Poor Neighborhoods Make the Best Investments
strongtowns.org
strongtowns.org
The average cost of rehabbing a home bought for $1000~$2000 say is $50,000. Have a look at the website:
http://www.buildingdetroit.org/
The 'Rehabbed and Ready' (http://auctions.buildingdetroit.org/RehabbedAndReady) homes demonstrate the transformation from a $1000 to a $50000 property.
To my eyes this approach closely matches the 10% target described in the article, and seems to be a smart way to build a tax base.
Looks like the argument the article is trying to make relates to zoning, traffic design, and density - which I don't think is changeable by people taking advantage of this house flipping program.
A street in Detroit can go in a downward spiral within months. All it takes is one bad apple (home) that gets boarded up or goes down in flames near your investment and your purchase becomes a super high risk gamble, most probably with a very unhappy ending.
Add the high property taxes, completely out of touch with the current values of the properties in such neighbourhoods. And don't forget the back taxes from previous owners that you're often required to pay.
You lure people with a limited income, attracted by the low auction prices, force them to invest a significant sum to renovate a property to code within a limited time frame, saddle them with a mortgage and then you slap them with high taxes.
I'm not saying investing in such properties in Detroit is a bad move, you can make a lot of money with it, but it's not for the inexperienced or someone without a buffer to overcome setbacks!
The average investor rarely" knows what they are doing".
The program is basically just a mechanism for a bunch of buyers to signal intent.
We don't live in Detroit but bought 3 properties for 40k each with about 18-20% yields. The renters aren't the best (they're paying 800 in rent because they can't afford an 8k downpayment), but they're great investments.
There's a reason why the value op the property, including home and land, cratered to $500 or a few thousand dollars. It's the state of the neighborhood that dictates the value and it can change rapidly, faster than in regular neighborhoods.
It's not an investment I would recommended for inexperienced investors or people with limited savings who put all eggs in one basket. And sadly, the low prices attract quite a few of them.
When I suggest real estate investing of any kind, I usually hear a wall of objections about risks, and a lack of interest in how to counter those risks. It's part of the reason I like it.
(Not that I'd invest in Detroit, I don't have a rationale for it. Some people do)
Here's a good example how a lot of the $1,000 homes, and the surrounding neighborhoods, really look like: https://youtu.be/IuJFLJ0JApA . In the description there's a link to a follow-up video 3 years later. It's not a pretty picture. But then again, who buys properties on auctions without inspecting them first?
It seemed there were some distressed properties and that some work was done on them... which tells me nothing. Were the houses rehabilitated, is work still in progress or were they ultimately re-abandoned? Can any conclusions whatsoever be drawn from this?
It's definitely sympathetic to the plight of the very low income tenants but not unjustly so; anyway I found it fascinating and worth recommending here:
https://www.amazon.com/Evicted-Poverty-Profit-American-City/...
While it worked in some parts of the city, other parts of the city had entire blocks bulldozed. Kind of like what happened in SF when they blew up buildings to stop the fire.
You can make a decent profit on these, but not in a home flipping sense. You have to become a landlord. You are in it for the cash flow from renting it out.
My father in law does this in Baltimore. He'd make a lot of money if he wasn't so bad at rehabbing the places. He spends too much, makes them too nice, and can't rent them out for any more than the going market rate. Best house in the ghetto isn't worth shit. If he just did the bare minimum he'd be doing pretty well. And if the area ever gentrifies, he'll make a fortune.
One trick is to get Section 8 housing vouchers. That makes sure you are always getting at least some of the rent.
The downside is that you are basically a slum lord. He has to go and knock on doors for rent.
It's definitely not passive income--like renting a condo to working professionals can be.
Regarding the notion of 'high risk' neighborhoods. See above point - risk is proportional to occupancy. Occupied structure, reduced risk. Rental unit with fallow periods - high risk.
The elephant in the room here is also Race. Race does not correlate to risk or a 'High risk neighborhood' - this notion is perhaps the most insidious and hardest for Capital to overcome - if it ever will be - in which case these supposed 'High Risk Neighborhoods' or 'Bad Apples' will always be labelled as such and avoided. (Incidentally I see this paradigm shift - to be the core argument of the article - albeit approached obliquely)
Regarding neighboring houses - A street in Detroit, if it can go in a downward spiral, typically already has, the city is currently in the process of demolishing blighted structures, and a property owner has a reasonable expectation that if a nearby house has-gone or goes 'galley-west' the city will take it down and offer the lot to neighboring property owners or list it for-sale on the website linked in the original comment.
