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Curbing Displacement in Gentrifying Cities: Small Answers to a Booming Crisis

Fast-paced economic growth in strong market cities brings complex and often critical transformations to local communities. In urban cores, gentrification fosters displacement as renters who can’t keep up with prices rising at breakneck speed risk being driven out. Expanding the affordable housing supply seems like a commonsense solution. The question remains as to who will channel enough resources towards building affordable housing in a real estate climate that overwhelmingly favors luxury over necessity. More urgently, as a recent Wall Street Journal article discusses, what is being done to stem the displacement of families in areas where costs have already spiked untenably high?

Gentrification links to displacement in fast-growing metros

As new population and capital shift towards urban cores, affordable apartments convert to market-rate prices and end up ostensibly out of reach for low-income residents. Rising construction costs and the growing demand for rental housing at all price levels means that tax cuts and subsidies no longer act as sufficient financial incentives for developers to venture into affordable projects.

New apartment supply is conspicuously concentrated in the high-end spectrum. According to Yardi Matrix data, only 10% of all buildings with more than 50 units completed in 2017 was subsidized affordable housing. In a core market like Manhattan, luxury units (class A+ to B+ in Yardi Matrix rating system) made up as much as 92% of last year’s supply, and the trend is ongoing.

As median home values rise to incredible highs over a short period of time, they spell displacement for many low-income homeowners as well. In an earlier study on the fastest gentrifying areas in the US, we identified zip codes where prices registered increases as high as 700%  between 2010 and 2016.

When neighborhoods gentrify, lower-income residents are more likely to be swept out of housing they currently afford. While some families might have the necessary resources to relocate, moving out can be disruptive on many other levels: it can mean a longer commute to work, loosing valuable neighborhood ties, or having to disrupt children’s schoolyear. Even though partially-affordable housing is increasingly being built in desirable areas, people who get evicted are likely to relocate to a less affluent region, diminishing their already slim chances of upward social mobility.

Preventing displacement through local action — necessary, not sufficient in the long run

Many local responses to gentrification deliver promising solutions based on both community and market involvement. These answers are often intricately rooted in particular contexts, and therefore difficult to turn into blueprints for other cities to follow: the success or failure of local actions depends on markets, public authorities and communities reaching common ground in perfect timing.

In Philadelphia, for example, the city council passed a policy which allows long-term residents to cap property-tax increases if the value of their homes triples throughout the year. Portland is trying to make amends to previously displaced residents by giving them preference for newly-built affordable housing. In East New York rezoning brings the promise of new affordable housing, but residents are rightfully skeptical: the new units could end up being more expensive than what they currently afford.

Based in San Francisco, the Mission Economic Development Agency (MEDA) is on the lookout for units that house low-income residents in areas bound to experience extreme price hikes. Their aim is to purchase these buildings and continue renting them out at affordable prices. This type of intervention relies heavily on strong relationships between NGO representatives, property owners (who might otherwise sell their building to for-profit developers for a better price) and tenants (who have to agree to the new ownership status of their building). The challenge for agencies such as MEDA is to strike a perfect balance between providing affordable housing and racing against for-profit developers in a very competitive market.

Acting beyond short-term strategies: affordable housing in the long-run

Many argue that as long as the affordable sector remains undersupplied, most efforts will be channeled towards redistributing what is left of an already small and diminishing inventory. In some cities, voices demanding more substantial solutions to the housing crisis are already pushing for broader transformative measures.

As The Nation reports, some community groups, housing nonprofits and Local Council members in Austin are pushing for City Officials to approve a housing bond initiative. If voted by local residents, the bond would provide substantial funding for creating new affordable units and financing upgrades to public housing. To finance new affordable housing and assistance for homeless people in the near future, the City Council in Seattle has recently passed a tax on the city’s largest employers, aiming to raise $47 million per year over the next 5 years.

Growing public concern about housing affordability has helped spark these initiatives. Time will tell if they can be sustained in the long-run and serve as models for city-based affordable housing development in the future.

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