The paradoxical challenge of gentrification – how to reinvest in urban areas without causing economic displacement – is one for which every urbanist, politician and advocate has a different opinion. Liberal urban planning philosophies such Smart Growth and New Urbanism have likely contributed to the gentrification problem. While they have succeeded in their goal of redirecting populations and investments to the urban core, they rely heavily on private investment to execute the actual urban development. These philosophies are a reflection of the neoliberal shift in western governance since the 1980’s when leaders like Reagan and Thatcher moved to privatize vast sections of their economies.
In the case of the housing market, developers are today incentivized to produce housing and amenities for middle and upper class residents, often disregarding the needs of existing working class communities. While many urbanists argue that allowing the private sector to meet market demand at the upper end will eventually relieve pressure on the lower end, others argue for more systemic change. As Neil Smith writes in his essay “New Globalism, New Urbanism: Gentrification as Global Urban Strategy:” “Urban policy no longer aspires to guide or regulate the direction of economic growth so much as to fit itself to the grooves already established by the market in search of the highest returns, either directly or in terms of tax receipts.” Thus, contemporary urban policies exacerbate gentrification by greasing the rails for private development, while channeling infrastructure improvements to the urban core.
In the context of neoliberal urbanism, we see that when a neighborhood begins to gentrify, otherwise positive project often become pariahs – bike lanes, highway removals and pollution abatement have all been characterized as harbingers of gentrification. Long-term residents often seek to block these projects, regardless if they are in fact the root cause of the gentrification. This is a frustrating roadblock for reinvesting in previously neglected communities, which often stand to disproportionately benefit from these projects.
According to People for Bikes, poor people and people of color in the U.S. have the most to gain in terms of health and mobility from bike lanes, running contrary to the popular belief that bike lanes only benefit gentrifying yuppies. Planners often argue that reducing transportation and healthcare costs with improvements such as bike lanes or sidewalks can offset any increases in housing costs due to gentrification.
This argument has been made in defense of Plaza Saltillo, a transit oriented development (TOD) in Austin, Texas that is currently being built in the rapidly gentrifying Caesar Chavez Neighborhood. The mixed-use development is being built adjacent to the city’s single light rail line, which offers limited but fast access to downtown. The project has faced tough opposition from neighborhood groups who demand an increase in affordable housing in the development. Meanwhile, it is being held up as a model development by the city, which touts the magnetic power of rapid transit as a salve to sprawling suburban development while offering locals a car-free lifestyle. In reality, it seems that Plaza Saltillo will do little to benefit the long term residents’ transportation costs without a significant expansion of the city rail system. In addition, the developers have walked back their plan for affordable units from 25% to 15%, adding to the pervasive mistrust between neighborhoods, developers and the city in Austin.
Another approach that cities have taken to abate the symptoms of gentrification is to legislate away the problem. Take for example Montreal’s new one-in-six rule, which takes aim at what some believe is an oversupply of posh new restaurants in gentrifying neighborhoods. The rule prohibits new restaurants from opening within 25 meters of an existing one – theoretically freeing space for more locally oriented businesses such as groceries and retail. Critics argue that the law arbitrarily singles out restaurants – a symptom of gentrification – rather than addressing the root cause.
In contrast to Montreal’s legislation against a gentrification symptom, Vancouver has chosen a specific driver of gentrification to target as a scapegoat for its affordability problem. Vancouver has become a posterchild for an unaffordable housing market in North America, and many people in the city blame speculative real estate investments by foreign buyers who buy houses as an investment with no intention of actually living there. In an effort to slow the skyrocketing housing prices, the local government instituted a 15% “foreign buyer’s tax,” specifically to address the effects of (in this case) Chinese real estate speculation. Similar investments in other world cities such as London, New York and Miami drawn outcries for cities to take action against “Owner Unoccupied Housing Units.”
Owner Unoccupied Housing Units are the subject of demonization because of what critics point to as their unnecessary inflation of housing prices. While these speculative real estate investments are certainly a very public affront to affordability across the globe, closer investigation by University of Texas Planning professor and affordable housing expert Jake Wegmann has shown that their actual effect on rents is probably insubstantial. In a 2017 lecture, Wegmann explained that owner unoccupied housing is typically very geographically concentrated in neighborhoods that have long been exclusive, and is practically non-existent in gentrifying neighborhoods such as East Brooklyn. Because of this, Wegmann believes that increasing taxes on speculative real estate investments probably won’t do much to reduce gentrification – but could be leveraged as a funding source for new affordable housing developments or similar programs. In the case of Vancouver, it appears that the foreign buyers tax has not had a lasting effect on the real estate market; after an initial dip in sales, which was attributed to the physiological effect of the tax and winter weather, home sales are once again on the rise.
So where is gentrification abatement actually working? The answer is probably nowhere, but the city trying the hardest (and with the biggest head start) might well be Berlin. Germany is a renter’s country, particularly in Berlin, where 85% of the population does not own their home. Since the second World War, Berlin has been Germany’s poorest and cheapest big city, and thus has the advantage of a relatively abundant housing stock and a low cost of living. These conditions have historically made Berlin an attractive destination for artists and minorities from around Europe. Today, that advantage is well on it’s way to being used up, as the city’s creative economy has exploded, attracting young professionals from around the world.
In response, Berlin has employed a slew of legislative maneuvers to slow development, particularly in gentrifying neighborhoods. Among these maneuvers includes preemptively buying up low-income apartment complexes before they can be sold off to investors (known as pre-emptive right of purchase), banning AirBnB, toughened rent control laws, and the Milieuschutz Laws, otherwise known as the “No Bling in the Hood” laws. The Milieuschutz Laws have designated numerous neighborhoods as “urban conservation areas” where developers and landlords are prohibited from significantly upgrading historically affordable properties – banning things like high-end finishes and combining small flats into large penthouses that used to justify large rent increases.
These maneuvers are subject to endless debate on their effectiveness, with housing advocates saying they don’t go far enough, while developers complaining they unnaturally restrict market supply. Regardless of their efficacy, everybody admits that Berlin’s gentrification problem is only getting started – with housing prices that are still affordable compared with other global cities, the new tenants continue to arrive.
To a certain extent, this is by design. Despite attempts by the local government to slow the effects of gentrification, the influx of middle class investment is largely welcomed by city officials as it feeds their lucrative growth machines and maintains the political status quo. These outcomes demonstrate that without a true shift away from growth policies by local and regional governments, there seems to be little recourse to stopping the continuance of gentrification. While certain measures can be taken to dulling the worst of it’s effects, we have yet to see a city deprioritize its growth machine in favor of maintaining affordability for its long-term residents.
In the second part of this article, we look at what communities are doing at the grassroots and non-profit levels to address gentrification where city policy has failed them.