The risk with urban improvement is making the area more desirable eventually prices people out of the community. So, the real question is do you help the land or current residents? When you own property it’s seriously worth considering local improvements for several reasons, but it’s also easy to confuse the two. Further, if most people in the community own property then there is a lot of overlap.
To be clear both are worthwhile, just be cognizant of what your goals are. Anyway, if you want to help people I suggest either the young as changing the trajectory of someone’s life is easier early on, or the elderly because social inclusion scales well with individual effort.
I think your concern is valid but unfounded. This is fortunate - otherwise the way to help the poor would be to vandalize their neighborhoods, which is a strange conclusion.
It's true that increasing quality of a neighborhood will increase its housing price. This will have disparate impact: (1) it will help people who enjoy higher quality, but (2) it will hurt people who would prefer low quality and lower price. However, I think it's important to remember that the stock of people and housing are mostly fixed. If you raise the quality of one neighborhood so that more people bid to move in, then at the same time there must be other unobserved neighborhoods where prices fall. Therefore there is also a third effect of making a neighborhood nicer: (3) it can lower prices in other neighborhoods.
One way I like to visualize it is as a supply curve - if you move some neighborhoods up in the desirability ranking, then by conservation of rank, others necessarily fall in rank.
The argument I sketched above isn't a proof, obviously. There are edge cases where higher quality induces more people to own multiple homes or to live with fewer roommates, and nuances where heterogeneous preference for locations may make it harder on someone who needs to commute to their job and really would be better served by a cheap neighborhood, but for the most part I think it's reasonable that making neighborhoods nice is an overall positive good for the world.
In a market with a population growing faster than the supply of housing it is possible for there to be no place where values fall, and in fact for people who can no longer afford an improved neighborhood to end up homeless as a result.
This is why housing supply is absolutely critical, and as a society we should be working hard to ensure we always have supply in level with (or erring toward slightly exceeding) demand.
However, we have a cultural myth that the home is a persons primary investment and wealth accumulation vehicle. That Mrs. very harmful because it creates enormous incentives to do the opposite: restrict supply as a way to ensure that the people who already have a home are guaranteed a good return on their “investment.”
It’s true that home is a very large asset and that appreciation can benefit the individuals who live there, there’s nothing wrong with that at the individual level. However when we choose to have house appreciation as a significant goal at the societal level, it directly competes with the desire to end homelessness and see everyone housed.
If ensuring that everyone could afford at least adequate shelter was a primary goal for society, we would need to make choices that sometimes worked against, or at least did not help, home appreciation.
It’s likely a net positive for the world, but a net negative for the people displaced. That’s why gentrification is a dirty word in many communities. However, like most things it’s complex.
One often overlooked benefit is the knock on effects of gentrification are real improvements in local school systems. Looking across decades you often see gay communities which care less about local school systems acting as a catalyst by increasing local revenue while reducing the demands placed on local schools. The improvement in local schools precedes people’s awareness that the schools have improved. Similarly, many people can leverage the improvements in the local economy to keep up with the transition.
That said, relatively few people can keep up with significant changes and those people are simply worse off having lost an affordable community which they had social or economic ties to. A restaurant for example is generally different to relocate. A local handyman may have a steady stream of existing customers, which don’t follow them etc.
Whether it's a net negative for people who get displaced probably depends on their capital gains from the increased property values, no? Not everyone loves their neighborhood, especially if they aren't in great condition.
It’s assumed these people are renting. Homeowners only really face property taxes which take extreme shifts to become unaffordable. Even then owners can generally remove equity to pay them for years to decades.
In simple terms, improving a neighborhood increases the supply of good quality neighbourhoods and therefore reduces the price of good quality neighbourhoods (given that the demand is more or less constant).
It also decreases the supply of bad neighborhoods. Given that demand is more or less constant, this increases the cost. If the price gap is sufficiently large between the two, prices go up during gentrification and the poor have to move to more expensive bad neighborhoods
If you're only concerned about the average quality of housing your argument makes perfect sense, but if I understand you correctly you're casually brushing over people (your neighbors) being forced out of their homes.
> (2) it will hurt people who would prefer low quality and lower price.
Uh... poverty isn't a preference. Sure, at the margins people can choose to spend the money they have on different things, but you're positing an equivalence here between things that aren't remotely equal. It's not like suburban professionals simply choose to spend their money on expensive housing and infrastructure where their inner city compatriots have different priorities. Poor neighborhoods are poor because the people there HAVE LESS MONEY.
You fix that by fixing the inequity, not imagining a fantasy resident who decides to put all her money into bitcoin or whatever.
