Gentrification and Housing Instability

How does gentrification create housing instability?

Rising Housing Costs

Increased demand for housing among those who can afford to pay more for it drives up housing costs for everyone, sometimes rapidly. Low-income households forced to absorb more housing cost are less able to address unexpected expenses.

Rent Seeking

High demand enables landlords to engage in rent seeking. They may let conditions deteriorate to push out low-income tenants, then make repairs to attract a wealthier tenant. Landlords also have more leeway to turn away low-income applicants.

Overcrowding

Doubling up can be a way for low-income households to cover higher housing cost. But such arrangements can end abruptly. Overcrowding is associated with shorter tenures than formal housing. In addition, it can erode supportive relationships.

Loss of Jobs and Income

Studies show that gentrifying census tracts can also see job losses in service and goods-producing sectors. Loss of income makes it even harder for households to pay their rent or property taxes.

Rising Housing Costs

If households entering a neighborhood can afford to pay more for housing than existing residents can, housing costs go up for everyone. This is because landlords can charge higher rents, knowing they can find a tenant who can pay. Since newcomers can also pay more to buy a house in the neighborhood, home values rise. If newcomers buy a property and renovate it, this drives the values of neighboring homes still higher. So, when the city reassesses property, even low-income residents who don't want to sell their homes end up paying higher taxes. The higher housing costs mean less room in tight budgets for food, transportation, or healthcare. Even small unexpected expenses can spiral into big problems when they cause families to miss rent payments, fall behind on taxes, or default on their mortgages.1

Rent Seeking

High demand for rental units allows landlords to "rent seek," that is, use the tight market to make additional profits, while providing no additional value. Rent-seeking takes many forms: asking for large up-front deposits, charging application fees, refusing to perform repairs, or beefing up tenant screening.2 The Fair Housing Act (FHA) bars landlords from discriminating on the basis of race, sex, or familial status. Nevertheless, there is evidence that landlords discriminate against families with children.3 In addition, the FHA does not prevent landlords from turning away renters with unstable income or histories of eviction. Gentrification makes it harder for low-income renters to stay put or enter the neighborhood.

Overcrowding

Unlike higher-income households, lower-income households have few options for housing that is suitable, affordable, and accessible. To avoid street homelessness, families often double-up with friends, family members, or even acquaintances.4 While these arrangements are a kind of safety net, they are unreliable. Informal agreements can end suddenly. The stress of overcrowded living can erode the personal relationships that the housing depends on.

Loss of Jobs and Income

Gentrification can lead to losses of local jobs for low-income residents. In New York City, low- and mid-wage service and manufacturing jobs declined steeply in gentrifying neighborhoods.5 There was growth in well-paying jobs nearby and low-wage jobs somewhat farther away. However, it is not clear that former residents could take advantage of these opportunities, given job qualification barriers and transportation costs.

Another New York study found that gentrifying neighborhoods suffer from lengthy storefront vacancies and see local shops replaced with chain businesses. These changes can mean that longtime residents' needs are no longer reflected in the local landscape, fostering feelings of instability.6

References

1. Michael Barr. No Slack: The Financial Lives of Low-Income Americans. Washington, D.C.: Brookings Institution Press, 2012, p.2.

 2. For instance, see Tux Turkel. "No Vacancy: Landlords Capitalize on 'Insane' Market." Portland Press Herald, November 15, 2015.

3. Matthew Desmond, Weihua An, Richelle Winkler, and Thomas Ferriss. "Evicting Children." Social Forces, 92, no.1 (2013): 303-327.

4. Kimberly Skobba and Edward Goetz. "Mobility Decisions of Very Low-Income Households." Cityscape: A Journal of Policy Development and Research, U.S. Department of Housing and Urban Development, 15, no.2 (2013): 154-171.

5. Rachel Meltzer and Pooya Ghorbani. "Does Gentrification Increase Employment Opportunities in Low-Income Neighborhoods?" Regional Science and Urban Economics, 66 (2017): 52-73.

6. Rachel Meltzer. "Gentrification and Small Business: Threat or Opportunity?" Cityscape: A Journal of Policy Development and Research, U.S. Department of Housing and Urban Development, 18, no.3 (2016): 57-85.