The taxes correlate to the assessed value of a property, these are slightly unpredictable. However, the city is reassessing property values this year, working under the supposition that realistic valuations that people can actually pay are a better approach. Basically - I agree, lack of confidence in tax-rates is a bad thing, and it's a good thing the city is working to deal with this.
That could be quite a large amount depending on the back-taxes and liens that could have been placed on the property.
However, I believe it will be at least 20 years before my local municipality will be able to learn from any of these lessons. The planning meetings for any type of development are dominated by those with the time to go to them mid-day: retired people that set up the initial zoning and are dead set against any potential change. The same person who is super concerned about negative impact on property values will in the next sentence rail against those wanting to do development for their "greed."
I really gotta move out of California...
It's not a California thing. As part of my job, I spend a lot of time presenting at public meetings and in my spare time I do a fair amount of advocacy (for various causes) which also results in a lot of time in public meetings. I've been in public meetings in small rural villages and large cities across 30 states. And I've observed the same thing - the folks that attend those meetings tend to be dominated by those affluent enough to take the time to go.
The starkest example of that are public meetings in poor cities where projects will affect large minority areas and yet 95% of the attendees will be affluent folks from the outer suburbs. It's not that the affected folks don't care, it just that when the meeting is held at 2pm or 5pm or even 6pm on a weeknight, they have jobs to go to and they can't make time to attend. The most diverse, well-attended public meetings I've been to have always been held on Saturday afternoons.
In my experience, people will be engaged if you engage them. Typically what happens in these scenarios is somebody gets a grant and decides to do something, and they put a public posting in the janitors closet in the women's room in the city hall basement.
My city is doing a refining effort where they publicly over faux-communicate. There's lots of meetings with brainstorming, fancy pictures, etc. Than a preliminary document dump written in jargon. Then, days before the decisions get made, there's a Friday night drop with the "decisions".
Then people find out at the last second if they are lucky. At that point all decisions are made. Partial public financing is typically lined up. The only way to effectively get any voice is to rally around some bullshit regulatory point.
How on earth is that the case? They recounted their experience, which took place in reality. That was their reality.
> It had the final say on legislation and the right to call magistrates to account after their year of office. In the 5th century BC its members numbered about 43,000 people. It would have been difficult, however, for non-wealthy people outside of the urban center of Athens to attend until payments for attendance were introduced in the late 5th century. It originally met once every month, but later it met three or four times per month.
Today, "ecclesiastical" is associated with a centrally managed church, but the term is rooted in a democratic assembly, with payment for attendance enabling representation of more segments of the citizenry.
Since we're at a point where many people are under-employed, and we expect many more to become so, we can probably re-institute something like this.
After all, the United States was a crazy experiment to revive 2,000-year-old Greek idea called 'Democracy'. While we did have slaves at the beginning, we have managed to enfranchise all adults politically. Maybe the Ecclesia could work, too.
Call me old-fashioned but I don't think locking people in as a permanent underclass is a good idea.
And practically speaking I'm not sure how a slave society where the slaveholders have special rights to participate in democratic society is an improvement over a system where poor people have trouble participating because of their jobs or their resources but not because they don't have the right to.
Not really. Representative democracy as the substantive form of government was an established tradition in Britain and it's North American colonies long before the US (a prime motivation for the revolution was perceived increasing deviation from that norm by the central government in respect to the administration of the colonies in the period leading up to the revolution.)
Insofar as the US (under the Constitution, at least) was an experiment in government, it wasn't in revive a dormant concept of "democracy", but in vigorously and fairly explicitly adopting the novel tripartite separation of powers model of Montesquieu.
> we have managed to enfranchise all adults politically.
No, we haven't. We have in principle (though less so in practice) eliminated certain bases of disenfranchisement, but it is not the case that the US has, at any point, enfranchised the entire adult population, even on theory, much less in fact.
