Travel Update: I’m Going To Cuba

Miami, FL

1. My two Forbes articles this week included one about how inclusionary zoning has replaced rent control as urban America’s preferred housing price control; and one about how San Francisco’s housing prices are causing creative class exile.

2. There was another interesting recent housing story in San Francisco, when city supervisor David Campos–who represents the Mission District–proposed putting a 2-year moratorium on market-rate housing in the gentrifying neighborhood. While activists support the measure, even San Francisco’s establishment liberals have deemed it counterproductive. Here are formal oppositions published by the San Francisco Chronicle; from the local Democratic Party; and by supervisor Scott Wiener, a renowned affordability champion. Wiener includes in his Medium op-ed a statement that will hopefully one day be read, contemplated, and internalized by every anti-gentrification activist in America:

New residents aren’t moving to the Mission because of new development; rather, they’re moving to the Mission because of the Mission, amazing as it is. People who want to move to the Mission will move there with or without new development. And, without additional housing, they will put more and more pressure on the existing housing stock. Evictions and displacement are the inevitable result of that pressure.

To counter, here’s an editorial by Campos criticizing Wiener for “channeling the ghost of Ronald Reagan.”

3. And yes, you read that headline right–I’m going to Cuba! I’d been flirting with the idea ever since President Obama normalized relations with the nation (just earlier today he removed it from the state sponsors of terrorism list), and being in Miami seemed like an excuse to go. I’m slated to leave early Sunday and return Thursday, June 4.

Traveling to Cuba is still not easy, much less available to the broader U.S. A person must fit one of 12 categories, and they are rather narrow (I qualified as a journalist, and am expected to keep a record of my activities). Few U.S. airlines offer Cuba flights, and the ones that do leave only from select cities. While numerous Cuba travel agencies exist here in Miami, some don’t have a single staffer who speaks English, suggesting that they cater more to Cuban-Americans connecting with their families than gringos. But I wanted to see a country in the final throes of its half-century stagnation, before it inevitably changes from increased tourism and new-found access to U.S. banks. I plan to visit las ciudades de Havana, Trinidad y Santiago de Cuba, while exploring much of the countryside in-between.

I realize that much has been written about the effects of Cuba’s Communist system on its living standards. Two particularly illuminating articles I found were by New York Times columnist Roger Cohen and global traveler Michael Totten, who described what life is like for the many citizens who live on their allotted $20/month. Other journalists have taken a more positive tone by noting that Cuba has full literacy, minimal homelessness, and a relatively efficient health care system. But I’ll suspend judgement until arriving, and don’t know how much I’ll add to the conversation anyway, since I’m only there for 4 days.

One under-represented thing, though, that I’d like to explore is the nation’s reportedly vibrant street culture–and the causes for it. As PlacesJournal noted in an extended essay, Cuba’s urban neighborhoods have not been disrupted in the last half-century by excessive urban renewal, automobile through-traffic, or change in general. This has prevented modernization, but helped preserve their historic character and walkability. Such neighborhoods may be poor, but, as I’ve read and heard from Miami locals, are clean, safe, and full of people, music, and well-defined civic spaces. One doesn’t have to embrace Cuba’s overall political structure to acknowledge that there are probably still design lessons to be learned from its cities, and I’m looking forward to seeing what those are. Hopefully I can report back next week with plenty of photos.

 

Has The Urban Planning Profession Declined? (Like Planners Claim)

As readers know, Market Urbanism has for several years had a strong homepage and Twitter presence. And thanks to Adam, it is getting a stronger Facebook one, both on MU’s official Facebook page, and its chat group. If you enjoy reading substantive things, I recommend following both, but especially the chat group, which is available for anyone to join.

Many of its updates feature links from around the web posted by MU readers, informing us about the world’s biggest urban issues, with everything from mainstream news clips, to esoteric working papers and book chapter pdf’s. We would love to have more of you join and begin posting! This doesn’t mean the group is open to trolls; we don’t want to hear your grammatically-tortured vitriol. But we do like potential skeptics who ask questions and start debates, as they have received strong responses in the past.

All that said, here are some of my recent favorite links shared by the group, and let’s raise a Friday night glass for the many more to come.

