Friday, September 22, 2017


This is the bane of urban development, right?  Old housing stock, built for yesterday’s working class, is spiffed up and priced far out of reach of today’s regular folk.  High end shops replace hardware stores, bric-a-brac recyclers and appliance repair centers; a tide of designer coffee flushes out the cheap, refillable kind.  Who can afford to live there?

But wait!  Those refurbished old houses are beautiful.  It’s a pleasure to peruse delicate artisanal fabrics and custom-designed furniture.  The food is fresher, healthier and tastier.  And what’s the alternative—to put a blanket over everything old and keep out all improvements?  Is gentrification even a problem?

It is.  It’s wrong if whole neighborhoods are uprooted, unable to afford housing and services available to them for generations, and the dynamism of city life is crippled if only those who have already made it can make their home there.

Regulations that restrict the development of new housing have rightly come under attack.  Encouraging infilling and greater density benefits the environment and keeps housing costs down, but that only moderates the impact of gentrification.  The luxury apartments that replace old single family houses are still beyond the means of most of us.

My hypothesis is that the basis of gentrification as an urban problem, rather than a type of broad-based development that benefits everyone, is extreme inequality of income.  Gentrified neighborhoods are those outfitted for the upper echelon to spend their money on, and prices are geared to what the traffic will bear.  The rest of us can’t afford it.

Imagine that income were distributed much more equally in this country.  Maybe a few people would be rich, but there wouldn’t be enough of them to fill up whole cities.  And the gap between the better and lesser off wouldn’t be so large as to preclude mixed neighborhoods.  As overall incomes rose over time, so would the quality of housing, shopping options and services.

If I’m right, the solution to gentrification isn’t a prohibition on investments that upgrade urban life, but serious measures to reduce economic inequality itself.  The test is whether countries without the great divide between the rich and the rest are as subject to gentrification as the US.


Thornton Hall said...

Or... was gentrification a problem in the Gilded Age? What if it's a problem of too many super rich people? If the 99% are equal the 1% aren't the problem?

What if we were to cap the number of super rich at the size of the housing museums we have created in San Franscico and Georgetown DC?

Denis Drew said...

Here's the path back to fair wages -- the gap you could drive a Teamster truck through in the wall of federal preemption of all (and it is all!) of state labor law:
If a state or local legislature passes a law that makes exercising freedom of association (e.g., organize a labor union) possible where it would otherwise not be possible, then, Congressional preemption of labor law falls to the First Amendment.

We simply want to protect the organizing process here -- not take issue with the plethora of NLRA regulations. As simply presentable an approach as it is simply true.

I never understood until recently that it is the vast overgrowth of federal preemption -- never mentioned in the NLRA by Congress; spewed out endlessly via judicial presumption -- that is holding back state protection against labor union busting all over the country.

Republicans will have no place to hide.

For an all-day read on judicial twists and turns shutting out state labor law under the NLRA(a):
Louisiana Law Review, Volume 70, Number 1, Fall 2009 (97 page PDF)
Reforming Labor Law by Reforming Labor Law Preemption Doctrine to Allow the States to Make More Labor Relations Policy -- Henry H. Drummonds

Longtooth said...

I think you have to get back to land use laws (zoning) which are defined by the city councils of all the little cities and county commissioners of all the little counties.

They in turn are subject to the demands of the adult city residents, which boils down to city benefits and taxes (sales, property, business fees and licenses). Their incentive is then to maximize revenues to maintain and improve benefits.

They do that by increasing employment in their city so must provide for business zoning, which reduces new space for residential zoning. Since new employment wants to live closer to work, this drives up residential land prices closer to work.. both existing residential housing and vacant lots/parcels.

Since land can't be created, then when employment increases in the city land supply/demand ratio's drop (land prices rise) in proportion to employment gains (or total workforce gains, including unemployed and employed).

That is independent of gentrification which occurs when employers in a city increase employee compensation relative to housing / land and inflation. They do this to attract and compete for employees both those already within the region and those from outside it, which is the driver for both increased employment and increasing incomes.

The increasing incomes is asymmetrically distributed to the higher skills which increases the proportion of high income relative to medium and low income in the city. General wage inflation follows along with goods/services inflation, but housing / land supply/demand equilibrium simply follows wage inflation up and continually reduces available housing at lower prices... since land can't be created!

So the gentrification you refer to is a direct function of the relationship of labor supply / demand ratio's which increases workforces when cities councils attract more employers to increase revenues to provide more benefits or maintain them by zoning more for business land use than housing land use.

this force people to go further from the employment centers to find affordable housing or alternatively for city councils to zone for multiple story residential dwellings. but if they try to do that existing single family low density residents object strenuously and that puts re-election to city councils at risk... so of course city councils can't zone for multiple story residential at the rate necessary to maintain lower housing prices. Besides, if they did then everybody who already owns (or owns rental apts. and properties) will see demand drop or not rise and they are of course opposed to that... and they let city councils know this.

What you are really facing is a tradition of local jurisdictional zoning laws and control.. which simply does what money and capital owners required --- who and who's money elects city council members... especially when labor unions no longer have much influence.

Longtooth said...

Here's a more analytic explanation of the real issues with affordable housing. The bottom line is that it's driven NIMBYism.

Housing Affordability = median income / Housing Price

Nominal Housing Price = Housing units / land Area

Housing Units = Population / Land Area


Nominal Housing Price = Population / Land Area / Housing Units / Land Area
= Population / Housing Units


Housing Affordability = median Income / Population / Housing Units
= median Income x [Housing Units / Population]

Thus for constant Housing Affordability as a function of median incomes Housing Units/ population must remain constant

Thus as population increases Housing units must increase proportionately.

If land Area is limited then Housing density (Housing Units / Land Area) must increase proportional to Population Increase, which means housing units must increase per unit land area ....building UP rather than OUT, or utilizing less area / dwelling unit.

But there's a lower limit on area/dwelling unit which means that as that lower limit is approached, building UP is the only option to maintain affordable housing relative to median income.

What happens in fact though as population increases is that land area is increased by expanding OUT, which maintains affordable housing only as housing is further from employment centers. But this increases time and distance to / from work, which increases costs of working (lower disposable income) and reduces free time, adding to costs of maintaining housing, driving disposable income lower.

These reductions in disposable income have to be compensated by either increases in wages or moving yet further from employment centers.

Then as population continues to increase in a given region, this outward expansion continues until in fact commuting time and costs reach a limit.

That limit is distributed... such that the further the commute distance to maintain affordable housing the lower the proportion of employed that move to the new outward limit.

This increases population density demand nearer employment centers, which then drive demand for housing Units / Land Area higher. which means that closer to employment centers either housing builds UP or affordable housing prices increase.

Ultimately then it is city councils' deciding not to build UP which is effectively just a reflection of the existing city residents owning land and property.

In other words direct and simple NIMBYism. This has nothing to do with gentrifation.

Thornton Hall said...

Shorter Longtooth?
Location, location, location means that the only way you can get affordable housing where people need it is for government to set rent for units that are in the same location as expensive units.

My suggestion: simply require developers to sell a certain percentage of new units built to the local government for $1 each. Government gets to pick the units.