Gentrification and Housing Affordability

An opinion piece in the Los Angeles Times this week repeats the argument that gentrification is reducing transit ridership. The Antiplanner was not persuaded by this when the claim was presented in the Eastsider last fall, but it and Senate Bill 827 raise another issue: what does gentrification do to housing affordability?

A standard theory of housing is that people who can afford to do so buy new homes and older homes trickle down to lower-income people. But this assumes that the older homes aren’t torn down to make way for the new. In regions with urban-growth boundaries, most new homes can be built only by sacrificing old ones — gentrification. This process is further encouraged by cities like Portland and Los Angeles that subsidize developers to build transit-oriented developments along rail transit lines.

People who already own homes aren’t hurt by this; in fact, their home values rise. But gentrification can price renters out of their housing and leave them with no comparably priced housing to go to.

The new housing might be denser than the old, but it’s not affordable to low-income renters. Cities can require developers to dedicate a certain number of their new units to low-income renters, but that just forces developers to raise the price of the rest of the units they build, reducing overall housing affordability.

According to tables B25003B (blacks) and B25003H (non-Hispanic whites), black households in the Los Angeles and San Francisco-Oakland urban areas are 50 percent more likely to rent than whites. In Portland, they are almost twice as likely to rent. This makes blacks more vulnerable to high housing prices than whites, which explains why black populations in Los Angeles, San Francisco, and other cities are declining.

Black populations aren’t declining in Portland — yet — but the share of blacks living in multifamily housing is increasing much faster than the share of whites. Between 2006 and 2016, the share of whites in single-family detached homes declined slightly from 64.4 to 63.6 percent. But the share of blacks plummeted from 46.8 to 34.8 percent. In fact, the actual number of blacks in detached homes fell by 13 percent. Meanwhile, in less-regulated Houston, the share of people in detached homes grew, showing Portland’s decline is not due to a sudden desire to live in dense housing, and more than half of blacks live in detached homes.

Gentrification is clearly hurting low-income people. Does the construction of more dense housing help middle-income people? Not likely because, as the Antiplanner has noted before, dense housing costs more to build than low-density housing. It also costs more to maintain, which means unless it is subsidized it will never really trickle down even to middle-income people.

In short, gentrification may or may not be contributing to a reduction in Los Angeles transit ridership. But it certainly isn’t providing affordable housing for low-income families and it almost certainly isn’t leading to a general improvement of the affordability of the region as a whole.


4 thoughts on “Gentrification and Housing Affordability

  1. LazyReader

    Why is it just blacks, poor white people and hispanics are affected by gentrification too.
    Gentrification is a buzz word for refurbishing a cheap place to live to something where they can squeeze more tax revenue for municipalities.
    In Reality they’re doing it for kickbacks from companies who sign lucrative development contracts.

  2. Frank

    Gentrification just means cleaning up your property, taking care of your house, and taking pride in ownership.

    More of Portand, which is overrun with white trash, homeless, and hipsters (who are sometimes indistinguishable), needs to be gentrified.

    I can post photos of my most recent PDX ‘hood (December to present) where there are FULL needle depositories on school fences, where there is human feces on the sidewalks, where there are abandoned cars and properties full of trash.

    The same neighborhood is full of “Black Lives Matter” signs that white trash people put on on their filthy lawns.

  3. Sandy Teal

    Forcing new developments to have “low income” housing of course won’t fix a system wide problem. First the free gift of “low income housing” will be sold by somebody to extract some of the profit from it each time it is transferred.

    Second, the other units will be bumped in cost, so they will be less affordable, so some people who would have lived there will instead buy into a lower cost housing and raise the cost of that housing, which of course will cascade down the housing the housing market.

    Third, it will diminish the incentive to build new housing, which is the opposite of the the goal in the first place, wasn’t it?

    The only way government can outsmart the free market is when it has a monopoly, such as a bridge or road toll. Taxing or subsidizing other things just leads to huge unintended consequences. But that is obvious. Why else would cities heavily tax soda to reduce usage and also heavily tax jobs and expect it to have no effect on job opportunities?

Leave a Reply