1. Robert Moses’ 23-page response to The Power Broker. Like the man himself, the letter was angry, rambling, irrational, and condescending, yet had moments of rhetorical flash:

The current fiction is that any overnight ersatz bagel and lox boardwalk merchant, any down to earth commentator or barfly, any busy housewife who gets her expertise from newspapers, television, radio and telephone, is ipso facto endowed to plan in detail a huge metropolitan arterial complex good for a century.

I wonder which “busy housewife” he could have been referring to…

2. Richard Sennett comes from a school of sociological thinking–alongside academics like Saskia Sassen and Mike Davis–who criticize global capitalism and urbanization. But here is his rather balanced review in 1970 of Jane Jacobs’ The Economy Of Cities (you can access the review through a Facebook post via Anthony Ling).

3. This is an old Economist article that aims to define “rule of law.” It cites a study arguing that “a country’s income per head rises by roughly 300% if it improves its governance by one standard deviation,” with the efficiency and reasoning ability of its legal system playing a huge factor.

4. Here’s yet another article, this time from PlacesJournal, claiming that the growth of conservative economic theory in the 1940s, followed by the failures of 1950s urban renewal, led to the death of central planning and rise of “market urbanism” (his usage) in America. “By the ’70s and ’80s,” writes architect Anthony Fontenot, “the discipline of planning had come under such sustained attack that in many design schools the planning programs were jettisoned altogether and relocated — banished — to schools of policy and administration.”

I read this charge about the decline of American city planning frequently from architecture/planning writers. But can anyone please tell me what the hell they are talking about? The fact is that land use regulations–the most essential planning tool– have grown substantially in America in the last century, and even more so in recent decades. Zoning has transformed from merely separating incompatible uses to policing the design, coloration, placement, shape, density and “form” of buildings. Lots that years ago would have been subdivided in suburbia, or built upwards in cities, are now, respectively, preserved. Practically every city of minor significance has a planning department (not to mention an urban development corporation and design review board). Whereas America’s great legacy cities–New York, San Francisco, DC, Chicago, Boston, Philadelphia–adopted their built pattern during the relatively laissez faire industrial era, and thus in a manner that was dense, walkable, and attractive, land use controls often prevent them from furthering these goals today–and prevent newer cities from mirroring the old ones.

I thus can’t agree with Fontenot and similar-thinking architects and planners. Their profession has not declined in the U.S.; it has metastasized, only to inhibit many of the outcomes that they seem to want. Market Urbanism, meanwhile, is still an ideology confined to the internet, and not even close to being practiced today in any major U.S. city.

Happy Birthday Jane Jacobs! (Now Let’s Have A Debate)

Jane Jacobs

1. This week I wrote three articles: one for Governing Magazine about how to make pedestrian malls successful; and two for Forbes—about how Syracuse is squelching a driveway-sharing app, and the latest attempts from San Francisco NIMBYs to stop a Warriors arena.

2. Today would have been Jane Jacobs’ 99th birthday, and I know many of you celebrated by attending (or hosting) Jane’s Walks in your cities. Because of other obligations, I wasn’t able to attend the Miami one, which was hosted in Little Havana by local realtor Carlos Fausto Miranda. If any of you did, tell me how it went.

3. I hate to use Jacob’s birthday as an excuse to seem divisive, but there’s something about her writings—and the way they’re interpreted—that I want to explore:

The thing that’s always made Jane Jacobs’s work so refreshing is that it has ideological crossover appeal. But this has also caused different schools of thought to emerge about her.

The left-leaning among Jacobs’ fans emphasize her work on urban form. Jacobs’ favorite neighborhood was her home base of Greenwich Village, and living there inspired her vision for other neighborhoods. As she brilliantly explained throughout The Death and Life of Great American Cities, the ones that functioned best had traditional street grids, human-scale buildings and parks, a mix of old and new architecture, and pedestrian accessibility. These elements of her teaching have been embraced by New Urbanists like Andres Duany, who have built entire neighborhoods on her principles; and by “smart growth” planners, who take the next step by imposing historic overlays and “form-based codes” on urban areas. These latter moves are done to stave off modernization, which they see as threatening Jacobs’ aesthetic vision for cities.

