Those with above-average economic power can’t help but be gentrifiers?

One public policy student suggests it is really hard for those with economic advantages to avoid being gentrifiers, even when they don’t move into up-and-coming urban neighborhoods:

But it’s worse than that: it doesn’t even matter where you live. Moving to a higher-income neighborhood – one where market and regulatory forces have already pushed out the low-income – means you’re helping to sustain the high cost of living there, and therefore helping to keep the area segregated. You’re also forcing lower-income college graduates to move to more economically marginal areas, where they in turn will push out people with even less purchasing power. You can’t escape the role you play in displacement any more than a white person can escape their whiteness, because those are both subject to systemic processes that have created your relevant status and assigned its consequences. Among the classes, there is no division between “gentrifiers” and “non-gentrifiers.” If you live in a city, you don’t get to opt out.

The upshot here is not that we should all descend into nihilistic real estate hedonism. But we need to recognize what’s really going on: that what we call “gentrification” these days is only one facet of the much larger issue of economic segregation. That people get priced out of the places they already live in is only half of the problem. The other half, which affects an order of magnitude more people, is that people can’t move to the neighborhoods to which they’d like to move, and are stuck in places with worse schools, more crime, and inferior access to jobs and amenities like grocery stores. That problem is easier to ignore for a variety of reasons, but it’s no less of a disaster.

And all this, in turn, is the result of a curiously dysfunctional housing system – one that’s set up to allow market forces to push up prices without regard for people who might be excluded, and to prevent market forces from building more homes and mitigating that exclusion.

The emphasis here is on the system: people with more economic resources have more opportunities to move where they want and the capital tends to be or go where they go. A few other thoughts:

1. This reminds me of the book Colored Property which argues a key shift took place in the 1950s and 1960s as white homeowners started arguing for their economic, rather than race-based, rights. Thus, buying a nice home in a nice white neighborhood wasn’t about avoiding blacks or other minorities; it was about taking advantage of one’s own hard work and protecting one’s property values. These are the same justifications underlying the system today: people with more resources argue they should be able to move to nice places and have nice amenities. But, this comes at the expense of fewer resources in other places.

2. Students often ask me what they can do about issues of poverty and social injustice. I try to inform them about these systems as well as tell them that one of the bigger choices they will have to make after graduating is choosing where they live. Should they as relatively wealthy Americans with cultural capital simply chase nice amenities, high property values, and a secure and high-paying job overall? Or, could they choose to contribute to and learn from other kinds of places?

Rare: urban Millennial claims to miss the suburbs

This is not a piece from The Onion but rather a story at Atlantic Cities: a Millennial discusses why she thinks the grass may be greener in the suburbs.

I’m one of the thousands of Millennials who make up this new urban demographic. I left the comforts of Eden Prairie, Minnesota — a suburb of the Twin Cities and a community that has consistently been ranked one of the best small towns in America — for New York City. And while my move to New York was the right decision for a variety of reasons (or so I keep telling myself), I often wonder if the grass might indeed be greener—both literally and figuratively—had I stayed in the suburbs.While we’re on the subject, let’s talk about green space. Multiple studies have tracked the social, cultural, and emotional assets green spaces bring to a community, including mental health benefits and reduced rates of gun violence. While cities such as New York and Philadelphia have made tremendous gains in creating new and better public spaces in recent years — former New York City Mayor Michael Bloomberg presided over the biggest program of park building since the 1930s — too many urban communities are still “park deserts” compared to their suburban counterparts.

Another area where suburbs often trump cities is in the quality (or lack thereof) of their public schools. From the mass closing of public schools in Chicago to the “dizzying, byzantine system” eighth grade students and their parents go through to select a public high school in New York City, it is as hard as ever—if not harder—for parents to find quality public education for their children in large American cities. And this particular reality seems especially stubborn: students from suburban communities are more likely to graduate high school and go on to higher education than their urban counterparts, which of course in turn makes them more likely to get well-paying jobs as adults.

