12.31.2013

Trickle-down Gentrification

Luxury condo development can't solve the affordable housing crisis — only public housing can.

Old, dense, transit-served cities like San Francisco and New York have excessive restrictions on new housing construction, making them increasingly inaccessible to all but the 1 percent. Newer, sprawling, car-centric cities like Dallas and Atlanta facilitate new development, helping to maintain lower housing costs.

This is the argument advanced by economist Ed Glaeser in his much-cited 2011 book The Triumph of the City, a paean to creative-class urbanism written by someone who could afford to live in Boston’s Back Bay but instead chose suburban Weston, outside the Route 128 beltway that defines the metro area.

There is some truth to these basic facts, but their interpretation has led to a pernicious claim about urban development: that the construction of any housing stock at all, even luxury condominiums, will relieve pressure on the housing market to an extent that will keep cities “affordable.” This reliance on a false cause and effect has become a common justification for urban gentrification. Once the new luxury condos are built, the argument goes, truly wealthy city-dwellers will move into them and leave open the market-rate apartments meant for good old middle-class families.

Nowhere in the argument is housing for the poor addressed or even suggested. And as David Madden noted in the Guardian, this argument “ignores the fact that the ‘very fortunate’ invariably seek to bend municipal priorities and local land uses towards their own needs . . . the more that urban governments become obsessed with gutting welfare policies and punishing the poor, the less the trickle-down theory of gentrification makes sense.”

The fallacy of trickle-down gentrification also highlights the complications of the term “affordable,” used to describe housing priced below market rates. Affordable housing, often built by community development corporations like the one I work at, has largely supplanted government-funded public housing since the 1970s. Many units are paid for by Low-Income Housing Tax Credits (LIHTC), while some are covered by project-based Section 8 vouchers and other subsidies. But while public housing is home to people with incomes below 30 percent of the median, LIHTC units typically use 30 percent of median income as a floor. This means that while affordable housing is affordable to certain low- and moderate-income people, and plays an important role in allowing those people to remain in gentrifying cities, it is often unaffordable to the working poor.

If affordable housing is only sometimes affordable, and public housing construction has stalled, then how will luxury condo development keep cities affordable for poor and working-class people? It won’t, of course. But the idea that the crisis can be solved by letting the free market build penthouses masks the need for government intervention through massive construction of new housing.


Much has been written about the so-called failure of public housing in the United States, so I won’t take up the topic here, except to point out that a much-ignored cause of that failure was the inability of local authorities to actually maintain and repair their housing projects. While few would blame potholed roads on the drivers who use them, a great effort has been made to attribute the degeneration of public housing in the US to public housing residents themselves.

In other countries, however, public housing has been more successful. In the mid-1960s, the Swedish Social Democratic Party launched an ambitious plan to provide truly affordable housing and produce “good democratic citizens,” called the Million Programme. More than a million homes were built by the 1970s, and they now house approximately a quarter of the Swedish population. Though they have come under fire from liberal and conservative critics for their modernist superblock architecture, their peripheral locations, and their propensity to house newly-arrived immigrants, they have continued to provide quality housing for millions of low-income Swedes and to resist privatization. Some are currently being retrofitted to make them more environmentally efficient.

If public housing in Sweden could be said to have failed, it would only be because the Social Democrats no longer maintain the degree of influence that they did when the miljonprogrammet was instituted.

Five thousand miles away in fiercely capitalist Hong Kong, nearly half of the population lives in government-subsidized housing. Hong Kong began building public housing on a large scale in 1953; since then, both the colonial and independent governments have encouraged and financed the creation of public housing. Because available land is at such a premium, construction must be vertical — low-density sprawl is not an option. And yet Hong Kong is facing pressure from low-income residents and progressive government ministers to build more public housing, even to introduce rent control.

The minister of housing and transportation, true to Hong Kong’s capitalist spirit, uses market-based language to describe the role of public housing: “In the face of high housing prices and rents in the private sector, public housing has to perform a stronger lever function.” The demand for and recognition of public housing is encouraging. But when government is asked to compete as a market player with commercial developers that drain its coffers for their subsidies, proponents of the welfare state have much to fear.

Housing, a basic need for every individual, cannot be treated as an ordinary commodity. While there is certainly a demand for affordable housing, private developers are unlikely to meet that demand. Affordable housing is more complicated to finance than market-rate and sometimes more expensive, especially if land costs are high. If the widespread demand for affordable housing fails to produce increased supply, poor people are left without a good option. Some crowd into substandard housing. Many become homeless. Others are displaced to suburbs and outlying towns, where social services can be harder to access and transportation costs are high.

A recent New York Times article acknowledged that, though the demand for affordable housing is widespread, the market has declined to meet it. Instead, commercial developers have chosen to build a glut of luxury apartments and condos:

Today, millions of poor Americans are caught in a similar trap, with the collapse of the housing boom helping stoke a severe shortage of affordable apartments. Demand for rental units has surged, with credit standards tight and many families unable to scrape together enough for a down payment for buying a home. At the same time, supply has declined, with homebuilders and landlords often targeting the upper end of the market.

There seems to be a demand for plush pieds-à-terre too, and developers are clearly responding to that demand. But it is faulty logic to suggest that each additional story of a high-end apartment building frees up land for affordable housing. If current trends are anything to go by, they merely free up land for more luxury housing. Instead of investing in services for their citizens, today’s cities chase the designation of “world city,” a euphemism for glitzy business centers with expensive restaurants and entertainments. When city boosters say that poverty is disappearing, what they really mean is that it is going somewhere else — most likely somewhere with fewer opportunities for social mobility, collective action, and political power.

Housing construction cannot be separated from the economic conditions that surround it — low-wage service jobs, stringent requirements on credit scores, and a pervasive opposition to rent control. Frederick Engels foresaw this problem in his essay on housing.

Whence then comes the housing shortage? It is a necessary product of the bourgeois social order; it cannot fail to be present in a society in which the great masses of the workers are exclusively dependent upon wages; in which the workers are crowded together … at a quicker rate than dwellings come into existence for them under existing conditions; in which, therefore, there must always be tenants even for the most infamous pigsties; and in which finally the house owner in his capacity as capitalist has not only the right, but, in view of the competition, to a certain extent also the duty of ruthlessly making as much out of his property in house rent as he possibly can.

In such a society the housing shortage is no accident; it is a necessary institution.

While Engels’ ultimate solution to the problem of housing costs — dictatorship of the proletariat — is a ways down the road, there are some serious steps that must be taken if we are to avoid complete working class immiseration. As our economy pushes more and more people into unemployment, underemployment, and precarity, the demand for affordable housing will only grow.

And despite Ed Glaeser’s protestations, dense development on its own cannot solve the problem. Only public housing can do that.