But the right-leaning side of Jacob’s followers focus less on design, than on her economic teachings, many of which came in later works. They adore the woman who loathed central planning and land use controls, and who thought that the “organized complexity” of city life was best tackled through organic growth. Rather than advocating for new layers of regulation, then, conservatives view Jacobs as an early advocate of market-based solutions. This side is led by people like Edward Glaeser, a proponent of more skyscrapers. Although skyscrapers might be taller than Jacobs’ ideal neighborhood, he argues, they would be a Jacobian response to many cities’ housing shortages, and if designed properly, would generate the street life she described.

I’m not here to say that one side is right or the other wrong. Both Jacobs’ economic and design teachings—and the way they’ve been interpreted—have been mostly beneficial for cities. But I will say that the New Urbanist side has gotten more representation. If you think today of what someone means when referring to a “Jane Jacobs-style neighborhood,” you picture a medium-density area with historic character, pocket parks, and niche coffee shops—places like Greenwich Village, The Haight in San Francisco, Capitol Hill in Seattle, Wicker Park in Chicago, or Boston’s Back Bay. Meantime, large-scale neighborhoods—such as a typical downtown business district—are considered antithetical to Jacobian urbanism, and are frowned upon by planners.

I wish this perception would change, though, because high-rise neighborhoods play a role in cities that Jacobs would have appreciated. As I wrote on this site several weeks ago, the Miami neighborhood of Brickell—which is an overnight skyscraper zone that would have Glaeser beaming—is essential to the city’s economy, providing housing, offices, and recreation for the ever-important banking industry. It has also helped preserve surrounding downtown neighborhoods, by containing the city’s banking wealth to a small area, rather than having it inflict gentrification elsewhere. While Brickell doesn’t yet have great pedestrian infrastructure, the neighborhood’s sheer density has made it (as Glaeser would have predicted, and Jacobs would have liked) one of the city’s most active around the clock.

Yet I can’t imagine Brickell ever being the subject of a Jane’s Walk. There is something about the neighborhood’s sensibility—corporate, wealthy, glossy, neo-liberal—that doesn’t gel with Jacobs’ left-wing faction. However, Brickell and other skyscraper neighborhoods are essential in helping cities grow and stay competitive in a global economy. True fans of Jacobs should see the value of encouraging (or at least allowing) such neighborhoods, as a compliment to the more traditional-style ones.

 

Why Money for Schools Means No Permits For Housing

Housing has a lot going against it in the California. But amidst all the legal, political, and regulatory roadblocks, there’s one law that sneaks by largely unnoticed: Prop 98.

Prop 98 guarantees a minimum level of state spending on education each year. Sacramento pools most city, county, and special district property taxes into special education funds to meet this commitment. The localities only get to keep a small part of the property tax revenues for their own general budgets.

This system creates a disincentive for cities to permit housing. New housing brings in new residents who need city services. But it doesn’t bring in a commensurate increase in property taxes since most of that revenue gets scooped up by Sacramento.

Commercial development, though, brings in taxes a city gets to keep. Sales and hotel taxes are significant revenue streams. And they don’t cause the kinds of strain on city services that new residential does.

Reforming Prop 98 might be low hanging fruit. Changing the formula to appropriate a broader stream of city revenues might help ease the bias against housing. And it might even be possible to amend the law without having to fight the California Teachers Association. As long as there’s no net decrease in education funding, of course.

stack_of_books

For those not acquainted with California politics, the California Teacher’s Association (CTA) is the most potent lobby in Sacramento. If the CTA doesn’t like a bill, it doesn’t become a law.

 

It’s tough to say exactly how much new housing Prop 98 actually prevents. Different cities get to keep different amounts of their property taxes, so the disincentive differs case to case. And there are plenty of other things like CEQA and Prop 13 which put a drag on new construction as well. But where CEQA and Prop 13 make it easier for residents who are already NIMBYs to gum up the works, Prop 98 is a reason in itself for a city to avoid residential development. So while we can’t do much to change the aesthetic preferences of our neighbors, we can do something to change the law. And if tweaking one law makes cities see new housing as a financial boon instead of a burden, it might be worth the effort.

