Gentrification
Making Sense of City Neighborhoods
Whose neighborhood is it, anyway?
While gentrification has agreed upon definitions and effects, it has contested implications – loaded with value judgments, sympathies, anger, and misunderstanding. As a subject, it is wrought with emotion. This makes sense, because at a fundamental level gentrification is all about tangible locations where people live, and in many ways, our responses to it indicate how we feel about different types of residents and their right to dwell in the places they either have lived for some time or want to move to. For people, the idea of home is filled with visions of who we are and who we want to be, and as such, is subjected to biases of how we see and interact with our homes and neighborhoods, and what we want for their future.
As an economic commodity, real estate is paradoxically related to the individual’s idea of home – it doesn’t necessarily change based on how we think as individuals, but instead, it changes largely based on other peoples' actions. How can this make sense? First, one must understand the fundamental relationship between a city neighborhood and a home. A neighborhood, of course, is a collection of homes or apartments – with sprinkled in businesses, restaurants, bars, etc. But it isn't that simple.
A city neighborhood has characteristics which help to place it within the larger city: its affordability, its location relative to other neighborhoods and business centers, its transportation nodes, the type of people who live there, its schools, its local taxes, the types of businesses or establishments which exist, the existing stock of its real estate, and so on. People base decisions on where to live by exploring these elements – elements which define neighborhoods, not elements that define individual homes.
The value of any single piece of real estate in a neighborhood is primarily determined by its economic value in the rent market – as a financial asset capable of generating economic return via the payment of rent. But since people make decisions about where to live in large based on elements outside of individual residents’ control, the value of real estate, too, is out of individual residents’ control. In other words, if prospective tenants value a neighborhood, than that value will be recognized via the revenue generated by landlords, and on the other side of the same coin, the rent paid by tenants.
One major effect of gentrification is increases in the cost of living accrued to native tenants - which results in displacement. If we are to understand what drives neighborhood-wide trends that change peoples' conception of home, we need to broaden our focus of gentrification away from the individuals' idea of a neighborhood to what a neighborhood actually is in practice: locations with identifiable characteristics and a variety of stakeholders with, sometimes, competing interests.
Understanding the stakeholders in neighborhoods, along with their respective interests, is the first piece of the puzzle. While there can be many parties which take an interest in neighborhoods, the major ones in regards to gentrification are as follows: native residents - both renters and property owners, new residents - both renters and property owners, local business owners (both native and new), landlords, real estate developers and investors, city planners, and local organizations. Each of these groups is interested in neighborhoods serving different purposes - from being an affordable place to live, being an ideal a place to raise children, being a place to open a business, and finally, to being a strategic place to turn a profit.
Residents may be interested in the degree to which their neighborhood reflects what matters to them: affordability, funding for schools, local businesses, and infrastructure. For example, residents with children may care a whole lot about school funding, while residents who do not may rather save money on taxes. This simple difference represents a possible conflict of interest that gentrification assists in imposing on neighborhoods.
Likewise, some tenants who are stretched for cash may care a whole lot about how much of their income they are spending on rent in a given month, while other more affluent tenants are less sensitive to rent payments. Increases in rent prices produce different reactions by these sorts of tenants.
Owners of real estate will reasonably be far more concerned with the value of the property they own than with rent - unless, of course, they are landlords who receive income via the payment of rent. Still, as we will explore later on, the value of real estate is determined by rent payments regardless of if the owner of a property lives there or not.
Similarly, real estate developers and investors are interested in turning a profit on buildings that other people will occupy. A real estate investor has an obligation to their clients to purchase a property or piece of land for a low price, earn rental payments that ideally increase every year, and sell it for a relatively higher price than they bought it for. Owners of real estate and investors have a very different stake in neighborhoods than renters or even land owning residents do.
Low priced, affordable neighborhoods that are increasing in popularity are ideal candidates for real estate developers and investors who speculate that the land will be worth more in the future than its worth now. In general, these sorts of neighborhoods make way for more affluent tenants and their tastes by way of economic processes of modern day urbanization, and are reinforced by developers, investors, and city planners. Indeed, the interests of stakeholders are at odds with each other, which creates the type of black and white narratives which surround the topic of gentrification today.
Pictured: The same building before and after gentrification progressed in the West Village, Manhattan
When increased living costs and vast neighborhood change begin substantially changing the type of people who live in a neighborhood because of displacement, and change the types of local shops and businesses which cater to the local demographic, it is clear to see how people – who have deep felt emotions and ideas of home – get upset. As these changes and frustrations mount, neighborhoods turnover even further while residents who no longer recognize or identify with their neighborhood’s character jump ship following those who were forced out by increases in rent.
In regards to gentrification, these sorts of emotional narratives dominate discussion. I believe it is easiest to identify with the victimized native tenant who can no longer afford their home, whose neighborhood changes beyond the forces of their control or without the consent of the people who they grew up with. Because this narrative is so powerful, it is typical to associate incoming residents, landlords, and the very concept of gentrification with greed, immorality, and ignorance. City planners and real estate developers often to refer to gentrifying neighborhoods as undergoing “Urban Renewal.” Urban renewal, along with terms like ‘urban renaissance’ and ‘urban regeneration’ strategically avoid the kind of negative connotation that comes with the term ‘gentrification,’ and are described particularly well by Loretta Lees in Gentrification as “neutered” political terms which “politely avoid the class constitution of the processes involved."
Still, its important to avoid labeling stakeholders with value judgements. As we'll come to see, gentrification is about changes in cities that are larger than any real estate investor or landlord. However, having an understanding of different stakeholders motivations is critical to understanding gentrification.
Next, we'll discuss larger changes in America that have helped to create gentrification as we know it. There are both macro and micro reasons that neighborhoods in cities like New York have changed. We will start with the macro reasons: the changing economy.