But the number one way the suburbs beat the city, especially for young people, is in affordability. After living in both Washington, D.C., and New York City, I can safely say that affording basic human necessities, such as shelter and sustenance—not to mention having a little fun here and there—is much cheaper outside of the city center. When paying $1,000 per month to share an apartment is a “good deal,” and when you don’t think twice about spending $14 for a single cocktail, what chance does a young city dweller have to actually save money? Not all cities are as insanely expensive as Washington and New York (Philly! Baltimore! Portland!), but when the mortgage on a spacious, four-bedroom home rivals the monthly rent of a cramped one-bedroom apartment, there really is no competition.

These are common arguments for the suburbs through American history back to the founding of some of the earliest suburbs in the mid-1800s: they provide green space and more nature, the ability to avoid “urban issues” like underperforming schools, and affordable housing compared to dense cities.

I have to wonder if her perspective is skewed just a little bit by growing up in Eden Prairie. As she notes, this is a community often marked as one of the nicer American suburbs. Not all suburbs are like this as they range from inner-ring suburbs adjacent to big cities to industrial suburbs to edge cities with lots of jobs to more exurban areas with bigger lots. Not all suburbs would have these three traits she claims are most important and others may offer features she does not discuss. On the whole, her arguments about the merits of the suburbs may be marked by a particular higher-end experience of American suburbs.

In first half of 2013, roughly 20% of Chicago area home purchases by institutional investors

A good portion of the homebuying activity in the Chicago region during the first half of 2013 was driven by institutional investors:

Chicago home prices climbed 11 percent in November from a year earlier, the biggest jump in almost a quarter century, according to S&P/Case-Shiller data. While gains are slowing across the country, the Windy City was one of nine areas in the group’s 20-city index to show a year-over-year increase in housing values…

Institutional investors, led by companies such as Blackstone’s Invitation Homes and American Homes 4 Rent (AMH), have bought as many as 200,000 U.S. properties in the last two years, taking advantage of real estate prices that fell as much as a third from the 2006 peak, and rising demand for rentals among Americans who lost their houses in the foreclosure crisis. Their reach has stretched from the hard-hit regions of California to small Ohio towns to the sprawling suburbs of Atlanta…

In Chicago, investors accounted for about 20 percent of purchases in the first half of last year, according to Geoff Smith, executive director of the Institute for Housing Studies at DePaul University in Chicago.

Like the portfolios of other investors, Invitation Homes’ Chicago-area holdings are mostly filled with properties in suburbs such as Barrington and Oak Park. The smattering of houses they own in the city itself is evidence that the rebound is starting to broaden. Even in some neighborhoods where prices fell more than the rest of Chicago during the foreclosure crisis, values are climbing.

The average homeowner may not pay much attention to this because at least their home values are increasing again. The Chicago area housing market has been sluggish and local media has made much of the uptick in home prices. Additionally, these investors are filling a void in the market.

But, this could lead to more questions in the long run.

1. What will these institutional investors do with these properties years down the road?

2. What happens when the Chicago market is no longer profitable for these institutional investors?

3. Does this mean that the average homebuyer has a better chance to buy a home or does this simply concentrate buying power in the hands of the already wealthy? In other words, this may not provide more affordable housing.

4. Since communities, particularly suburbs, tend to think homeowners are better community members than renters, is it a problem when so many homes are purchased with the intention of having more renters?

To improve health and cut costs, UnitedHealth spending $150 million on affordable housing

Having affordable housing is linked to better health outcomes so insurance company UnitedHealth is spending some money on affordable housing units:

The firm is taking an unusual step for an insurance company –investing $150 million to build low-income housing in a dozen states…

UnitedHealth’s big push into housing isn’t charity. The company derives benefits from it, too, including tax credits.

But Kate Rubin, vice president of social responsibility for UnitedHealth Group, says the real payoff is longer term.

“Studies show that without stable homes people are sick more often,” says Rubin. “There’s more undiagnosed illness and people are more likely to seek care in emergency rooms.”

That’s expensive for insurance companies, for patients and for the rest of us, who pay the price in higher premiums and taxes.