 

Travel Update: Recent Articles On Housing

I wrote a housing-related article this week for Forbes, and in the process of research, came across several other interesting recent ones. Here’s the roundup:

1. My article discussed the connection between rent control and high housing prices. To my surprise, only 6 of America’s 50 largest cities still have rent control, as numerous others ended what they saw as a counterproductive policy. But those six remain among the nation’s most expensive, and I argue that rent control is a big reason why.

2. This didn’t prevent Seattle from trying to revive the policy this week, led by Socialist Party councilor Kshama Sawant.

3. While rent control is seen today as antiquated, this hasn’t stopped the rise of its close cousin, “inclusionary zoning.” Steven Greenhut writes for Reason about a California state court case that could determine the policy’s constitutionality. The case, he says, is “about whether cities have unlimited power to extract concessions from homebuilders for things that are not ‘impacts’ from the project. In other words, it’s legitimate for government to require new developments to pay to mitigate the effect of the new residents on local infrastructure (roads, sewers, fire service), but is it OK for cities to require affordable housing just because officials want to see more of it built?”

4. Michael Lewyn challenges the notion that Airbnb hurts housing affordability by taking units off the market.

5. Recently the New York Times published a short time-lapse video of lower Manhattan’s various developmental stages over 500 years. Daniel Bier at Newsweek points out something strange about the video’s last few decades: “The pace of change slows dramatically toward the end…because the city government has deliberately calcified New York City, encasing the city’s structures in a legal state of suspended animation.”

6. Emily Badger writes on Wonkblog about the rise of urban adult singles, and the way that cities’ housing stocks have failed to adapt–thanks to government regulation. Her piece is worth quoting at length.

Our housing stock wasn’t built for a society full of singles. Our communities instead are full of homes meant for the traditional nuclear family — two-bedroom starter homes, three-bedroom houses, apartments with more bathrooms than a singleton needs, full-service kitchens when 25-year-old bachelors now primarily dine by microwave….In New York, Austin and Denver, nearly 57 percent of adults were single in 2010 (although not necessarily living alone). In Washington, D.C., that figure is a whopping 71 percent. But none of these cities have anywhere near enough small-sized housing to accommodate them. That means that a lot of people are probably living with unrelated adult roommates who’d prefer to live alone (half you people in D.C. group homes?). And it means that some people who do live alone are likely paying more for space they don’t want in a large one-bedroom because there aren’t enough alternatives in studios and efficiencies.

Changes in demographics and social norms invariably occur faster than changes in the built world around us…[But] a lot of cities are also actively making it hard for the housing supply to adjust. The rise of singles calls in particular for more micro housing: apartments the size of studios or even smaller, and “accessory dwelling units” (think in-law cottages or garage apartments) that might be built in the back yard of existing homes. It also calls for a different model of housing where, for instance, four singles might share a communal living space adjacent to their separate units instead of each having their own living room. Neighborhood opposition and existing regulation make this kind of housing hard to build in most cities, though. Parking requirements, for example, often mandate that new housing come with new off-street parking spots, too. But that rule is impractical for someone who wants to rent a cottage in her backyard. And it makes projects financially unworkable for a developer who wants to build an apartment full of micro units next to a train stop for residents who don’t own cars. Other laws set minimum standards for how small a housing unit can be — in much of New York, it’s 400 square feet — making micro units effectively illegal.

 

Travel Update: A Tale Of Two Latino Areas In Miami And San Francisco

Miami, FL

1. The two Forbes articles I wrote this week are about New York City mayor Bill de Blasio’s effort to modernize the city’s courts; and a tech program under New York governor Andrew Cuomo that failed colossally in year one.

2. The highlight of my week, though, came at the tail end on Saturday night, when I explored Miami’s Little Havana, a Cuban neighborhood outside of downtown. What surprised me was how Cuban it actually was, despite abutting one of the nation’s booming financial districts. Almost everyone there is Cuban—save the few gringo tourists like me—and the neighborhood is rooted in their culture. Spanish is the first language, salsa music echoes through the streets, and retail areas are lined with Caribbean cuisine. It’s not unusual to find live chickens running though people’s backyards. The architecture reflects what I’ve seen in photos of Havana, and hasn’t been interspersed with condos and yoga studios.