But that model is basically based on the English government with Parliament and a king in place of Congress and a president, isn't it? There was definitely a lot of neoclassical thinking among the Founding Fathers, although I'd say more inspired by the Roman Republic than by Greek democracy (to which the American system bears very little resemblance).
Anyway, curiously, a lot of early discourse uses "democrat" or "democracy" as a pejorative akin to "anarchist" or something.
I'm not a classical scholar, but I get the impression that later times preferentially transmitted the less democratic points of view. I.F. Stone also wrote about this in The Trial of Socrates.
Not really; the British system of the time was certainly an important influence on Montesquieu, but it didn't exhibit the three-way separation of powers between executive, legislative, and judicial that his model called for.
At the time Montesquieu was writing (there has been some practical evolution towards an independent judiciary since) Parliament held not only legislative power but also (in the House of Lords -- which at the time was also the dominant House in terms of the legislative function, though that is very much not true now) the judicial power as well.
Again, the then-current British system was one of the primary reference points which informed Montesquieu's model (and he clearly saw it as far superior to the French system of the time), but it wasn't designed around the three-way separation of powers with mutual checks and balances the way the US system under the Constitution was.
Which church heirarchy? The secular heirarchy of the Catholic Church (which you seem to be referring to) certainly isn't an example (while there were certainly councils in which voting occurred, the members of those councils were not, for the most part, elected by the people below them, but appointed by those above.)
The monastic heirarchy perhaps had greater similarity to representative democracy, though I'd still say it was at best loosely similar to representative democracy rather than an example of it.
It's not quite that simple. The US Federal style adapted neoclassist architecture from Europe, where Greek and Roman inspired revivals started in the mid 18th century when new archeological expeditions as well as artists bringing back impressions of Italy and Greece produced an influx of images and artefacts that made Greek and Roman architecture better known.
French revolutionary architecture went to a similar extreme as the US Federal style, and I'm sure it wasn't all a one way thing, and you're sort-of right in that certainly people were looking to the Roman Republic and the Greek city states as an ideal, and that was part of the fascination with Greece and Roman culture.
And the architecture in return did get an image tied to radicalism and republicanism as a result of the extent of its use in the US and France after the revolution (the French then went on to take it to the extreme, when under Napoleon the French Empire style tried to do everything bigger, shiner and even more Roman).
But the Greek and Roman revival didn't start in the US, and often copied then-modern European architecture rather than copying the originals.
An example where we know the direct influence is the layout of Washington D.C. - Jefferson provided l'Enfant with maps and sketches of a number of European cities to use as inspiration, with Karlsruhe being one of them.
Karlsruhe had been built from scratch starting in the 18th century, following a strict planned layout with a palace at the centre, radiating artery roads out from the palace gardens, aligned with the wings of the palace, and was a major force in spreading the influence of strict geometric city plans that used the shape and regularity to draw attention to important buildings or monuments as well as to tie the city together. Washington D.C. (and many later US cities) certainly in turn influenced further city plans in Europe.
Greece and the Roman Republic and Empire came to be seen as purer, grander and more refined past, which drove a lot of effort into re-discovering information about them, which led to an increased interest in archeology, and eventually to things like neoclassism.
Dictators and radicals alike looked for lessons, and found them in different places for centuries. E.g. the former have often had an extreme fascination with the idea of continuity with the Roman Empire (see one of Napoleons later extreme examples of trying to be Roman[1]); the latter with the nascent democracy of the Greek city states and the Roman Republic.
You find it everywhere, not just in philosophy, architecture and art: English itself was subjected to a sustained "assault" of writers trying to bring more Latin and Greek words into common use.
A bit cheek-in-mouth: Everyone wanted to create the new Rome, ever since the fall of Rome (e.g. consider the Holy Roman Empire and the idea of "translatio imperii" which was used to justify a tenuous connection to the perceived glory of ROme [2]). They just disagreed (strongly) about what was great about Rome.
[1] https://en.wikipedia.org/wiki/Empire_style#/media/File:The_M...
Couple that with the invented principle of translatio imperii [1], and they glossed over the multiple long breaks in lineage, and lack of even an unbroken connection between the territories ruled.
There's the old joke about the HRE: It was neither Holy, Roman or an Empire - the emperor ruled on paper, but it had very limited practical effect other than letting a smaller and smaller set of families reflect in the glory of an Emperor title.
