PAI786: Urban Policy Class 5: Neighborhood Change.

Slides:



Advertisements
Similar presentations
Government Control of Prices in Mixed Systems
Advertisements

Housing Preservation and Community Revitalization 1.
Chapter 5 Urban Growth. Purpose This chapter explores the determinants of growth in urban income and employment.
Urban and Regional Economics Weeks 8 and 9 Evaluating Predictions of Standard Urban Location Model and Empirical Evidence.
Local Initiatives Support Corporation (LISC) Philadelphia Data & Resident Engagement: A Fair and Balanced Approach to Neighborhood Growth.
Growth, and Limiting Growth © Allen C. Goodman, 2006.
Introduction and the Context The Use and value of Urban Planning.
THE INDIANA HOUSING MARKET Realities, trends, and predictions  Not market but markets  Focus on big picture (metro and rural)  Key reality is fundamental.
International Economics: Theory and Policy, Sixth Edition
Chapter 6 Urban Land Rent.
11 PERFECT COMPETITION CHAPTER.
Public Choice through Mobility © Allen C. Goodman, 2009.
Incidence of Environmental Regulations Who pays for environmental regulations, and how much?
More on Housing © Allen C. Goodman, 2006 The cost of housing We talked about the relation of an asset to the rents that it could earn. If a house generates.
U.S. suburbanization and gentrification Soc 331 Population and Society
Chapter 1 Ten Principles of Economics Outline of Topics T1
1 Understanding Urban Growth Patterns Real Estate 690 Market Analysis for Real Estate Dr. Longhofer.
Fun with Rent Functions! We derived a rent gradient Remember, slope was related to mgl transport cost. Let’s assume that we have an open city. What does.
Fun with Rent Functions! We derived a rent gradient Remember, slope was related to mgl transport cost. Let’s assume that we have an open city. What does.
Urban Challenges AP Human Geography.
Why do inner cities have distinctive problems?
Chapter 14 Firms in competitive Markets
PPA786: Urban Policy Class 7: Housing Problems and Federal Housing Programs.
General Equilibrium Analysis A Technological Advance: The Electronic Calculator Market Adjustment to Changes in Demand Formal Proof of a General Competitive.
State and Local Public Finance Spring 2015, Professor Yinger Lecture 8 Property Tax Incidence.
Ch. 13 Key Issue 2 Where Are People Distributed Within Urban Areas?
The Australasian private rental sector; A tenure under severe stress Professor Terry Burke.
Building Support for Affordable Communities: A Summary of Research on Opinion and Messaging October 20, 2014 Janet Viveiros National Housing Conference.
Public Finance Seminar Spring 2015, Professor Yinger Property Tax Incidence.
Bowen Island Affordable Housing Needs. What is a housing needs assessment? Current housing situation Future trends Gap between demand and supply at various.
The Greater Boston Housing Challenge Barry Bluestone Center for Urban and Regional Policy Northeastern University WBZ “Attaining the American Dream” October.
Urban Challenges AP Human Geography.
Public Choice through Mobility © Allen C. Goodman, 2015.
Urbanization of America Late 1800’s & Early 1900’s.
West Oakland Specific Plan Equity Strategies. Potential impacts of new development and investment on existing West Oakland community New development &
1 of 37 PART II The Market System: Choices Made by Households and Firms © 2012 Pearson Education CHAPTER OUTLINE 9 Long-Run Costs and Output Decisions.
Inner Cities Physical Problems: Deterioration  Filtering-The process of dividing up a large home into small apartments for low income families. So what.
Gentrification the process of renewal and rebuilding accompanying the influx of middle-class or affluent people into deteriorating areas that often displaces.
Managing Neighborhood Change: An Overview Alan Mallach, Non-Resident Senior Fellow The Brookings Institution.
PPA786: Urban Policy Class 7: Housing Problems and Federal Housing Programs.
Housing in London - the current state of play Christine Whitehead London School of Economics Next steps for housing policy in London - supply, standards.
Is there a problem with the current housing market? Christine Whitehead LSE Social implications of a changing housing market ESRC Festival of Social Science:
PAI786: Urban Policy Class 7: Housing Problems and Federal Housing Programs.
International Economics: Theory and Policy, Sixth Edition
PAI786: Urban Policy Class 5: Neighborhood Change.
PAI786: Urban Policy Class 4: Household Sorting and Neighborhood Amenities.
Chapter 13 Key Issue 3 Why do inner cities have distinctive problems?
TOD University 2013 Housing 201: Preservation. Brainstorm: How do we lose affordable apartments? Rent raised Slumlords run building into the ground Fixed.
This created a “white flight” from the cities to the new suburbs. New freeways enabled much of this flight. Note: Spring Branch, SW Houston, Scarborough.
The Greater Boston Housing Challenge Barry Bluestone
The Moment. The Moment Mile High Connects A Growing Network.
Karen Chapple, Professor of City & Regional Planning
INCOME DISTRIBUTION AND POVERTY ERADICATION
International Economics By Robert J. Carbaugh 9th Edition
Problems with Urbanization
Issues in American urban centers hw: read pgs
Unit 6: Economic Geography
Chapter 8 The Urban Labor Market.
Defining Gentrification
Class 3: Housing Concepts, Household Bids
Gentrification – Economic Model
Class 5: Neighborhood Change
Trading and Factory Towns
Class 4: Household Sorting and Neighborhood Amenities
Class 4: Household Sorting and Neighborhood Amenities
Defining Gentrification
Class 5: Neighborhood Change
Class 3: Housing Concepts, Household Bids
Demand Chapter 20.
Democratizing our Energy System:
Presentation transcript:

PAI786: Urban Policy Class 5: Neighborhood Change

Urban Policy: Neighborhood Change Class Outline ▫Neighborhood change  Increase in low-income residents  Gentrification  Outmigration ▫The ripple effects of neighborhood change ▫Long-term urban trends

Urban Policy: Neighborhood Change Housing Bids and Neighborhood Change ▫The tools we have developed help us to understand neighborhood change. ▫The key is to recognize that changes in population or income shift bid functions up or down.  If people move into an area, for example, competition for housing intensifies and bid functions are pushed upward.  This leads, in turn, to declines in housing unit size or quality.