This surprised me because, usually when I walk into such neighborhoods that abut rich areas, I find that they have been gentrified past the state of being “ethnic.” For example in San Francisco, The Mission District, historically the city’s Mexican neighborhood, is a shell of its former self. While it may have some streets dedicated to Mexican culture, there is literally a one-block demarcation from hipster Valencia Street, and the only thing keeping the old-timers around is rent control. San Francisco also has an increasingly diluted Chinatown and Japantown, and the decline of its black culture is well-documented. Meanwhile Miami’s “Little Havana” is still Cuban and historically-black Overtown remains black. Both neighborhoods are a stone’s-throw from downtown.

The fact that Miami is better than San Francisco at preserving close-in ethnic neighborhoods is surprising, because the cities are similar. Both have experienced a flood of new people and capital due, respectively, to their booming financial and tech industries. Both are warm-weather cities that attract tourists, artists, and the creative class. So how has Miami resisted gentrification? The answer lies in its downtown housing policies.

Rather than acting like they had no clue what to do with all these incoming rich people, Miami officials allowed them a place to go: Brickell. This is a neo-liberal mecca that several decades ago was a low-slung neighborhood. But in the 1970s, it began attracting small banks, and in the decades since has boomed into the “Wall Street of Miami.” It is now home to dozens of banks, and more than just a daytime work center, has evolved into a 24/7 skyscraper neighborhood, with a residential population that doubled from 2000-2010, to 27,000. A 2013 report found that 19 new condos were under construction, and another two dozen were in the planning stages. Along with this has come the fancy restaurants, bars, light rail, and walkable streets.

“If you’re a yuppie in Miami,” said a finance-industry woman who I went on a date with in the area, during a characteristically hopping Thursday night. “You’re going to live in Brickell.”

brickell

San Francisco, meanwhile, doesn’t have a Brickell-like area, and thus not a decisive place for its techies to live. The reason is politics. For one, Brickell’s ostentatious wealth displays conform with Miami’s culture, but would send San Francisco’s class warriors into spasms of outrage. Brickell also wouldn’t get built because San Francisco’s NIMBYs wouldn’t just allow a high-rise neighborhood to go up overnight—or at all. Even when something as harmless as a 12-story condo—8 Washington—is proposed in downtown San Francisco, it faces years of litigation. The stretch of land most eligible to become San Francisco’s Brickell would be the Mission Bay area around the Giants’ baseball stadium. But much of this land is government-operated, and all of it is regulated, leading to parking lots and low-scale buildings.

If this area were allowed to explode with high-end condos, it would be a natural destination for SF’s techies—just as Brickell is for Miami’s bankers. Many of America’s rich young professionals, after all, have shown a taste for the type of high-rise, upscale, security-laden condos found in Brickell. But because San Francisco lacks such development, yuppies there instead settle for older housing in low-slung neighborhoods like The Mission, Potrero Hill, and the Tenderloin. And this has brought chaos to those neighborhoods, as prices rise and established tenants are evicted.

All this, of course, suggests an ironic aspect of urban housing markets that is misunderstood by most government officials and NIMBYs: “if a city wants to preserve, it must build.” In other words, if a city is being flooded with rich people, then allow the market to build to their specifications, namely in under-utilized areas, and watch them concentrate there. That way, they won’t overwhelm the old-school ethnic areas, keeping prices down, and enabling those areas to function as they long have.

 

Urban[ism] Legend: The Free Market Can’t Provide Affordable Housing

Over at Greater Greater Washington, Ms. Cheryl Cort attempts to temper expectations of what she calls the “libertarian view (a more right-leaning view in our region)” on affordable housing.  It is certainly reassuring to see the cosmopolitan left and the pro-market right begin to warm to the benefits of liberalization of land-use.  Land-use is one area the “right,” in it’s fear of change, has failed to embrace a widespread pro-market stance.  Meanwhile, many urban-dwellers who consider themselves on the “left” unknowingly display an anti-outsider mentality typically attributed to the right’s stance on immigration.  Unfortunately, in failing to grasp the enormity of the bipartisan-caused distortion of the housing market, Ms. Cort resigns to advocate solutions that fail to deliver widespread housing affordability.