As an aside, that aphorism about the Holy Roman Empire is so well-known that it has the unfortunate trait of being spouted by people who know nothing else about the topic (not that I'm accusing you of that, if it sounds that way).
As to being a true successor, recall that the Holy Roman Empire was famously neither holy, nor Roman, nor an empire.
The "Byzantine Empire" is equally a misnomer. Constantine moved the capital of the Roman Empire to Byzantium-- renaming it "New Rome"--for defensive and commercial reasons. The Roman Empire itself remained. The notion that the "Byzantine Empire" was a successor to the Roman may arise from the fact that the eastern parts of the empire had always used Greek as the language of administration and as a lingua franca. Greek was barely known in the West from the fall of the eastern empire (ca. 476) to the Renaissance, when Greek scholars came to Italy as the eastern empire was contracting.
Given the Roman Empire's survival until 1453, the fall of Constantinople, a claim of succession is best made by the Russian Empire. Their Orthodox religion and Cyrillic alphabet were clearly derived from Greek Orthodoxy and the Greek alphabet.
Or alternatively, just run all the meetings on Saturdays and Sundays. Government is a public service, after all, and could do a bit better at operating to meet the needs of the people.
New York: 6am-9pm
New Jersey: 6am-8pm
Connecticut: 6am-8pm
Pennsylvania: 7am-8pmIn Australia voting day is always a Saturday, from 8 am to 6 pm, also with ample opportunity to mail in beforehand. Oh and you'll be fined if you don't cast your vote... It may not be perfect, but appears way more democratic to me than the US elections.
http://www.aec.gov.au/Voting/polling.htm
(When I left Norway nearly two decades ago, so glad I didn't go to the US now.)
You may want to reconsider your logical approach here, because it's not true at all.
I'm also unconvinced that forced voting is a positive. If you don't care enough to develop an opinion and vote, why should your random "because you have to" vote count?
It could be kept that way for that reason, but to say it was deliberately designed for that reason I feel is disingenuous.
[1]: https://en.wikipedia.org/wiki/Election_Day_(United_States)#H...
https://www.bustle.com/articles/192414-why-do-we-vote-on-tue...
Why is it still on a Tuesday? I think your reason is spot on.
That said, EVERY interest group is going to favor or disfavor any particular new solution due to perceived advantages of drawbacks to their cause, preventing any progress whatsoever.
It's actually the first Tuesday after the first Monday (in other words, the first Tuesday after the first of November, which is All Saints' Day, and therefore unsuitable).
I have never known an employer who wouldn't make accommodations for an employee to go vote.
I'm sure there's probably a border case somewhere that has happened for the most part, this is the case.
This. I've struggled to phrase why most developments seem so terrible, or sterile, or what-have-you, while the areas that developed over time seem so much more... Alive? Valued? This is an amazing way to phrase that difference - it's possible to invest yourself in places that are not at peak value.
When they went to see Levittown for it's 50th aniversary they were unable to find a single house that had not changed in a major way.
Even the worst architecture and urban planning will be reprocessed over time.
He chose to build half-houses that are literally unfinished roofs on one side. Over time, people were encouraged to build the other half as they saw fit.
[1] Episode 231 - Half a House - http://99percentinvisible.org/episode/half-a-house/
If you visit that neighborhood today, you can see the results of laws very different from those in American suburbs. Most of the houses have been expanded. Each one has grown in a different way. They've been repainted different colors, there are Virgin of Guadalupe icons and paintings and Aztec designs and decorations and every other kind of individualistic expression all over. Small shops have opened to provide typical neighborhood corner store services and light industry like auto repair and electronics servicing is going on during the day. Lots of the car parking has been enclosed and some has been eliminated entirely in favor of more living space. [1]
All of those changes would be illegal in the vast majority of American suburbs. When older American cities were built, the laws were more like Mexican laws and neighborhoods could grow up with residents and families and provide local services and develop character.
Plus, the Mexican neighborhood and older American neighborhoods are significantly denser than new American suburbs, without being remotely like really dense development. That makes things much more accessible by walking and creates more cooperation.
That's the difference a reasonably open and humble set of laws makes.
[0] http://www.nationalgeographic.com/photography/photo-of-the-d...