It will be interesting to see how many units UnitedHealth is able to construct for that kind of money. It seems like the biggest payoff would be if they are able to have sufficient economies of scale, enough units to see significant long-term returns.

This also hints at the need for affordable housing more broadly in the United States and the inability of others to construct it. Public housing in the United States is limited and has had a variety of issues for decades. Lower levels of government, whether states or metropolitan regions, or local government, have had either a hard time finding the right mix of regulation and incentives or haven’t paid any real attention to affordable housing. If few organizations are stepping up to provide or prompt public housing, perhaps insurance companies are a good bet.

Designing a McMansion that actually contains four townhouses

Check out a Fairfax County, Virginia McMansion that was intentionally built to contain four townhomes:

This is the Great House, a four-unit townhouse designed to look like a large, single-family home. Like DC and Montgomery County, Fairfax requires developers to build affordable units in new developments, but they often stick out like a sore thumb. When Carrington was being built in 2001, the county worked with builder Edgemoore Homes to help subsidized, $120,000 townhomes blend in with homes several times as expensive.

Each Great House is comparable in size to its neighbors and uses the same materials. But instead of one, 5,000 square-foot house, you have four, 1,200-square foot townhouses. Only one of the doors faces the street. A driveway runs around the back, where each townhouse has a two-car garage…

The Great House could be a particularly useful housing type as the region grows. A recent study from George Mason University’s Center for Regional Analysis estimates that the DC area will need 548,000 new homes over the next 20 years. About half of those units will need to go in the District, Montgomery, and Fairfax counties. And 60% of them will need to be townhouses or apartments…

Those things don’t really matter to neighbors who spend lots of time and effort to “maintain the integrity” of their single-family neighborhoods. But seeding their neighborhood with a few Great Houses that provide housing diversity while blending in could be a compelling alternative to building traditional apartments or townhouses there instead. Of course, they aren’t possible under most zoning laws, which only allow single-family homes in “single-family neighborhoods.”

This sounds like a fascinating compromise: help provide cheaper housing in a region that needs it while at the same time keeping the single-family home character of these neighborhoods. I wonder just how many “Great Houses” a typical suburban neighborhood could handle without social life changing or the McMansion owners complaining a lot.

I also suspect that some would argue building townhouses that look like this only perpetuates some of the problems of McMansions, including bad architecture and emphasis on sprawl and auto dependence. At the same time, a key factor in helping affordable housing succeed is that it needs to look like normal ousing so it doesn’t stand out and draw the attention of nearby residents.

Is there an invisible wall keeping $1 million homes east of Western Avenue in Chicago?

One person in Chicago real estate argues $1 million homes on Chicago’s North Side stay east of Western Avenue.

It’s as if there is an invisible wall running through the middle of Chicago, along Western Avenue all the way south of Montrose. When buyers of million dollar homes specify their search criteria they will often specify that they want to stay east of Western Avenue – or if they specify Ukrainian Village, Bucktown, Wicker Park, Roscoe Village, or St. Ben’s those neighborhoods technically stop at Western Avenue so again you are staying east of Western. And it almost doesn’t matter anyway because over the last 7 years there have been very few homes above $1 MM for sale west of Western anyway as you can see in the map below. It’s pretty dramatic isn’t it?

What could be behind this?

Well, for one you are typically getting further away from public transportation options as you move west. But then again public transportation isn’t really that much more accessible just east of Western than it is just west of Western. If you can’t walk to the el stop in 10 minutes in January you may not feel like you have good access to public transportation regardless of which side of Western you live on.

The other thing that happens as you cross Western Avenue is that you cross into a few lower income census tracts. For example if you look at the heat map from RichBlocksPoorBlocks.com you will see that there are are a few sections of Western Avenue where the median household income drops pretty dramatically as you cross the street. In the map below as the color transitions to darker green median household income goes up and as it transitions to darker red it goes down. From Fullerton to Armitage the median income is $66K on the east side of the street but $35K on the west side of the street. And from Armitage to Bloomingdale it’s $107K vs. $66K. And then from Division to Chicago it’s $67K vs. $42K.

Might this change in the future?

