Back in the 1980s, Pittsburgh, Pennsylvania, was gripped in an economic crisis as it suffered the effects of de-industrialization: Its unemployment rate was triple that of Detroit’s today. “We basically died,” Pittsburgh Mayor Bill Peduto said on a recent press call. But, in a much-celebrated comeback story, the city came back to life. “In 30 years Pittsburgh changed its economy. It built out an entire new city of eds and meds, technology, finance and energy. Now we’re seeing a new Pittsburgh emerge.”
That’s the narrative of many major urban areas today. If Donald Trump ever took the time to talk to people in the “inner cities” he loves to denigrate, he’d know that many of them are more concerned about rising rents than they are about rising crime. Preserving affordable housing—and easing the displacement of existing residents that often follows these urban economic comeback stories—is the current problem that New York University’s Furman Center for Real Estate and Urban Policy has been tracking throughout the year. The center’s latest report, released on October 27, highlights some of the ways that governments in high-cost cities have been responding to the affordable housing issue. Reads the report:
After decades of attempting to entice real estate and business investments, as well as a resident base with higher taxable income ... cities now find themselves with a significant amount of all three. One of the most visible results of this shift has been soaring housing prices. As the demand for housing has grown to far exceed the existing supply, many urban neighborhoods that have long served as a home for mostly low- and moderate-income households are now seeing an influx of higher-income households; in other words, they are experiencing gentrification.
The report focuses on two major ways that cities are tackling gentrification: creating and/or preserving affordable housing, and assisting residents displaced by gentrification.
One way to hit that first goal is via the community land trust model, in which affordability is preserved through ground-leased properties on city-owned land, or land that’s been entrusted to a neighborhood nonprofit. That idea has been picking up support in recent years in places like Baltimore and New Orleans. Under this model, the nonprofit determines the pricing for the properties it rents or sells on land that it either owns or stewards. Such trusts have also been proven effective in certain neighborhoods in Philadelphia and Burlington, Vermont.
But, for the most part, cities have not yet fully bought in to them, largely because of the inflexibility they introduce: Cities lose their ability to repurpose community-entrusted land for other uses, such as zoning it for commercial use if necessary, because the land is often locked into long-term leases, usually spanning in the 75-year range.
The report also recognizes new trends in the adoption of inclusionary zoning and linkage fees for private developers. There’s no one universal model for these policies, but they generally involve one of two things: a requirement that developers either make a certain percentage of their housing units available at below-market rates, or that has them pay a fee into a fund for affordable housing. Recent studies on inclusionary zoning found that these policies do help prevent housing prices from surging in gentrifying neighborhoods. However, the studies also found that inclusionary zoning doesn’t necessarily make housing more affordable for very low-income families.
As far as the goal of reducing displacement, the Furman Center points to strategies such as rent regulation programs, or policies that give low-income families prioritized preference for subsidized housing as helpful. However, some strong caveats follow:
Anti-displacement policies do have potential downsides. Perhaps most fundamentally, if cities are segregated, policies that help keep households in place can reinforce existing racial and economic segregation. Moreover, programs designed to prevent moving may reduce beneficial mobility—leading residents to favor staying in place even when a move might increase their wellbeing or might be a better outcome for affordability in the city overall (if those moves then pave the way for higher-density development or better use/allocation of the existing stock). Such programs may also reduce revenues for landlords, which may run the risk of discouraging investment to maintain existing housing and investment to create new housing.
The context here is that we’re currently in the “Moving to Opportunity” era, which is fueled by the theory that low-income families improve their lots when they’re able to live in wealthier neighborhoods with better economic prospects. Many families now living in neighborhoods that are so racially and/or economically segregated might be better off uprooting themselves and moving a different community that could bring them better economic outcomes.
One big issue not addressed in the Furman report: better wages. Over the past few decades in the U.S., wages have remained stagnant while the costs of building and living in housing has steadily risen. Researchers in Illinois published a study this week that found that raising the minimum wage to $15 could help families better afford decent housing. The Illinois study encourages policymakers to continue pursuing strategies for making housing more affordable, but suggests that without increased wages, families will still be cost-burdened with living expenses.
“Housing unaffordability is a function of wages and housing prices,” says Jessica Yager, Executive Director of the NYU Furman Center and coauthor of the report. “The problem has been getting worse in many places, including New York City, because housing prices are rising faster than wages. We did not look at local strategies to help raise wages, but that would be an excellent follow-up study.”
There is no proven blueprint on how to fix this somewhat intractable problem. Perhaps the most important takeaway from the Furman paper is that its authors can’t vouch for any of the strategies they list as actually being totally effective in the long run: The report is clear to point out that it is only a collection of responses to gentrification, not a testament of what are the best practices.
Why can’t we tell what works best? Most anti-gentrification strategies haven’t been in place long enough to project any real impacts. And, as the report notes, it would take a combination of them to make a measurable difference. In Pittsburgh, for example, the city council just assembled a housing task force this year to investigate the housing problem and issued a slate of recommendations in May, one that includes many of the strategies listed in the Furman Center report.
It is telling, though, that many cities are only now getting around to thinking about how to curb the displacement of low-income families from their homes. That’s not the same as saying these places are war zones—and Trump himself is no stranger to displacing families, especially black families. But it does mean that high-cost cities have a long way to go in sharing their new prosperity.