[1] Try a satellite or street view somewhere around 19º18'30'' N and 98º51'30'' W
If you want to visit "good suburbs" (single family homes and duplexes mostly, but with variety, character, mixed use, and you can get around by transit, walking, or car -- and a reasonable tradeoff of affordable housing but reasonable commute time) like this in the USA, the middle areas (not center, not outskirts) of northeastern cities developed before or around the time of the rise of the auto have some. Queens, Bronx, outer (ie, not the currently trendy part along the East river) Brooklyn for example.
So often we frame it as a choice, quiet but car-enslaved suburban living versus hectic but convenient urban living.
Wrong! You can have it all. You just need your government to not be stupid.
I never knew it was possible to put brick or stonework on a house built with wood siding until living in that neighboorhood. A couple of the owners apparently worked construction putting in brick siding and they bricked up their own houses in a few days. Another guy covered his house in white stonework rather than just the limited front elevation with a chair rail high stonework.
In addition, today is even worse because now we have Homeowners Associations which prevent any evolution because it might affect the price of someone's house in a downward direction.
The result is extremely jarring in ways that people can't easily articulate. Something in your brain is noticing the architecture is trying to hide what is basically a big empty box of steel and glass, with areas in between that kinda sorta seem like nice open space but doesn't seem to ever actually be used for that. It's just there to look at and think it's usable.
Of course such things are extremely subjective. One thing I have noticed that bothers me with new developments are trees. They are always short, because they are still young. Hence they have no character, yet. Storms haven't ripped them, they haven't been shared when they cover someone's window from sunlight. And if course they are always perfectly aligned and usually rounded with a square made of tiles. Everything measured and inch perfect.
Interestingly this bothers me with new developments, that everything is too neat and measured. At some places I appreciate it.
In other words the trees are as sterile and monoculture as the architecture.
Affluent neighborhoods are built in a way that cannot be easily improved upon.
With the way automation is taking jobs I wouldn't be surprised if these kinds of low income housing investments turn out to be solid cashflow producing investments.
I very much doubt a legislator or city council could muster money from Us to spend on places where Those People live, even if it makes financial sense. I would love to be wrong about this.
The problem is, most of the money (a staggering 80%) goes to pay salaries !!! They aren't helping the poor or the rich, they're helping themselves.
When I look at the map, it looks like most of the city is lightly in the red and it has several extremely red areas which may drive most of the losses. What is driving those? Are they stadiums or large government facilities that aren't taxable? Or maybe middle-aged neighborhoods with severe drainage problems that can't withstand a hurricane?
What’s driving the difference between the lightly red and the green areas? Some of the comments here propose that people in those neighborhoods aren't asking for improvements or the infrastructure is naturally cheaper. It could also be a city-favorable tax to liability balance since the larger portion of the green area is rented and thus doesn't get a homestead property tax exemption or growth cap.
"Putting in street trees, painting crosswalks, patching sidewalks, and making changes to zoning regulations" might put a city in better financial position if they think gentrification makes sense and is possible. But that by definition is not a social justice argument.
Usually not. Low population density and far from city center is usually enough to make it very "red". See also, suburbs.
I didn't understand the argument either. I've lived all over the country and doubt the poor neighborhoods in Chicago (where I'm from) and Detroit (where I once lived) do their respective cities much good from an investment point of view (whatever that means). Another thing to consider is that poor people use social services, and anyone who has been to Oakland will tell you a lot of those services live downtown. As a former resident of downtown Oakland, I'd say this rule wouldn't hold up there either.
Still, we should invest in poor neighborhoods because it's the right thing to do for the environment as well as the residents of said neighborhoods.
I'd argue the government should start the process by cleaning up brownfield and greyfield (obsolete shopping centers) sites and consolidated land for ease of development. The initial costs are certain to be higher but the returns are larger (in many cases).
Well, check the data, don't just "doubt it". It means that neighborhoods on the bad side of town tend to generate enough tax revenue to pay for their road, electric, and sewer maintenance, whereas neighborhoods on the good side of town tend not to.
Increasing the valuation of a property doesn't magically change a resident's ability to pay taxes. Best case scenario is that the areas where low wage earners live shift around a bit. Worst case scenario is that people are pointlessly taxed out of their homes and the city gets a reputation of being unaffordable.