There is no question that eventually the area west of Western will become populated with million dollar plus homes but at that point the disparity between the east and west sides of the street may persist and the east side may just be populated with homes priced well above $1 MM. And, regardless, it looks like that day is still several years into the future. In the meantime, if you are willing to be a pioneer you can definitely find cheaper living just a couple of blocks further west.

My interpretation: neighborhoods west of Western Avenue aren’t trendy or gentrifying yet and have different demographics. In other words, there isn’t demand yet among the creative class or young professionals for nicer housing west of Western.

This could lead to some discussion about the limits of gentrification on Chicago’s north side. Just how much can it expand? What happens when it moves out of hipper neighborhoods and comes up against more lower-class or non-white neighborhoods? Right now, there are some gentrifiers who want to live on that edge between the expensive homes and poorer neighborhoods, places they might consider more gritty or authentic. But, would large numbers of people move further west? And are there enough of them? (This, of course, doesn’t even consider the negative effects of gentrification which include making housing more unaffordable, a problem in a region that needs much more affordable housing, and white residents pushing out non-white residents.)

As Chicago area home prices rise, housing affordability drops

Affordable housing is a persistent issue in the Chicago region – and the percent of affordable homes has dropped in the last four quarters:

Housing affordability in the Chicago area just took its biggest quarterly tumble since early 2005.

During the year’s third quarter, 63.7 percent of all new and existing homes sold in the area were affordable to families earning the area median income of $73,400, according to the most recent National Association of Home Builders/Wells Fargo home affordability index.

The index put the median home price in the Chicago area at $210,000.

That compares with the 70.6 percent of homes being considered affordable during the second quarter. It was the fourth consecutive quarterly slip in local affordability. This latest decline was the most dramatic since the change recorded from the first to second quarters of 2005.

While this is a shift as home prices rise, it is a reminder of the bigger issue: the Chicago area has a long-term problem with affordable housing. This is the case in the city of Chicago as well as suburban areas. This isn’t just an issue of people being able to find decent housing; it is related to businesses being able to find workers (who don’t have to travel ridiculous distances from housing they can afford), people being able to access good school districts (which are often related to higher housing values), and whether there is continued residential segregation where those of certain racial and ethnic groups can’t live in certain areas.

Facebook partnering to build a new mixed-use development for its workers

Here are a few details about Facebook’s plans to help put together a new mixed-use development near its main campus:

The planned complex, designed by architecture firm KTGY Group, is the first major housing development in Menlo Park in 20 years, and is expected to open in 2016. According to Deanna Chow, a senior planner in Menlo Park’s planning department, the city is largely occupied by single-family homes. This 394-unit residential community will be the first mixed-use development of its scale in the city…

While Facebook’s investment in the complex only extends to subsidizing 15 low-income units, Anton Menlo could very well become a “Facebook Town.” Besides its proximity to Facebook’s campus, the designers also kept the company’s employees very much in mind. A series of focus groups and electronic surveys gauging employees’ needs and desires translated into amenities like a “grab & go” convenience store, sports pub, doggy daycare, bicycle repair shop, and an “iCafe” filled with community WiFi zones, printers, and office supplies. Once construction begins, St. Anton will market the apartments to Facebook employees first before opening up to the general public. The developer is also working to establish a leasing office on Facebook’s campus.

Beyond concerns about Facebook employees becoming slaves to work or the beginnings of a community made up entirely of “brogrammers,” the project is actually a much-needed step in addressing Menlo Park’s housing strain. According to a housing fact sheet from the city, Menlo Park has a “jobs/housing inbalance,” with 41,320 workers but only 13,129 housing units…

On the plus side, housing employees close to work can help reduce traffic and gridlock. In fact, the Anton Menlo project aims to make several specific transit improvements. The Facebook corporate shuttle will be adding a stop at Anton Menlo. On a mission to get people home as soon as possible, the developer is working with the city to put in a bike path that runs directly from the Facebook campus to the new complex. Also in the works are separated sidewalks, crosswalks that light up to caution cars, and an underground tunnel linking Facebook’s campus to the apartments.

