Playing With Politics

A Blog on Law, Politics, Planning, Development, and Other Vices

Planning Confidential: You Don’t Know Gentrification

Posted by Roobs on June 20, 2013

Gentrification Sign

Gentrification.  Often considered a third-rail topic, gentrification has become so controversial that the mere mention of it can elicit strong and passionate debate. Proponents of urban development (not calling it gentrification) say it improves neighborhood because it improves the physical environment of a neighborhood and quality of life for residents, new and old.  Critics, however, see gentrification as a tool by wealthy developers and urban professionals to displace an undesirable bloc of the population (read: minorities).  But in all the kerfuffle of debate, many critics of gentrification seem unwilling to look at the real causes of the problems they see – the displacement of the poor.  Studies are showing that gentrification doesn’t actually do all that critics have long accused it of.  By not focusing on the root cause of the poor’s displacement, gentrification critics are just as, if not more so, detrimental to the livelihoods of the very bloc they seek to protect.

What is Gentrification?

Gentrification is used so much that one has to ask if we even know what it means anymore.  Well, here is good definition:

Gentrification is a concept in urban neighborhoods where planning policies and an influx of new residents – usually white, middle and upper-class (hence “Gentry”) – cause an increase in the cost of living that can displace the original, poorer residents out the neighborhood or city.

How Gentrification Displaces Original Residents

What's Behind Gentrification

Gentrification is a process that is rather neutral in of itself.  The fact that new people have moved in a low income neighborhood isn’t necessarily what displaced the original residents.  It’s the increase in cost of living that does.

What is often difficult for some to understand is that property values do not occur in a vacuum.  Your neighbor’s property value has an influence on your property value as well.  To put simply, new, wealthier residents of a low-income neighborhood will fix up dilapidated properties, thus improving their property values.  Property values increase because the property, in very simple terms, looks a lot nicer – the prettier the house, the higher the property value.  And without doing anything, your property experiences an increase in value for simply being next door.

This is controversial in lower income neighborhoods because as a new wealthier resident increases the property value of their new home, they are indirectly increasing the property value of their neighbor’s home.  While this may seem like a win-win situation, it actually is a problem for low-income families.

As their property value rises, so do the costs associated with the property.  If you own the property, your property tax can increase.  If you are renting a unit in the building, then your rent may increase because the landlord is passing the additional cost of the property onto the tenants.  The property owner can also chose to sell the property altogether if he or she believes it is in their individual self-interest to do so.  As a result, the new owner may decide that he or she wants to re-develop the property as opposed to keep the existing building to maximize their investment.  In either case, the original tenants of the building will likely be displaced from the building because they can’t afford the new rent in whatever new building or improved building follows.

As property values and aesthetics of the neighborhood improve, more people move in who are able to afford the increasing cost of property.  As the population of higher-income resident increase, new ancillary facilities (restaurants, cafes, shops, etc.) begin to open in the neighborhood, tailoring to the new residents’ tastes and buying power.  As a result of higher property and living costs, the original residents may be displaced to another low-income neighborhood or out of the city entirely.

It is this displacement effect of gentrification that critics refer to when they bemoan gentrification.  But when they come out and say “gentrification is bad”, their focus is all wrong.

Missing the Forrest Because of the Trees

Critics would have you believe that gentrification is wrong under any circumstances.  But this isn’t true.  Whether you think it’s good or bad, most are willing to concede that development does improve the physical environment of a neighborhood.  And critics are fine with that for the most part.  In other words, gentrification critics often are caught saying that they want the physical improvements that make a neighborhood nicer, but want to allow the original residents to stay.  But this is impractical.  This isn’t because it’s a bad goal.  I mean, who doesn’t want everyone to live in a thriving and safe neighborhood?  But as I explained in the previous section, this view doesn’t accept the premise of how we assign value on real estate in this country. (Side note: if you think the system of assigning value to property is all wrong for whatever reason; that’s a perfectly valid opinion but a very different argument than being for or against gentrification).

Any attempt to improve the physical environment of a neighborhood is almost, by definition, to bring about the very effects of gentrification that they would like to avoid.  The real problem of displacement is not gentrification itself, but the low income of the residents.  In all the explanations I have given regarding how gentrification works, the common thread has been the ability of the original residents to afford cost of living.  That is to say, as the cost of living increases the incomes of the original residents do not.

Critics of gentrification often skirt this issue.  Rather than focusing on trying to increase the purchasing power of original residents through increased income, they focus on increasing their purchasing power by artificially lowering the costs of housing.  They accomplish this through policies such as rent control and affordable housing.  However, more research (Brookings, Metrotrends) is emerging on the shortcomings and failures of these well-intentioned policies to serve the very bloc groups intended.  Further, artificially lowering the costs of housing is only one part of the reason low-income residents are displaced.  The other is the increased cost of goods and services in the neighborhood, which cannot be artificially lowered.  You cannot, for example, dictate to Starbucks to sell coffee at a 25% discount in South-Central Los Angeles.

To solve this problem, critics of gentrification should be focusing on economic development for low-income families, such as education and employment retention.  They should also, ironically, look at increasing the overall housing stock to drive down prices (this is complicated in of itself).  It’s ironic because, in order to achieve the necessary number of units to see an impact on the market, you would need the help of many developers since they are the only ones who have the capital to make such a large investment in neighborhoods.  There is a new and exciting opportunity to enlist small investors in small, individual development projects in neighborhoods; allowing local residents to have a more direct stake in the neighborhood’s improvements.  However, this still needs to get approval from the SEC before it could be seen on a large scale. This is something critics could work with that better meets their end goals.  However, they usually don’t.

The goal of critics is to either halt development in these neighborhoods, or ask our market system to allow them to improve their properties but maintain property values and fees at their low rate, which is unrealistic.

Ultimately, it wasn’t the fact that new hipsters or yuppies moved into the neighborhood, regardless of their income.  People have the right to move wherever they want to, after all.  It was the way in which our system of market and property values work that put the original residents out.  You cannot decry all that is gentrification while still demanding that neighborhoods need to be physically improved.  And this is what critics are ignoring.

In closing

Don’t get me wrong.  I am not trying to say that all aspects of gentrification are great and we should encourage it everywhere. When proponents of gentrification speak, they must understand that their actions do have consequences.  There is nothing amusing or good about low-income families who are unable to afford their homes.  But when critics use gentrification as fodder for fear, they are being dishonest.  It is the poor economy that doesn’t provide jobs to all workers that is the problem.  It is the income disparity between the haves and haves not that is the problem.  We need to focus on bringing in new economic opportunities that are open to original and low-income residents that will allow them to stay.  When critics use gentrification to stop urban development in areas in much need of investment, they are hurting the very people they claim to protect.  No amount of opposition to gentrification will solve the underlying problems of a low income.  It only ignores it and that is the true wrong.

This is the 4th post in the series: Planning Confidential: Everything you thought about planning is true.  Click the link for an index of other Planning Confidential posts.

Roobs is an urban planner in Los Angeles.  He received his Master’s in Urban & Regional Planning from UCLA with concentrations in Urban Design and Transportation.  He received his Bachelors from UC Berkeley in Legal Studies and Sociology.

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One Response to “Planning Confidential: You Don’t Know Gentrification”

  1. J. Shaft said

    “Rather than focusing on trying to increase the purchasing power of original residents through increased income, they focus on increasing their purchasing power by artificially lowering the costs of housing.” HOUSING PROFIT IS NOT NEUTRAL. Increase the income of the whole ghetto? Dream on. Maybe, if you haven’t already, you should go into real estate.

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