Yes, adding more housing must absolutely be a part of the strategy to make housing more affordable. And zoning changes to allow people to build taller and more usable space near transit, rent out carriage houses, and avoid expensive and often-unnecessary parking are all steps in the right direction. But some proponents go on to say relaxing zoning will solve the problem all on its own. It won’t.

Well, if “relaxing” zoning is the solution at hand, she may be right – relaxing will only help a tad…  While keenly aware of the high prices many are willing to pay, Cort does not seem to grasp the incredible degree to which development is inhibited by zoning.  “Relaxing” won’t do the trick in a city where prices are high enough to justify skyscrapers with four to ten times the density currently allowed.  When considering a supply cap that only allows a fraction of what the market demands, one can not reasonably conclude “Unlimited FAR” (building density) would merely result in a bit more development here and there. A radically liberalized land-use regime would deliver numbers of units several times what is permitted under current regulation.

Ms. Cort correctly concludes that because of today’s construction costs, new construction would not provide housing at prices affordable to low income people.  This will certainly be the case in the most expensive areas where developers would be allowed to meet market demands by building 60 story skyscrapers.  Advocates of land-use liberalization who understand the costs of construction would not claim that dense new construction will house the poor.  But if enough supply is allowed to come to market today, today’s new construction will become tomorrow’s affordable housing.  And this brings us to the more meaningful discussion: filtering.  Here’s where Ms. Cort’s analysis completely falls apart.

It is true that increasing supply eases upward pressure on all prices. But the reservoir of naturally cheaper, older buildings runs out after a while.

Tragically, Ms. Cort is using the current radically supply-constrained paradigm to analyze a free-market counter-factual.  If development at levels several times the current rate were allowed over the past few cycles, the reservoir of cheaper, older buildings would have remained plentiful and affordable.  If the market were allowed to meet demand for high-end units in the form of dense new construction, there would be little or no market pressure for unsubsidized market-rate units to be converted into luxury units.  The 1400 Block of W Street NW example she gives would almost certainly still be affordable.

On a larger scale, the increased supply of housing in the area helps absorb demand for more housing, but it’s not enough to stem the demand for such a sought-after location. Between 2005 and 2011, the rental housing market’s growth added more than 12,500 units. But at the same time, $800/month apartments fell by half, while $1000/month rentals nearly doubled. Strong market demand will shrink the availability of low-priced units. That’s what has happened over the last decade as DC transformed from a declining city into a rapidly growing one.

But, 12,500 units is the amount of supply added under the current over-regulated regime.  This amount of development is minuscule in a large city. (see diagram below)  What if DC allowed as much supply growth as Austin or Miami?  The 12,500 figure would triple.  Further, since Austin and Miami are far from free-market, the development rate in a truly free-market DC would certainly exceed a tripling.  If you consider the amount of supply that would have been added over the last several decades in an unlimited FAR DC, Ms. Cort’s position starts to sound quaint.  Conservatively assuming 50-100,000 units of rental housing would have been developed over the last few decades of DC’s growth, rents certainly would not have doubled.  I’ll go out on a limb and estimate that average rent growth would be close to inflation.

Chart by the Citizens Budget Commission (via NYYIMBY)

Chart by the Citizens Budget Commission (via NYYIMBY)

Ms. Cort wants housing to be less than 30% of gross income for nearly all residents.  Will the market provide new housing affordable to minimum wage earners at the most expensive intersection in Georgetown?  Probably not, and I hope she isn’t setting the bar that high.  While nobody is wise enough to know whether a free-market in land use would accomplish this, a free-market DC could be affordable to 50-100,000 more people than the zoned-to-death DC of today.  Will stock of units deemed affordable to low wage earners be of the quality, location, and size acceptable to Cort?  The necessity for further intervention is a subjective preference.

While acknowledging the validity of liberalization in her critique of supply-and-demand denialism, Cort’s conclusion fails to look at supply and demand wholistically:

Supply matters, but it’s not the whole story

Wrong. Supply really must be part of the whole story.  A city is only affordable to the number of residents it houses affordably.  Failure to recognize this only shifts the burden from one demographic to another. (and it won’t be the rich who pays the price)  If a zoning-plagued city fails to provide 1,000 units demanded, 1,000 people can no longer afford to live there.  Even if that city chose to subsidize housing for 2,000 people at 50-80% of AMI, that doesn’t change the fact that 1,000 people who wanted to live in that city must leave.  Any viable solution (free-market or otherwise) must involve increasing supply significantly, either through creating supply directly or subsidizing demand through vouchers, which induces new development.  But, this simply can’t happen if overall supply is capped through zoning.

