Gentrification is the result of powerful economic forces. Those who misunderstand the nature of the economic forces at play, risk misdirecting those forces. Misdirection can exasperate city-wide displacement. Before discussing solutions to fighting gentrification, it is important to accept that gentrification is one symptom of a larger problem.
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. The finger gets pointed at the wrong rich people. There is no grand conspiracy concocted by real estate developers, though it’s not surprising it seems that way.
Real estate developers would be happy to build in already expensive neighborhoods. Here, demand is stable and predictable. They don’t for a simple reason: they are not allowed to.
Take Chicago’s Lincoln Park for example. Daniel Hertz points out that the number of housing units in Lincoln Park actually decreased 4.1% since 2000. 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.
Rich, entitled, white areas get down-zoned. Less-affluent, disempowered, minority areas are up-zoned. Politicians appease politically influential neighborhoods through limited growth. They then appease developers in less influential neighborhoods. Thus, less-affluent neighborhoods become the only viable places for new construction.
Fight Gentrification by Fighting Development?
Too often, the knee-jerk response is to fight development in gentrifying neighborhoods. The consequences of fighting development 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. This then quickens gentrification. Second, thwarting development shuts the release valve that alleviates housing price pressures that caused gentrification in the first place. Politicians prefer to funnel new construction into disadvantaged neighborhoods instead of letting it happen where there is stronger market demand. Development suppressed where needed most, gentrification swiftly captures one neighborhood after the next.
Only 2 Solutions to Fight Gentrification
When considering gentrification, we must accept a plain fact: 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. Up-zoning 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.