and affluent whites, were fleeing the city to the suburbs. Rents and sale prices declined or stagnated, and when rents decline, investment shifts to other places. This was doubly bad for the poor. A deteriorating real estate market meant little investment in repair and maintenance of old urban housing stock and thus declining housing quality. It also meant the decline and abandonment of the jobs base, tax base, and retail and service structure that had served the departed middle class. Furthermore, because the homogenous low-density suburban development typically allows little if any affordable housing, the poor could not easily follow the flight to the suburbs. The only measurable advantage from sprawl for those left behind in the city is low rent.

When consumer demand returns to an urban market, costs and benefits compete for peoples' attention. Bad news: rents will rise. Good news: jobs, tax base, economic structure and investment return. People, no doubt, would love to pay low rent and experience neighborhood economic prosperity at the same time, but this is difficult unless others -other taxpayers? -- subsidize rising rent payments.

Gentrification is no threat to Detroit. Poor people pretty much have Detroit to themselves. Rent is low and the demolition business is bigger than the home repair business. How much harm could some gentry do?

In cities with warm, but not quite red-hot housing markets, new housing replaces some of that lost to disinvestment and rents rise slowly, along with benefits such as neighborhood safety, improved transit service, and less time spent traveling to work or stores. In places where rents are stagnant, the discussion of gentrification can lead to government remedies for problems that don't exist yet and may actually chill development as regulatory burdens are layered on prospective projects.

One hopeful characteristic of successful urban redevelopment is that, by its nature, it often includes a wider variety of housing types at a wider spread of price points than sprawl. Less pricey units can be placed in the same building or on the same block with expensive dwellings. For example, people with impressive views pay more than those in units facing the alley. Unlike sprawl, urban infill and rehabilitation at least offer the possibility of people of various incomes living in close proximity.

The social virtues of urbanism and the cost-benefit discussion of new investment in cities tend to get washed out in the hue and cry over "gentrification" when some local activists, CDCs and armchair liberals assume the heroic mantle of protectors of the poor. While their outrage at urban developers is no doubt self-gratifying, it presents the existing residents of urban neighborhoods a very distorted picture of the costs and benefits of potential redevelopment. If allowed to decide for themselves, low-income people might choose to divert some of their scarce income to paying higher rents and thus take advantage of the benefits of living in improving neighborhoods. In fact, research by Lance Freeman, Columbia University Professor of Urban Planning, found that low-income residents were no more likely to move from gentrifying neighborhoods than those not experiencing gentrification. He found that many people valued other benefits more than low rents such as lower crime and restored amenities like shopping or better access to jobs.

Lance Freeman, Professor of Urban Planning, Columbia University

Of course, other factors besides renewed investment in cities have left poor and lower middle class people struggling. Their payroll taxes have gone up over the last 25 years while federal taxes on the rich have dropped, leaving working Americans to shoulder more of the burden. The globalization of the manufacturing sector has forced workers to seek other types of employment, some of it at lower wages. While interest rates remain low, a housing bubble limits the home ownership opportunities of the working poor. At a summit this spring hosted by the Congress for the New Urbanism at Wingspread, housing experts from across the political spectrum explored a number of promising policy responses -- including making urban neighborhoods with diverse housing stock legal in more communities and replacing inefficient housing programs with an expanded earned-income tax credit that would help low- and moderate-income people earn extra money and spend it on their own priorities -- perhaps housing, perhaps not. It's understandable that those in the housing business would want government money devoted to housing, but if ending poverty is the goal, it's good to remember that what low-income people ultimately need to escape poverty is more income.

Against this larger backdrop, the gentrification issue is best understood as nuanced with costs and benefits. It's also better understood in local context, i.e. it is genuinely a debatable issue in San Francisco or Manhattan, but a totally phony issue in Detroit or Buffalo. Some places fall in the middle of the spectrum. Faint signs of gentrification can be detected in Baltimore, Philadelphia, Milwaukee and Memphis, but there is so little of it that concern about it should logically be among the lowest priorities. Yet it isn't. The hot rhetoric spewed (perhaps appropriately) in San Francisco gets mindlessly repeated in cities that desperately need investment in their building stock.

Secondly, even if gentrification happens with little or no concern for the poor, it will, in my opinion, in the long run be much better for the low-income population of a metro area than sprawl. The poor have more opportunity in metro areas with compact and economically healthy urban cores. You want the money in the middle where the poor have a better crack at getting some of it. Example: A poor person in Yonkers is a 25-minute ride from Grand Central and one of the densest job markets on earth. A poor person at 6 Mile and Woodward in Detroit can reach 8 Mile Road by an infrequent bus where the Detroit bus system ends and then catch an even more infrequent bus or van to a far-flung suburban manufacturing or office pod. (Let's say it takes 2 hours each way and that would be fast.) My point is that the gentry threat is grossly exaggerated in all but a few mega metros and that the obsession with the perceived threat from the moneyed class slows needed reinvestment in most large US cities.