So, Facebook might help alleviate some housing pressure in a community that is difficult to live in but there will be questions about this being a “company town.” There are a lot of American companies that could afford similar actions. If they provide housing for their employees without being too controlling, two good things might emerge: (1) the workers might be more productive and (2) the community could be helped. Either way, it will be interesting to watch the outcome of Facebook’s real estate development activities.

While companies might get flack about providing housing, I wonder if developers and those involved in real estate are regarded more highly for their efforts to develop housing. For example, this 2009 Harris Poll regarding occupational prestige has real estate agent/broker at the bottom of 23 occupations. Developers sometimes provide big houses people want but they can also raise the ire of neighbors whose NIMBY hackles are raised.

“Why Low-Income Housing Applicants Have to Waste Hours of Time Waiting in Gigantic Lines”

The 312 looks at why applicants for social services have to wait in long lines:

Can you imagine people waiting in a line that stretched around the block for any other government service? The DMV? The City Clerk? The Secretary of State?

But inconvenience is pretty standard when it comes to services for the poor, says Dan Lesser, of the Sargent Shriver Center on Poverty Law.

“There’s a world of different between how the average person is treated at the DMV and how someone whose applying for assistance is treated at the local public aid office,” said Lesser.

“We heard that a lot when the economy went bad and a lot of people applied for food stamps for the first time,” he said. “They were definitely not used to get the kind of treatment that they got when they went to those local offices.”

It makes you wonder: Is there simply a belief that poor people have nowhere better to be? Why do the providers of essential services treat them as if their time is worthless?

Most of the problem lies with the abysmal funding levels for human services, says Lesser. But the majority of people who are on some kind of public assistance are working, he says, and the layers of red tape hurts them financially.

It sounds like adding insult to injury. This reminds me of a faculty member I know who has students go through the process of applying for public aid without giving them any information. The students tend to report that the process is a lot harder than you might think.

But, there could be another issue at work as well. Take the example in this blog post about a line for applying for low-income housing. There is an issue long before getting into line: the Chicago area, not just the city, is lacking in affordable housing. I’ve seen numbers suggesting the region is at least 50,000 affordable units short. Hence, the wait lists for public or affordable housing are really long. Interest in joining a waiting list or getting a shot a new opportunity is high.

New luxury NYC condo building gives affordable housing residents their own back entrance

A new luxury condo building in New York City has space for affordable housing – but those residents have to use a separate, back entrance:

The poor will use a separate door under plans for a new Upper West Side luxury tower — where affordable housing will be segregated from ritzy waterfront condos despite being in the same building.

Manhattan developer Extell is seeking millions in air rights and tax breaks for building 55 low-income units at 40 Riverside Boulevard, but the company is sequestering the cash-poor tenants who make the lucrative incentives possible.

Five floors of affordable housing will face away from the Hudson River and have a separate entrance, elevator and maintenance company, while 219 market-rate condominiums will overlook the waterfront…

“It’s a blatant attempt to segregate people,” fumed Rosenthal, who is demanding that HPD deny Extell’s request for tax breaks. “It’s just not a good thing for the city of New York to be supporting.”“I hate the visual of market-rate tenants going in one door and affordable tenants going in another, but that’s a visceral reaction,” Diller said.

I’m not sure we should be all that surprised. Developers generally don’t want to construct affordable housing because it cuts into the profits they could make. This is particularly the case in dense areas like Manhattan where land is at a premium and using some of the space for affordable housing means leaving money on the table. So, if the city is going to offer tax breaks for including some affordable housing units (and this is a common strategy for encouraging affordable housing), why wouldn’t a developer want to separate the exits so the wealthy can think they live in a building solely with other wealthy people (and will pay more for this appearance)?

On the other hand, perhaps New York needs to add to what it means by “affordable housing.” It is one thing just to require units. It is another to place wealthier and less-wealthy residents closer together so they might actually interact. This is the sort of “black box” behind mixed-income neighborhoods that replaced public housing high-rises in many American cities. The idea is that more regular contact between wealthier and less wealthy residents will help those less wealthy residents in the long run.