Only 2 Ways to Fight Gentrification (you’re not going to like one of them)

Tompkins Square Riots in 1988

Gentrification is the result of powerful economic forces. Those who misunderstand the nature of the economic forces at play, risk misdirecting those forces in ways that exasperate city-wide displacement.  Before discussing solutions, it is important to accept that gentrification is one symptom of a larger problem.

Anti-capitalists often portrays gentrification as class war, painting the archetypal greedy developer as the culprit:

Gentrification has always been a top-down affair, not a spontaneous hipster influx, orchestrated by the real estate developers and investors who pull the strings of city policy, with individual home-buyers deployed in mopping up operations.

Is gentrification a class war?  In a way, yes.  But the typical class analysis mistakes the symptom for the cause, and ends up pointing the finger at the wrong rich people.  There is no grand conspiracy concocted by real estate developers, though its not surprising it seems that way.

Real estate developers would be happy to build in already expensive neighborhoods where demand is stable and predictable.  They don’t because they are typically not allowed to.  Take Chicago’s Lincoln Park for example.  Daniel Hertz points out that the number of housing units there actually decreased 4.1% since 2000 and the neighborhood hasn’t allowed a single unit of affordable housing to be developed in 35 years. The affluent residents of Lincoln Park like their neighborhood the way it is and have the political clout to keep it that way.

Given that development projects are blocked in upper class neighborhoods, developers seek out alternatives. Here’s where “pulling the strings” is a viable strategy for developers. Politicians are far more willing to upzone working class neighborhoods. These communities are far less influential and have far fewer resources with which to fight back. The end result is that rich, entitled, white areas get down-zoned, while less-affluent, disempowered, minority areas are up-zoned. Politicians appease politically influential neighborhoods through limited growth, and then appease developers who see less influential neighborhoods as the only viable place for new construction.

Too often, the knee-jerk response is to fight development in these gentrifying neighborhoods. The consequences of this are two-fold. First, economics 101 tells us that capping supply will only cause prices to rise. Instead of newcomers filling newly-constructed units, they will quickly flood the existing stock of housing, quickening gentrification. Second, thwarting development shuts the release valve that alleviates housing price pressures that caused gentrification in the first place. Since not building is not an option, politicians would prefer to funnel new construction into disadvantaged neighborhoods instead of letting it happen where there is market demand. Development suppressed, gentrification swiftly captures the neighborhood and moves on to the next neighborhood in its path.

When considering gentrification, we must accept the fact that rich people don’t just vaporize by prohibiting the creation of housing for them.  If housing desires cannot be met in upscale neighborhoods, the wealthy can and will outbid less affluent people elsewhere.  With that in mind, there are only 2 solutions to stem the tide of gentrification.  The first solution is widespread liberalization of zoning.  This is particularly needed in already desirable locations where incumbent residents have effectively depopulated their neighborhoods over several decades.  The only other solution is to eradicate rich people altogether. This, I hope, is not what people have in mind when they declare class war.

Whether you are a class warrior or Market Urbanist, here are some tips to more effectively fight gentrification:

  • The battlefield is not in the gentrifying neighborhoods.  It is in the more wealthy neighborhoods where empowered residents fight to keep new people out.
  • The enemy is not the gentrifiers or developers trying to serve them.  It is the rich people who use their influence to thwart development in their neighborhoods.  The more they fight to depopulate desirable neighborhoods, the more people are left seeking alternative neighborhoods.
  • The mechanism of gentrification is not development.   It is zoning, and other regulations that thwart development in currently desirable areas.
  • The solution is not to fight development in currently gentrifying areas.  It’s to call for radical liberalization of zoning in already wealthy areas, and to stand up to neighborhood groups who try to abuse zoning to prevent that.
  • The reason people gentrify is not to disrupt ethnic or economically-challenged neighborhoods.  It is likely because they have been priced out of the neighborhood they desire.