John Norquist is President of the Congress for the New Urbanism, which holds its annual Congress in Pasadena from June 9-12 where Norquist will host the session, "Beyond Subsidies: The Future of Low-Cost Housing." Visit www.cnuxiii.org for more information.

Comments

Comments

gentrification

If you want to see what happens when politicians react against gentrification, just look at Vancouver's downtown eastside. The concentration of the poor, and drug addicted now threatens the otherwise very livable downtown neighbourhoods. We need some gentrification in this neighbourhood!

gentrification is an issue

I do not appreciate the casual approach you take to gentrification in Detroit. Gentrification is an issue for low- and moderate-income residents in Detroit. I suggest you come to a City Council hearing for an apartment building that is about to be converted to condominiums and listen to the comments of residents.

Detroit faces many affordable housing issues. Arguably the most challenging is the low median household income. In many cases, housing cannot be built cheap enough for the "poor people." Further displacing them by converting affordable, quality apartments to condominiums only worsens the problem.

In the past, the city has also attempted to use the power of eminent domain for new housing developments. The result has been the displacement of long-time city residents and homeowners for new residential development.

When you examine the number of vacant parcels in Detroit (of which approximately 38,000 are city-owned), is is clear that there is plenty of land to build new, unsubsidized housing. In that sense, gentrification is definitely not a problem. The problem comes in the form of the displacement of existing residents from their affordable dwellings. Many households in Detroit struggle to pay their rents and mortgages - 30% of all households pay more than 1/3 of their gross income on housing. These low- and moderate-income households do not have many options. It is important to preserve (and increase) the number of affordable units.

The challenge is to manage gentrification without displacement. Higher-income residents have the potential to bring substantial resources to Detroit (assuming they are moving in from outside the city; contrary to your article their are affluent Detroiters). Lower-income residents can benefit through increased job opportunities, rising property values, improved schools, additional retail, and stronger institutions.

It is the challenge for planners and housing activists to advocate for solutions that allow a variety of income levels to flourish. Why would you want gentrification to occur with "little or no concern for the poor?" There is plenty of available land in Detroit. It is possible to disentagle gentrification and residential displacement. It isn't necessary to marginalize lower-income residents in favor of gentrification. Doing so only exacerbates problems. A more careful approach will lead to better outcomes for all.

As a final point, the housing market in Detroit has shown signs of improvement recently. I do not know what you mean when you say "the demolition business is bigger than the home repair business" in Detroit. In 2003 there were 5,488 permits issued for home repair. This accounted for an estimated $59,227,548 in investment. There were 735 demolitions in 2003. The cost data is not availablefor demolitions, but is clearly less than $59M. Furthermore, new construction in Detroit has increased in recent years. For the last two years Detroit has had the third most new construction starts in the 7 county metropolitan region.

Peter McNally, Senior City Planner
City of Detroit

gentrification

I agree completely with your analysis. In Silicon Valley, gentrification is also discussed and the manufacturer's group suggests that as you grow cities, so too must you "grow people". Therefore, they have invested in retraining the poor to perform jobs more suitable to the high-tech industry that dominates the area. - steve matarazzo, community development director, sand city, ca

gentrification

I've read several discussions on who benefits and who suffers when a neighborhood gentrifies. Residential gentrification, it seems, can take two basic forms: renovation of single family houses and renovation of multifamily buildings. When I think of gentrification, it is the former I think of- I don't know the extent of the latter. The latter, presumably, would displace a lot of low income people as their building is renovated or replaced. In the case of single family house gentrification, some of the existing low income people there would rent, and some would own. We've seen evidence that renter turnover during gentrification is less than we thought. What of the owners? For a neighborhood to gentrify, the houses must turn over from lower income to higher income owners, because of the investment in buildings required to meet the definition of gentrification. The low income owners then presumably benefit from higher prices when they sell. If a low income owner buys in when the prices are low, and then acts to improve the house and perhaps the neighborhood through neighborhood involvement, then sells out when the price goes up, they are the beneficiary of a transfer of wealth from a higher income buyer. I haven't seen any attempt to study how much this occurs, and it probably varies a lot from city to city, but any attempt to study gentrification should include a study of this. A successful attempt to thwart gentrification may well close off this avenue of wealth creation for lower income households, thereby sacrificing the interests of some low income households for the perceived interest of other low income households.

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