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Many, if not most people cannot afford to buy. So they should just be at the whim of greedy developers?
Incorrect.
Most people (assuming we're talking Americans) own. Other people could afford to but rent because it's advantageous. I'm kind of settling down now, or at least I think I am. I've been here for going on five years. Before that I lived in three continents in the matter of a few years.
OP, I think it takes developers that are not in it for a profit. Call it public development or whatever, the profit motive is something that is very hard to get around.
How many not-for-profit developers exist anyway?
Just about none.
The ones that are are the really scary ones. Kind of goes back to carephilly's comments about the squandering of welfare housing dollars. In Sacramento, the majority of housing in the central area that's been constructed has been welfare housing. If you look at what they cost, it's really frightening. Perhaps the most egregious example was Hotel Berry where the spent $240k per unit to remodel the building, remove three units for expanded common areas. A lot of the former inhabitants were fixed income social security disability recipients who don't bring in enough income to meet the new requirements and probably couldn't afford the new rents which are higher post remodeling even if they were waived. $240k is a lot of money in the Sacramento area. You can buy a newly constructed (post 2000) SFH home for about that just a few miles away. Still, that's not that horrible until you learn that unit size in Hotel Berry is 200 to 240 square feet.
Somebody made a whole lot of profit of remodeling Hotel Berry for $1,000 square foot. It's the usual suspects across similar projects. Cannery Place Apartments is just about to open up in Township 9. It's the first development in the old railyards area and is all welfare housing with fairly high income limits. Single people can make up to $53k/year, family of four $76k/year. I'm not really sure how much affordable housing money was used to provide welfare housing to single people making $50k/year but any amount is basically a waste. This isn't Manhattan or San Francisco where a family making $76k/year is going to struggle to afford housing or a single 20-something making $50k has to live with rooomates if welfare housing isn't available.
Great post Malloric. So the question is, how do you get developers that don't have a profit motive, but can charge reasonable rates and develop housing that is newer and increases neighborhood value?
Obviously developers and landlords are looking to make a profit, they'd be out of business if they didn't...
I think it's natural for new development to cater towards people with an income higher than the neighbourhood average, but that's not necessarily a bad thing. This sort of new development typically happens if there's an increased demand for higher income people to live there, and if they can't live in new housing, they'll just update older housing and price people out of there (unless there are rent controls and such stopping this).
If new development occurs, the rest of the housing stock that hasn't been redeveloped can remain more affordable than it otherwise would be.
If you split up Toronto's inner city into Downtown, East Toronto, West Toronto and North Toronto and look at how things changed from 2005 to 2010...
The East Toronto got the least amount of new development, and the biggest increases in income (gentrification).
The West Toronto got the second least amount of new development, and the second biggest increase in income.
Downtown got the most development, followed by North Toronto, and both have had relatively constant incomes.
Great post Malloric. So the question is, how do you get developers that don't have a profit motive, but can charge reasonable rates and develop housing that is newer and increases neighborhood value?
I don't think you can.
What's wrong with profit motive anyway? One of the best things Sacramento has done is create an agency WITH a profit motive to manage all of the State properties in and around the capital. Prior to its creation, the State bought up properties that it thought it might want in the future (more for the land than whatever was on it) and then just was basically the worst slum lord to ever exist. Creation of the agency with a profit motive was in response to all the derelict properties the State owned in the area.
Watch the video and tell me how it's fair that this can happen so developers can make money - what can be done to protect against this?
What is not fair about it? Someone owned a property and decided to sell it; that all of a sudden is not fair?
What is there to protect against? People selling their property? A property owner making improvements? A property owner requesting more money for use of their property?
Do you own property? If so, can I tell you want I want you to do with it? Do you have a car? Can I tell you what to do with it?
What is not fair about it? Someone owned a property and decided to sell it; that all of a sudden is not fair?
What is there to protect against? People selling their property? A property owner making improvements? A property owner requesting more money for use of their property?
Do you own property? If so, can I tell you want I want you to do with it? Do you have a car? Can I tell you what to do with it?
Hyperbole aside--the government does tell you what you can and cannot do with your property,so it is not perfectly "yours"--I think the concern is for those who are of limited ability to cope with a sudden change because of age or timing or income.
