The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.
The text below is an excerpt from the complete document. Read the policy brief in PDF format.
Abstract
Gentrification presents a quandary for government officials and urban planners concerned about the welfare of low-income families. How can policymakers encourage development in depressed urban neighborhoods without pricing out their residents? The existing strategies—doing nothing, mandating rent control, subsidizing rental housing, decreasing barriers to building low-cost units, and promoting homeownership by low income families—are all problematic. By creating a market for rent options or insurance against rising rental costs, policymakers could preserve housing for low-income people while giving them a stake in improving their neighborhoods. Such financial instruments can also insure builders, preserving and increasing development of affordable housing.
Introduction
The comeback of sections of many inner
cities is very good news. Progress against
crime is allowing residents of poor neighborhoods
to shop, play, and walk comfortably
outside their homes for the first time
in years. Efforts to clean up formerly dangerous
and low-rent neighborhoods and
enhance their safety are making them
increasingly attractive to moderate-income
individuals and families. With the inflow
of new, higher-income families, neighborhoods
with large numbers of poor people
have begun to gentrify. Neighborhood
gentrification can revitalize substandard
housing and buildings; bring residents
access to nearby grocery stores, banks, and
other services; create additional job opportunities;
and reduce crime.
But gentrification can also have negative
side effects for low-income residents. As a
neighborhood improves and attracts new
residents and businesses, demand for property
increases, causing rents and property
values to rise. The high rents and increasing
property prices bring benefits to homeowners
and attract additional investors, but may
also price low-income renters out of their
own neighborhoods. Residents and their
allies often protest against gentrification.
As one neighborhood leader put it, “Gentrification
is a nasty word. It really does knock
out the people who have lived in an area for
a long time.” Recent news articles report
these dynamics playing out in Harlem,
Bedford-Stuyvesant, and the East Village—formerly low-rent New York neighborhoods
famous for their high crime rates, drug
dealers, and abandoned housing.
Gentrification thus presents a
quandary for government officials and
urban planners concerned about the welfare
of low-income families. Revitalization
efforts could price low-income residents
out of an area and force them to relocate,
while fear of hurting low-income residents
could prevent development and leave
depressed neighborhoods to urban blight.
Is there a sound policy or approach that
would encourage development, but protect
low-income residents and give them a
stake in improving their neighborhoods?
This brief proposes such an approach, one
based on the purchase of options to rent in
a given neighborhood at a given price for a
specified number of years, or on the purchase
of insurance against rent increases.
The complete brief is available in PDF format.
Usage, posting and reprint of materials on the UI web site:
Most publications may be downloaded free of charge from the web site in PDF format. This information may be used and copies made for research, academic, policy or other non-commercial purposes. Proper attribution is required. Copyright of the written materials contained within the Urban Institute website is owned or controlled by the Urban Institute. Posting UI research papers on other websites is permitted subject to prior approval from the Urban Institute—contact paffairs@ui.urban.org.
If you are unable to access or print the PDF document please contact us or call the Publications Office at (202) 261-5687.
Disclaimer: The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.