To be fair, I know at least a handful of people who are not in poverty but seem to prefer low quality / low price options to those that are more expensive.
I would assume that the preference is not for low quality, but low price. That is, if better quality housing was available for the same price, I don't see why one wouldn't choose that option. But it is certainly true that some prefer to spend less of their budget on housing.
This comes up a lot in progressive urbanist circles. My favorite example was something Matthew Yglesias mentioned once on the Weeds about how some progressives opposed planting trees in D.C. because trees raise property values.
I think this is a total non-starter. Trees are good, not bad. Good things are good, not bad.
It is good to do good things. If doing good things reveals something bad, then we should work on fixing that bad thing, not on avoiding the good things that uncovered the bad thing.
We want a politics where poor people can live in neighborhoods with trees, not a politics that says trees are bad because they make neighborhoods too desirable.
Also in a very objective way, I don't understand this reasoning. I've never brought up the question before and hoping that HN can explain it in a logical way that I might understand.
Let's say that a neighborhood is rated 3 out of 10 - not very good. There is a mix of people that live in this neighborhood. Some people own property and some do not.
Then the community makes the neighborhood better and it rises to a 7 out of 10 ranking. The people in the community that own houses costs are fixed and they now recognize the improvement.
The part of the community that don't own eventually see their costs rise. At some point they can't afford to a community that ranks 7, might only be able to afford a community that ranks 3 and would need to move to a community with that ranking.
It seems like part of the original set that owns experiences a large and lasting benefit. Another part of the original set experiences a short term benefit, then a transaction cost (moving) and reverts back to the mean.
Can someone explain what this description misses and where the harm comes from?
This is a fair point except that neighborhoods are not fungible and are in short supply.
You’re assuming that there is another 3/10 neighborhood available for the people who are displaced to move to, and therefore they gain a short term benefit and eventually end up back where they were.
In practice it’s typical that older areas which have become run down have ample city services, such as transit, parks, and libraries, which may not be the best quality, but at least exist.
Since neighborhoods are no longer built with these amenities, the best available substitute for someone who is displaced from an old neighborhood may be far less desirable than what they had before - a 1/10 trailer park, or worse, homelessness.
However, if we would continue to build traditional neighborhoods that were walkable, had city services, had transit etc. and built enough of those to keep up with the demand, then it would be much more likely that your scenario would play out. In that case the harm of economic change in neighborhoods would be greatly reduced, perhaps even to the point that it wouldn’t be a problem anymore
But that’s quite far from the reality on the ground today.
Transit comes with density and growth and usually increases in property values. When an area goes downhill but still has this services it creates a temporary situation that people can take advantage of certain aspects - live with increase crime but get increased services.
The wealth of yesterday created that situation. At some point someone will invest in that older area because of the location value.
The only way to artifically control that is through low rent units. Which create other barriers because one can never leave or they give up something even though it might make sense to move somewhere else for family or job reasons. When they always take 1/3 of gross getting a raise and taking on more responsibility seems counter-productive. Hard to break dependence.
moving is not just a reversion to the mean. A neighborhood is more than atomized individuals who live there. There can be a community of people which form a network and a support system that is many years old. Pricing certain people out can rip apart these communities, so it's not just a matter of relocating then continuing as you were.
Then there are the individual-level logistical problems. What does moving do to your commute? Is it easy to find a new job? Will your kids have to go to a different school district?
Your model is mostly useful and shared with the people with the 'harm' view. To reach the conclusion that the 'harm' group are reaching, set your move transaction cost¹ to a large value and add a local-relationships parameter that depends on time-spent-at-current-location and weight it very highly as well.
Should you so desire, you may want to add in a cost to capture the notion of how a person moving contributed to the improvement. This will usually need to be inflated above the true economic contribution (IKEA effect, etc.).
The local-relationships parameter may be effectively quadratic (since a person moving diminishes their relationships and relationships are two-sided).
¹ It is clear you know this but for other readers that may not, that's not just the monetary cost.
> Can someone explain what this description misses and where the harm comes from?
If they have lived somewhere a long time, one of the big losses is: Relationships.
For the people forced to move, they will not find another "3 out of 10" neighbourhood, as part of what makes it a 3 is that's where all their friends and long-lasting relationships and perhaps childhood memories are. That already makes anywhere else < 3.
They will have to move somewhere where they likely don't know anyone, or at least not the well-established friendships they had before.
If they have extended family in the area, they will have to leave those too. (Parents, children, aunts & uncles, siblings, that sort of thing).