To the OP, the way to limit the effect of gentrification is to, ironically, loosen the market. Don't worry about gentrification, per se. Gentrification is just going to happen as neighborhoods improve and become popular. It is not, in and of itself, a problem. The problem is when gentrification happens in a constrained market, putting serious stress on the displaced who may not be able to afford going back in to the market.
Most of the constraints on supply are borne of government regulation. EIRs and dev fees and zoning rules seriously constrict supply, thereby raising prices faster than incomes and creating these situations wherein property owners have strong motive to sell and at-risk renters have few alternatives. In this situation, reducing red tape brings supply and demand closer to balance, giving long-term tenants more options.
Here's a solution: make sure your region is economically stagnant and your leaders have no vision. If you're not attracting gentrifiers, you won't have gentrification. Problem solved.
The word "gentrification" is thrown around very loosely these days. It has come to mean any neighborhood in which people are forced to move because they no longer can afford to live there. It used to apply to a neighborhood that moved from a lower economic area in which the poorer and usually run down housing existed. It could also mean an area where slums and crime were routed out and neighborhoods were greatly improved.
But today, lower and middle class income people are finding themselves being pushed out of perfectly fine neighborhoods because the more well-to-do buy up properties and charge more for housing. House flippers and real estate developers play a large role in this. They know how to take advantage of weak housing ordinances and scorn neighborhood associations who try to keep things on an even keel.
I just moved from a city that is a prime example of this. My former neighborhood was technically gentrified, "improved" as far as fixing up a few buildings and getting rid a minor crime back in the 80's but prices still soar as the neighborhood continues to become a more and more expensive place in which to live and people like me are forced out.
This is no longer gentrification. This is profit making and it's just the way it is.
If a city wants to help it's citizens with displacement, it could have stronger ordinances addressing these issues. It could support affordable housing in prime areas instead of just stacking displaced people up on the outskirts of town. Some cities help people some don't. It's all about how much greed is allowed to take place and unfortunately, you have your real estate flippers banging on elderly people's doors harassing them to sell their homes and developers who have only to ask "May I" before they tear down good affordable housing for expensive monster buildings.
Where there is profit to be made, there is going to be good news for some and bad for others. It takes a third party to try to keep it even but that doesn't seem to be happening and I think that's partially because of the overuse of the word "gentrification" which denotes improvement when it often does not apply.
The word "gentrification" is thrown around very loosely these days. It has come to mean any neighborhood in which people are forced to move because they no longer can afford to live there. It used to apply to a neighborhood that moved from a lower economic area in which the poorer and usually run down housing existed. It could also mean an area where slums and crime were routed out and neighborhoods were greatly improved.
But today, lower and middle class income people are finding themselves being pushed out of perfectly fine neighborhoods because the more well-to-do buy up properties and charge more for housing. House flippers and real estate developers play a large role in this. They know how to take advantage of weak housing ordinances and scorn neighborhood associations who try to keep things on an even keel.
I just moved from a city that is a prime example of this. My former neighborhood was technically gentrified, "improved" as far as fixing up a few buildings and getting rid a minor crime back in the 80's but prices still soar as the neighborhood continues to become a more and more expensive place in which to live and people like me are forced out.
This is no longer gentrification. This is profit making and it's just the way it is.
If a city wants to help it's citizens with displacement, it could have stronger ordinances addressing these issues. It could support affordable housing in prime areas instead of just stacking displaced people up on the outskirts of town. Some cities help people some don't. It's all about how much greed is allowed to take place and unfortunately, you have your real estate flippers banging on elderly people's doors harassing them to sell their homes and developers who have only to ask "May I" before they tear down good affordable housing for expensive monster buildings.
Where there is profit to be made, there is going to be good news for some and bad for others. It takes a third party to try to keep it even but that doesn't seem to be happening and I think that's partially because of the overuse of the word "gentrification" which denotes improvement when it often does not apply.
On the flip side of putting affordable housing in in prime areas, in development-limited areas if you designate part of the small amount of what you allow to get built strictly for low income residents the result isn't to push less people out -- it just shifts who gets pushed out to the middle-class and in the most gentrified areas, the upper-middle class. That isn't a desirable outcome -- it's literally worse than doing nothing.
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