In praise of gentrification

GENTRIFIER has surpassed many worthier slurs to become the dirtiest word in American cities. In the popular telling, hordes of well-to-do whites are descending upon poor, minority neighbourhoods that were made to endure decades of discrimination. With their avocado on toast, beard oil and cappuccinos, these people snuff out local culture. As rents rise, lifelong residents are evicted and forced to leave. In this view, the quintessential scene might be one witnessed in Oakland, California, where a miserable-looking homeless encampment rests a mere ten-minute walk from a Whole Foods landscaped with palm trees and bougainvillea, offering chia and flax seed upon entry. An ancient, sinister force lurks behind the overpriced produce. “‘Gentrification’ is but a more pleasing name for white supremacy,” wrote Ta-Nehisi Coates. It is “the interest on enslavement, the interest on Jim Crow, the interest on redlining, compounding across the years.”

This story is better described as an urban myth. The supposed ills of gentrification—which might be more neutrally defined as poorer urban neighbourhoods becoming wealthier—lack rigorous support. The most careful empirical analyses conducted by urban economists have failed to detect a rise in displacement within gentrifying neighbourhoods. Often, they find that poor residents are more likely to stay put if they live in these areas. At the same time, the benefits of gentrification are scarcely considered. Longtime residents reap the rewards of reduced crime and better amenities. Those lucky enough to own their homes come out richer. The left usually bemoans the lack of investment in historically non-white neighbourhoods, white flight from city centres and economic segregation. Yet gentrification straightforwardly reverses each of those regrettable trends.

One in, none out

The anti-gentrification brigades often cite anecdotes from residents forced to move. Yet the data suggest a different story. An influential study by Lance Freeman and Frank Braconi found that poor residents living in New York’s gentrifying neighbourhoods during the 1990s were actually less likely to move than poor residents of non-gentrifying areas. A follow-up study by Mr Freeman, using a nationwide sample, found scant association between gentrification and displacement. A more recent examination found that financially vulnerable residents in Philadelphia—those with low credit scores and no mortgages—are no more likely to move if they live in a gentrifying neighbourhood.

These studies undermine the widely held belief that for every horrid kale-munching millennial moving in, one longtime resident must be chucked out. The surprising result is explained by three underlying trends.

The first is that poor Americans are obliged to move very frequently, regardless of the circumstances of their district, as the Princeton sociologist Matthew Desmond so harrowingly demonstrated in his research on eviction. The second is that poor neighbourhoods have lacked investment for decades, and so have considerable slack in their commercial and residential property markets. A lot of wealthier city dwellers can thus move in without pushing out incumbent residents or businesses. “Given the typical pattern of low-income renter mobility in New York City, a neighbourhood could go from a 30% poverty population to 12% in as few as ten years without any displacement whatsoever,” noted Messrs Freeman and Braconi in their study. Indeed, the number of poor people living in New York’s gentrifying neighbourhoods barely budged from 1990 to 2014, according to a study by New York University’s Furman Centre. Third, city governments often promote affordable-housing schemes, such as rent control or stabilisation, in response to rising rents.

Gentrification has been so thoroughly demonised that a mere discussion of its benefits might seem subversive. That does not make them any less real. Residents of gentrifying neighbourhoods who own their homes have reaped considerable windfalls. One black resident of Logan Circle, a residential district in downtown Washington, bought his home in 1993 for $130,000. He recently sold it for $1.6m. Businesses gain from having more customers, with more to spend. Having new shops, like well-stocked grocery stores, and sources of employment nearby can reduce commuting costs and time. Tax collection surges and so does political clout. Crime, already on the decline in American city centres, seems to fall even further in gentrifying neighbourhoods, as MIT economists observed after Cambridge, Massachusetts, undid its rent-control scheme.

Those who bemoan segregation and gentrification simultaneously risk contradiction. The introduction of affluent, white residents into poor, minority districts boosts racial and economic integration. It can dilute the concentration of poverty—which a mountain of economic and sociological literature has linked to all manner of poor outcomes, including teenage pregnancy, incarceration and early death. Gentrification steers cash into deprived neighbourhoods and brings people into depopulated areas through market forces, all without the necessity of governmental intervention. The Trump administration is unlikely to offer large infusions of cash to dilapidated cities. In these circumstances, arguing against gentrification can amount to insistence that poor neighbourhoods remain poor and that racially segregated neighbourhoods stay cut off.

What, then, accounts for the antipathy towards gentrification? The first reason is financial. Though the process has been going on for a few decades, the increased attention comes in the middle of a broader concern about the cost of housing in American cities. The share of households that are “rent burdened”—those spending more than 30% of pre-tax income on rent—has increased from 32% in 2001 to 38% in 2015. Things are worse among the poor; 52% of those below the federal poverty line spend over half their income on housing. Rents have risen dramatically, though this can be the fault of thoughtless regulations which hinder supply more than the malevolence of gentrifiers. The net creation of jobs has outpaced additional housing in New York City by a rate of two to one. In San Francisco, perhaps the most restricted American metropolitan area, this ratio is eight to one.

A second reason gentrification is disliked is culture. The argument is that the arrival of yuppie professionals sipping kombucha will alter the character of a place in an unseemly way. “Don’t Brooklyn my Detroit” T-shirts are now a common sight in Motor City. In truth, Detroit would do well with a bit more Brooklyn. Across big American cities, for every gentrifying neighbourhood ten remain poor. Opposing gentrification has become a way for people to display their anti-racist bona fides. This leads to the exaggerated equation of gentrification with white supremacy. Such objections parallel those made by white NIMBYs who fret that a new bus stop or apartment complex will bring people who might also alter the culture of their neighbourhood—for the worse.

Porcini progressives

The term gentrification has become tarred. But called by any other name—revitalisation, reinvestment, renaissance—it would smell sweet. Take Shaw, a historical centre of black culture in Washington which limped into the 1970s as a shadow of itself after a series of race riots. Decades of decline followed, in which a crack epidemic caused the murder rate to spike. Today, crime is down. The O Street Market, where one person was killed and eight were injured in a shoot-out in 1994, is now a tranquil grocery store. Luxury flats with angular chairs and oversized espresso machines in the lobby have sprouted opposite liquor stores. An avant-garde speakeasy beckons from the basement beneath a humble doughnut store. At the Columbia Room, a wood-panelled bar with leather chairs, mixologists conjure $16 concoctions of scotch, blackberry shrub and porcini mushrooms. This is how progress tastes.