Of course, the bump in those home's property tax revenue wouldn't drive other revenue like investing in making a downtown more upscale would: more local homeowner values (and property tax revenue), corporate business tax revenue, sales tax and tourist revenue. He brushes off simplistic arguments but his argument is simplistic as well - and he advocates for squeezing the poor! The poor would rather have lower taxes than a bump in home value.
> We see this trend everywhere we've done a model. On a per acre basis, neighborhoods that tend to be poor also tend to pay more taxes and cost less to provide services to than their more affluent counterparts. How is this possible? Some of my planner colleagues will say it is density..
Then he goes into how it's cheaper to service but really offers no argument about the density especially as it relates to the 2 photos he proposes as evidence (the 1.1M poor block vs the 618k affluent block - it's actually 803k on his other article). Clearly there are more structures and less parking on the poor block. The poor picture has this: "two liquor stores, a pawn shop, a barber shop, a bankruptcy attorney, a campaign headquarters, a retail establishment, a cafe and a vacant building." How can he shrug off density?
> Poor neighborhoods subsidize the affluent; it is a ubiquitous condition of the American development pattern.
Bold claim with no evidence. Perhaps he meant to say "poor neighborhoods are more profitable on a property tax basis than affluent neighborhoods"
However, most arguments for dense development are EXTREMELY relevant to this ratio - the idea being that dense development is cheaper, per unit population/economic activity, to build infrastructure for. Maybe it shouldn't be viewed as an end in itself, but it is a good heuristic.
[1] http://www.strongtowns.org/journal/2015/12/16/best-of-2015-d...
So his argument doesn't stand up in that case. Sure the poor block has a higher assessment and more property taxes unless those businesses got tax rebates for operating there. But that's just one revenue metric for the block.
Please don't take this comment as advocacy for a higher tax rate, simply recognition of the financial structure; you get what you pay for, or in the case of muni bonds what other people think future residents will pay for.
The argument is that improving neighborhood infrastructure will tend to improve housing values; that's noncontroversial. Increased housing values implies increased property tax; that's axiomatic. Poorer neighborhoods are denser, so a single neighborhood intervention has more impact on a larger number of properties. The poorer neighborhoods tend to be cheaper to improve. And the poorer neighborhoods have more upside: it's difficult to improve the value of properties that were recently designed and built to maximize real estate value.
I did pull it up on Google maps and visited a few random addresses on the Sherrif's property tax lookup page, etc. The orientation of the red-green graphic doesn't seem to be north-south and it isn't clear what is driving the large red areas.
Here in Italy the oldest part of the city are usually the most popular and most expensive.
We don't have THAT much land over here and regulation are pretty strict on what you can build and where...
If you look at US cities that share this trait, e.g. NYC or Boston or Chicago or even SF, the oldest parts of the city are very expensive and prestigious, and have been for several centuries.
Also, "white flight" never happened in Italy, while many US cities were affected last century.
Key quotes:
"It's wealth that is shared throughout the neighborhood." -- about as anti-gentrification as you can get.
"American cities can make low risk, high returning investments while improving the quality of life for people, particularly those who have not benefited from the current approach." -- indicates to me that the investment he's speaking of is of cities into existing areas, not developers demolishing and recreating neighborhoods.
The trick would be to apply the improvements to every poor neighborhood at the same time so you don't create winners and losers and upset the balance in the housing market, but this is basically impossible.
The difference I see here is that the developers and new residents are the ones who reap the benefits of the increased property values from gentrification, whereas if the city makes modest improvements before it's current residents are forced out by increasing prices/taxes, then the current residents reap the increased value. Even if they move because they don't want to pay taxes on higher property values, their property is still worth more when they sell it.
No, the current homeowners reap that value. Many residents are renters, particularly in low-income areas, while the owner often doesn't live anywhere near the place.
Typically with gentrification it isn't a series of small improvements that change the neighborhood its bigger urban planning changes or additional big projects.
Even if you could do that, it wouldn't work. It would simply make all of the poor neighborhoods more attractive to gentrifiers at the same time.
I think there is a tipping point where if you help poor neighborhoods too much, they become attractive enough as places to live that the poor residents end up being displaced by increased housing costs. It's an unintended consequence.
