Cities don't "aspire" to gentrification

In a recent article posted on New Geography, Aaron M. Renn asks what seems to be a fairly straightforward question: "Why Gentrification?" But unlike most writing on the subject, the question isn't why it happens or how to avoid it, but why cities aspire to it. This is the first sentence of his article:

The mostly commonly chosen means, or at least attempted means, of revitalizing central cities that have fallen on hard times is gentrification.

...What!?

This is perhaps the most egregious misunderstanding of the causes of gentrification that I've ever seen. According to this theory of gentrification, a city--any city, in any of its neighborhoods--could simply tear down a bunch of run-down homes or apartments and replace them with luxury towers, spacious retail and restaurant space, and some nice parks, and suddenly have an influx of affluent residents. It completely ignores the role of demand in driving redevelopment and gentrification, or, at best, gets the causal link between the two exactly backward.

In the real world, gentrification isn't the cause of demand, but the result of it. Cities, or specific neighborhoods within cities, become desirable for one reason or another, and eventually you have an increase in the number of people who are interested in living there. As the ratio of interested people to available housing units increases, competition between potential tenants increases and rents go up as a result. It's not a novel idea; it's exactly the same phenomenon seen in a "seller's market" for home sales, which is pretty noncontroversial.

If gentrification were as simple as providing upscale amenities, places like Detroit could just rebuild their cities and wait for the money to flow in. This never happens in practice, of course, because there's very little demand for living in Detroit.

When the demand does exist, as it does in successful, popular cities throughout the country, city leaders may respond in one of three ways. They can:

  1. Attempt to reduce the ratio of potential/interested tenants to actual residents by changing zoning to allow for the construction of additional housing, either through infill development or increased building heights;
  2. Do nothing, causing newer, more affluent residents to displace existing residents. This can either be due to the willingness of the new residents to pay higher rents, or through the more drastic action of purchasing, gutting, and upgrading existing buildings with fancy kitchens, spa bathtubs, etc.;
  3. Attempt to reduce the ratio of potential/interested tenants to actual residents by deliberately changing the neighborhood to make it less desirable to wealthier residents. E.g., by reducing police coverage, not maintaining sidewalks and parks, discouraging businesses from opening in the neighborhood, etc.
 Unsanctioned attempt at option #3. From griid.org.

Unsanctioned attempt at option #3. From griid.org.

Obviously, no one (sane) is going to be in favor of #3. And while many people claim to want to keep things the same, as in #2, the amount of authoritarian city regulation necessary to make such a desire reality would be completely oppressive. It would require that rents be strictly limited, even when old residents moved out willingly and were replaced by new ones, regardless of their income. And besides just forcing new development out somewhere else--probably to a more auto-dependent, less environmentally and economically efficient location--it would discourage building owners from maintaining any of their holdings beyond the bare legal minimum. I encourage you to think through amount and complexity of city control it would take to actually make this work effectively; to do so here would require another post entirely.

The question of gentrification, as most of us know, is not "why do cities pursue it?" but "how do we maximize its positive aspects and prevent or minimize the negative?" 

After all, contrary to Renn's assertions, cities don't have much incentive to gentrify. It's a terrible situation for the displaced residents--that isn't in question--but it's bad for cities as well. Displaced residents generally don't end up leaving and bothering some other city, they just end up in lower-quality homes, further away from work, school, and the social or medical services they might depend upon. Whatever those needs might be, they don't disappear just because the family moves a few miles away-- they just become less effective, and more costly to deliver. As even middle-income residents get pushed out of the middle of the city, increased prices push out beyond the city core, affecting everyone negatively. Except landowners, of course.

Reducing displacement is the challenge of gentrification, and thus far, no city has solved it in a completely satisfying way. That's not to say that some haven't been more successful than others though: even San Francisco, notorious for its out-of-this-world rents and home prices, is barely half the cost of Palo Alto ($835k vs $1.55m). At seven times the density, SF has done a much better job of facilitating growth than Palo Alto (although still a comparatively poor job), and this is certainly part of the reason it's not doing as poorly. But San Francisco also only grew by 30,000 people between 1950 and 2010; over that same time period Seattle, a considerably smaller city, increased its population by roughly 140,000. (Just for comparison, Palo Alto has increased in population by only about 10,000 in the past fifty years, although it's much smaller.) What Renn ignores, and what complicates the context of these statistics, is that demand differs between each of these cities, and responses will be, or should be, calibrated accordingly.

 More expensive than it needs to be. From westinsf.com.

More expensive than it needs to be. From westinsf.com.

Affordable housing, i.e., income-restricted units, are also an option, but can't be successful in isolation. The greater the difference between the average regional rent and the price-controlled affordable housing rent, the greater the burden of subsidization placed on the city and its residents. It's an invaluable resource to those able to secure an affordable unit, but their construction must be accompanied by vigorous market-rate housing development. Otherwise cities end up with unsustainable levels of housing subsidy for little overall benefit, and a system in which only the very rich and very poor lucky enough to find a subsidized unit are able to live there--those in the middle, unable to meet the income-restriction requirements but also unable to afford market-rate rents, are left out in the cold.

I think avoiding bust-and-boom cycles of residential development is also important to limiting the ill effects of gentrification, but I'm going to save that for a later post. I'm certain there are some creative suggestions out there for possible solutions--keeping in mind that no one answer will completely solve the problem of gentrification--and I invite you to share your own ideas here in comments, on Reddit, or with me via email.