The Mackinac Center’s David Guenthner has a new think piece in The Hill challenging some of the conventional wisdom surrounding gentrification.
Guenthner’s central point is that low-income Americans may actually stand to benefit from gentrification. As evidence, he points to a working paper recently published by the Federal Reserve of Philadelphia that argues that displacement is not caused by gentrification nearly as much as we tend to think it is, and that those residents who remain in gentrifying neighborhoods reap numerous benefits. According to the study, less-educated renters will move in or out of the typical neighborhood at a rate of 60 percent within a decade. This figure only increases 4 to 6 percent in gentrifying neighborhoods.
For adults who stay in gentrifying neighborhoods, the poverty rate around them drops by 7 percent. This, combined with the fact that rent usually does not increase during gentrification, is probably a big reason why 60 percent of less-educated homeowners and 30 percent of less-educated renters remain in gentrifying neighborhoods. Furthermore, the average income of more educated homeowners increases by $5,000, perhaps due to the new networks and job opportunities arising in revitalized neighborhoods. Meanwhile, the children of less-educated homeowners who remain in their neighborhoods are more likely to attend and complete college than their counterparts who leave.
Unfortunately, however, the benefits of gentrification are not uniform across all cities. Austin, Texas, for instance, has one of the fastest rates of gentrification in the country but has experienced a massive decline in its African-American population as a result. Most displaced residents reported moving, but not by choice. Instead, many were forced out due to an inability to continue to afford their homes, a problem that very much has its roots in skyrocketing property taxes. As a result of their displacement, they experienced less access to supermarkets, health care centers and transportation.
It’s with this point in mind that Guenthner offers his conclusion:
“An intelligent urban policy should seek to develop the local economy and to preserve neighborhoods in the central city. Its sweet spot, it turns out, might mean encouraging new investment in low-income neighborhoods while attacking tax policies and regulatory barriers that make housing unaffordable. Doing those things would make it more likely that people who live in gentrifying neighborhoods could benefit alongside the newcomers.”
The answer to the problems of gentrification is to encourage investment in urban centers while ensuring access to affordable housing. Curbing the rise of property taxes and attacking cost-increasing building regulations would go a long way in securing the positive aspects of gentrification without hurting the neighborhoods’ original residents.