So if you increase the quality of all of the affordable housing, then it shouldn't make much impact on the prices of those houses. They're already paying what they can. Now if you create new job opportunities at the same time then the equation changes. If the high quality jobs greatly outgrow the housing then you end up in a situation like San Fransisco or lower Manhattan where rents skyrocket regardless of the condition of the housing.
Consider what is happening in some of the rougher parts of downtown San Jose: people are moving in to the existing houses and either renovating them or living in them as-is. Few developers are involved in most of these areas so far -- they are simply the last remaining "affordable" areas in the city, but not for long. Home values in those neighborhoods have appreciated about $100k per house over the past several years.
This is also going to happen in Oakland, and it is probably happening already in some neighborhoods.
The bottom line is that gentrification does not have to be driven by developers. When demand far outstrips supply as it does in the Bay Area today, the wealthy end up in direct competition with the poor over the same housing, and the wealthy will simply outbid the poor.
There's no reason to expect that the city spending more money on a neighborhood increases any tax returns.
The article is making the observation that it's much easier and cheaper to improve bad neighborhoods than rich ones. Painting crosswalks and planting trees is cheap, but rich neighborhoods already have those things.
Those areas are "profitable" because they are using fewer services.
If you invest more there, they would no longer be "profitable" -- and increased investment may not increase future "profits."
I think this essay falls down in part because it's nonsensical to use these private industry terms when discussing municipal governance. I want my city to concern itself with equity and quality of life - not which citizens are most profitable.
The goal of a city shouldn't be to increase land values -- it should be to increase the affluence of residents.
Last thought, what do you think these municipalities should do instead of minor QoL improvements that might modestly increase average property value (as stated in the article)?
and for displaced renters?
However, a more usual pattern is for the three existing businesses to be torn out and replaced with a single retail space that's up to code, beautiful, clean, modern, and a financial drain on the city.
A land tax instead of a property tax seems to be the way to go. This would avoid punishing people from improving their property.
"No sh*t, it's called gentrification and has been around forever. Thanks for reinventing the wheel."
Except maybe the stock market with a 30 year horizon.
> We're talking about things like putting in street trees, painting crosswalks, patching sidewalks, and making changes to zoning regulations to provide more flexibility for neighborhood businesses, accessory apartments and parking.
His argument is that small civic investments in infrastructure in poor neighborhoods have a good chance of increasing the average property value of the whole neighborhood and thus increasing the tax base. Not all 'investments' will work, but they are relatively inexpensive so you can experiment and replicate the ones that do work across the whole city.
That raises the question: Property taxes increasing won't by themselves increase people's incomes. Since they aren't trying to affect jobs(per-capita income) and explicitly mentioned density is not the issue(population), then the only thing left is to change the demographics(transfer wealth in).
Investment could be meant more broadly(like education or healthcare), but he explicitly disclaims that at the start("What I'm going to present here is pure dollars and cents. "). Somehow it doesn't seem right to advocate for city policy that swaps out the existing citizens for more profitable ones, though I suppose the existing citizens do come out ahead.
whoa.
what about the person whose spouse died last year, and whose house burned down over Christmas?
^^ she's a 1st order connection, but not my tenant.
how about the aunt who's got +2 mouths to feed & house after her sister died?
^^ again, real human, facing real serious cash-flow problems.
there are so many ways to wind up in a hard way, necessitating low-cost housing.
as a student at university, I did significantly more damage to rental properties than I lost deposits to repair... intentionally. and I smoked a lot of pot.
I'm not disputing your point that most individuals in a place to afford the time and money to 'get into property' are going to want to avoid situations that represent a financial risk to them.
however, I was totally put off by the war zone characterization.
Why?!
How? Belligerence... naturally.
i think you're underestimating just how little money "people without money" have. a widely quoted statistic [http://www.theatlantic.com/magazine/archive/2016/05/my-secre... e.g.] is that half the country couldn't raise $400 in an emergency.
If poor people can't afford to live in nice neighborhoods, and we transform their surroundings into nice neighborhoods, they won't be able to afford to stay. Richer people will move in and drive up the prices.
These effects are likely to be amplified in towns with high demand for housing and low supply.
Looking at it this way gets at the heart of the problem with this way of thinking. Can I suggest a counter point?
Solve the systemic issues that prevent low-income people from seeking good housing, rather than advocating to keep them in their place.