Gentrification in the Short- and Long-Term
The first (and so far only) comment on my previous post raises an interesting point about gentrification:
Gentrification, in this framework, is a process in which the equilibrium shifts and areas with good amenities become expensive. In other words, it is a shift toward what we would expect to see if people cared about amenities but not about neighbors. So we might say that in the short term, people will take neighbors into account in picking neighborhoods to live in, but in the long run the expensive neighborhoods will converge on the nicest amenities. The exact dynamics of this are complicated and will depend on how "sticky" neighborhoods are, how quickly amenities change in value, how frequently amenities are created and destroyed, etc.
In my next post I'll examine the claim that the "undesirable neighbors" framework is "actually a theory of why gentrification isn't faster." I think it's a tricky question!
One of the possibly unfortunate side-effects of gentrification is that it makes neighborhoods more homogeneously good (or at least tolerable) or bad. In other words, I wonder if your theory of gentrification isn't actually a theory of why gentrification isn't faster: if people did not care about neighbors they would just bid up the prices of the "objectively" best neighborhoods (as defined by convenience) and the poor people would get the "objectively worst" neighborhoods; however, the Q. of neighbors makes good neighborhoods sticky even after they have stopped being convenient.The logic here is that amenities (subway stops, parks, etc.) are not distributed uniformly across the landscape. If people chose where to live based solely on those amenities, you would expect the most expensive neighborhoods to have the nicest amenities, or the highest concentration of amenities. But in fact, because people care a lot about the people they live near, it is possible for there to be a stable equilibrium with rich people clustered together in expensive neighborhoods that don't necessarily have the best amenities. By the same token, some affordable neighborhoods may have excellent amenities.
Gentrification, in this framework, is a process in which the equilibrium shifts and areas with good amenities become expensive. In other words, it is a shift toward what we would expect to see if people cared about amenities but not about neighbors. So we might say that in the short term, people will take neighbors into account in picking neighborhoods to live in, but in the long run the expensive neighborhoods will converge on the nicest amenities. The exact dynamics of this are complicated and will depend on how "sticky" neighborhoods are, how quickly amenities change in value, how frequently amenities are created and destroyed, etc.
In my next post I'll examine the claim that the "undesirable neighbors" framework is "actually a theory of why gentrification isn't faster." I think it's a tricky question!
posted by James | 8:28 PM
3 Comments:
3x2 more cents: 1. To some extent good neighborhoods create good amenities because wealthier people have more political clout. 2. Technological/demographic change can alter the idea of a good neighborhood in essentially arbitrary ways. 3. Eventually a good neighborhood might become too expensive to be vibrant -- because high rents discourage cultural innovation, or because eventually price wars are won by rich older people who make the neighborhood quieter and more boring than they would collectively like (or than would maximize the property values really). If neighborhoods are (in the short-term) sticky and 2. and 3. dominate over 1. it is possible that there are no equilibria.
Yes this all makes sense, but it seems that in the real world we observe some pretty stable equilibria, at least if you are willing to overlook some noise in the data. Part of it, I think, is that a lot of people actually want a sort of quiet, luxury-oriented neighborhood, which is what you can expect when rich older people dominate. However I admit my impressions are probably skewed by residing in NYC, which is on a decades-long binge of monotonically-upward gentrification. It probably does not reflect the reality in places like Detroit, St. Louis, Kansas City, etc.
Yes my point was just that there are various mechanisms at play in the long term so it seems unlikely that there's a clean general theory of the long term.
Also I think the metro area is a better unit than the city proper: I don't know where exactly the deteriorating suburbs are but feel sure they exist.
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