Urban Policy: Neighborhood Change 1. Increase in Low-Income Residents ▫Suppose that an urban area experiences a large increase in the number of low-income residents (due to immigration or job losses). ▫Then the bid function for low-income households will shift upward.  The low-income section of town will expand; housing units there will be converted.  Low-income households will consume less H and pay more per unit of H.

Urban Policy: Neighborhood Change Neighborhood Change These neighborhoods shift from high-to low-income

Urban Policy: Neighborhood Change Downward Housing Conversion ▫This housing conversion can take many forms  Dividing large units into smaller units  Renting previously single-household units to more than one household (or to larger households).  Allowing units to decline in quality.

Urban Policy: Neighborhood Change Type A Neighborhood Decline: Drop in Housing Quality ▫In some cases, this process leads to clear neighborhood decline due to:  Severe overcrowding and/or  Extensive housing deterioration—to bring quality- adjusted square feet, H, down to a level that the entering low-income people can afford.

Urban Policy: Neighborhood Change 2. Gentrification ▫Neighborhood change can also involve higher- income households moving into previously low- income areas.  This is called gentrification.  Now conversion involves improving units.  People must expect neighborhood amenities to improve.

Urban Policy: Neighborhood Change Gentrification These locations change from low- to high-income

Urban Policy: Neighborhood Change The Role of Expectations ▫The role of expectations is worth emphasizing. ▫Housing is a long-lived asset. Home buyers bid on housing based on their long-term expectations concerning neighborhood quality. ▫High-income people will not move into a poor neighborhood if they do not expect its amenities to improve.

Urban Policy: Neighborhood Change The Role of Expectations, Continued ▫Many local policy makers have figured this out. ▫Programs providing moderate-income housing in poor neighborhoods are likely to fail  Unless the city is committed to improving the neighborhood.  And moderate-income households believe the city will succeed.

Urban Policy: Neighborhood Change Gentrification and Displacement ▫One great dilemma of local housing policy is the trade-off between gentrification and displacement.  Cities want better housing and nicer neighborhoods.  Existing low-income renters may be pushed out as a neighborhood improves and rents go up. ▫Existing low-income homeowners benefit from gentrification because the value of their homes goes up, although they might lose social ties with renters.

Urban Policy: Neighborhood Change 3. Outmigration ▫Sometimes economic or social changes pull people out of a city.  Low-income jobs move to another region.  Housing subsidies or new highways pull middle- income households to the suburbs. ▫This leads to the opposite of the first case.

Urban Policy: Neighborhood Change Type B Neighborhood Decline: Emptying Out ▫As P, the price per unit of H, declines, landlords have less incentive to maintain their units and housing quality ( H ) deteriorates. ▫If high-income households cannot be convinced to move in, some neighborhoods will experience vacancies and abandonment—which have a strong negative impact on neighborhood quality. ▫We will return to these topics in the next few classes.

Urban Policy: Neighborhood Change 4. The Ripple Effects of Neighborhood Change ▫Change in one neighborhood often has ripple effects in other neighborhoods. ▫If low-income households move in and some neighborhoods change to low-income neighborhoods, for example, high-income people will not have enough room. ▫The resulting increases in high-income bids will lead to additional neighborhood change.

Urban Policy: Neighborhood Change Evidence on Neighborhood Change from Ellen/O’Regan ▫They studied changes in “gaining” low-income neighborhoods in the U.S. in the 1990s. ▫Gaining neighborhoods are those in which average incomes grew. ▫They put together a unique data set that could track people within neighborhoods. ▫Their key question was: Did economic growth lead to displacement?

Urban Policy: Neighborhood Change Findings of Ellen/O’Regan ▫There is no evidence of heightened exit rates for renters or for poor households—i.e., no displacement! ▫Selective entry and exit among homeowners (e.g. richer owners moving in) are key drivers of neighborhood change. ▫Incumbents had larger income increases in gaining than in other neighborhoods. ▫Neighborhood satisfaction increased a little more in gaining than in other neighborhoods. ▫Populations in gaining neighborhoods did not became more white in the course of change.

Urban Policy: Neighborhood Change Long-Term Urban Trends ▫Two key long-term urban trends are  Declines in transportation costs, t  Increases in income, which lead to increases in H. ▫These long-term trends obviously flatten the slope (- t/H ) of bid functions.

Urban Policy: Neighborhood Change The Impact of Long-Term Trends Slope flattens as t/H declines. And bid function shifts downward to keep population constant.

Urban Policy: Neighborhood Change The Impact of Long-Term Trends ▫This picture leads to three clear predictions:  Density will decline in central cities  Density will increase in suburbs  The physical size of urban areas will grow ▫These predictions are supported by evidence from many countries.