Those friendships and relationships aren't just valuable for sentimental reasons. They form an essential practical support structure, and sometimes a financial support structure. For many people those things are a big part of what makes quality of life.
And they might be forced to move at an age where it's difficult to make new friends, especially deep friendships.
As people on the lower end of the socio-economic ladder, it's likely that they were benefitting from their friendship/relationship network in another, subtler way: By having good quality relationships with people higher up the ladder, their own circumstances are effectively lifted up as well.
For example, they might be taken out to places and introduced to opportunities and people because of long-lasting friendships with people richer than themselves. Their children get to play with children of richer friends with nicer houses to stay over in. Little things that probably translate to differences of opportunity when the children are older. That kind of uplift goes away when they move to another location.
Some people have a good relationship with a local employer too, and will lose that as well. It might be something quite treasured (even though it presumably doesn't pay well), and difficult or impossible to replace. Remember we're talking about people forced to leave, not those who want to leave.
The community also depends on the people living in it - a diversity of the types, and incomes, of people benefits the neighborhood. People churning in and out is harmful -- I'd argue more harmful than the increased property value accounts for.
I don't have a good solution for this. Rent control helps a bit, but has bad externalities. Property ownership helps a lot but any measure to drive up ownership immediately prices out lots of people because it's captured very well by the housing market.
or instead of dismissing people's grievances as illogical, you can skip the strawman phase and engage with the real issues as I and others have described here
The post I replied to logically argued that people are not harmed when their community improves and they are priced out and forced to move. (Note, I never claimed they were illogical, but instead that they were "too logical" Pure logic will not explain why people feel the way they do, because people are not always logical).
They then ask:
> Can someone explain what this description misses and where the harm comes from?
In answer, maybe no harm is actually done. But even so, people will perceive that they have been harmed. And in the larger context of this thread, that is why people are sometimes unhappy with their community being improved, because they believe it will price them out and harm them.
>Can someone explain what this description misses and where the harm comes from?
Empathy. Sense of place is real. Home isn't just your house or property values. People deserve not to be priced out of their homes so the sake of profit.
By being cognizant of these effects, you can probably accomplish both at once. Improve your community with an eye towards projects that empower the residents -- even if they were to move away. Things like financial education/mentoring or around-the-house handyman type skills sharing.
This is the gentrification problem. Make the community more desirable, and you make it increasingly more expensive for the existing residents. It's hard to balance these things.
In the case of Minneapolis, the city committed to a plan (Minneapolis2040) to increase housing density. And a lot of that new apartment/condo construction (mostly on unused or old industrial land) is necessarily out of financial reach for average residents. But the increased supply helps protect the prices for the existing houses and older apartments, whether privately owned or rentals.
It's not perfect, it's arguably not even good, but it's a tradeoff most Minneapolis residents can live with.
To build more housing, you have to destroy the old housing. This still displaces people, and likely pushes them into smaller apartments where they would have been in a house
What studies show is that poor people move around a lot, whether there's "gentrification" near them or not, for what I think are pretty obvious reasons, and that they aren't any more likely to leave "gentrifying" neighborhoods than they are neighborhoods that aren't gentrifying.
No, you can let people decide whether they want to move out. Many of them would elect to then sell their houses to developers who would build apartments. Many would choose on their own to add units to their own property. If some people don't like living next to apartments, then they are out of luck though. I don't know if we should expect people to have that kind of say over what their neighbors do with their property.
There were 2 replies that I want to summarize together: empowering the current residents as part of the renewal, and rent control.
I think as part of the urban improvement is to work with the renters and landlords to let the renters capture some of the rising value, either through some sort of equity rent-to-own, or creative financing that lets the renters find other housing within the neighborhood. Maybe some sort of buy-out conversion from private landlords to private-benefit-corporation landlord (as opposed to public housing).
The alternative is localized rent control, that makes sure that the landlords don't capture the rising value of the neighborhood that is being added by the residents and their work. You also need some limits on redevelopment, so the landlord doesn't just replace the building with something more upscale and manage to replace the tenants as part of that. Maybe allow refurbishing and some new units in exchange for current residents getting rent control.
The risk with urban improvement is making the area more desirable eventually prices people out of the community. So, the real question is do you help the land or current residents? When you own property it’s seriously worth considering local improvements for several reasons, but it’s also easy to confuse the two. Further, if most people in the community own property then there is a lot of overlap.
To be clear both are worthwhile, just be cognizant of what your goals are. Anyway, if you want to help people I suggest either the young as changing the trajectory of someone’s life is easier early on, or the elderly because social inclusion scales well with individual effort.