More on Housing
Gentrification has become a dirty word, and my recent post on housing shows why that can be the case. Effectively what's going on (sometimes) is that rich people are moving in, driving up prices, and driving poor people out. This isn't pleasant, especially if you are renting and don't profit from the increase in real estate prices.
A few points should be made. First of all, gentrification takes many forms. Sometimes what's called gentrification is really just the re-integration of a neighborhood. White people are finally moving back into areas that became heavily black after restrictive covenants were struck down. The increase in property values is a mixed blessing, but it does mean more taxes for the schools and it probably means more attention from the city. It's unlikely that the neighborhoods will re-segregate, that is, become so expensive that all blacks are driven out.
Also, it's important to recognize the chaotic/multiple equilibria nature of housing. A neighborhood happens to have good schools, so the houses are worth more, so rich people move there, so the taxes are sufficient to improve the schools, and so on. This is a coordination game, where accidents of history determine which areas will be rich and which areas will be poor. When there are multiple equilibria, shifts can be sudden and unpredictable (I haven't read The Tipping Point, but I have to assume this is the kind of stuff Malcolm Gladwell gets off on).
If you had enough money and skill, you could probably make a lot of money predicting and precipitating equilibrium shifts. This must be what some developers try to do. Anyway, the unfortunate thing is that as long as good neighborhoods are expensive because they keep poor people out (the point of my earlier post), we are just shifting things around, not really addressing the issues of poverty. On the other hand, if we made sure that all schools were good and all neighborhoods safe, we might see the distinction (and price difference) diminish. Ultimately that should be our goal.
[UPDATE: fixed typo]
A few points should be made. First of all, gentrification takes many forms. Sometimes what's called gentrification is really just the re-integration of a neighborhood. White people are finally moving back into areas that became heavily black after restrictive covenants were struck down. The increase in property values is a mixed blessing, but it does mean more taxes for the schools and it probably means more attention from the city. It's unlikely that the neighborhoods will re-segregate, that is, become so expensive that all blacks are driven out.
Also, it's important to recognize the chaotic/multiple equilibria nature of housing. A neighborhood happens to have good schools, so the houses are worth more, so rich people move there, so the taxes are sufficient to improve the schools, and so on. This is a coordination game, where accidents of history determine which areas will be rich and which areas will be poor. When there are multiple equilibria, shifts can be sudden and unpredictable (I haven't read The Tipping Point, but I have to assume this is the kind of stuff Malcolm Gladwell gets off on).
If you had enough money and skill, you could probably make a lot of money predicting and precipitating equilibrium shifts. This must be what some developers try to do. Anyway, the unfortunate thing is that as long as good neighborhoods are expensive because they keep poor people out (the point of my earlier post), we are just shifting things around, not really addressing the issues of poverty. On the other hand, if we made sure that all schools were good and all neighborhoods safe, we might see the distinction (and price difference) diminish. Ultimately that should be our goal.
[UPDATE: fixed typo]
posted by James | 5:30 PM
1 Comments:
An equilibrium you forgot to mention: the amount of good citizens moving into Bushwick due to the recent favourable NYT article, and us. Scratch that: we're setting Bushwick back at least 20 years.
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