Last week I wrote about the gentrification trend analysis that DePaul’s Institute For Housing Studies does and how it can help identify the neighborhoods with the best price appreciation potential. In reviewing their report I was struck by the monumental contradictions and irony of the whole anti-gentrification movement. Even though I’ve touched on this subject before I can’t help but register a few more observations. I understand the issue but it’s like trying to fight gravity. On the one hand the very communities that don’t want home prices to rise are the very same communities that want lower crime and more investment. The whole point of the opportunity zone program is to bring investment to these communities.
For instance, the December 2017 IHS report refers to exploring “Lower-cost areas that have seen recent market movement but still require significant investment and long-term strategies to rebuild housing demand before displacement due to rising costs becomes an issue”. I think that sentence contradicts itself at least twice. Low cost areas need investment. They want to increase housing demand but they don’t want costs to rise. And they’re afraid that eventually people are going to be displaced anyway, given enough time, because costs will rise. But how are costs going to rise if the demand is not there? I’m so confused.
Guess what. You can’t have lower crime and more investment without home prices rising. This is Econ 101. As soon as you put in a Bloomingdale Trail, a Paseo Trail, or an Obama library you’ve made the neighborhood more attractive. More attractive = higher demand = higher prices. The social engineers can talk all they want about preserving affordability but no matter what they try they will fail. Of course, they can score political points by having a few token projects but in the end home prices are going up and the more supply shortages they create by setting aside property for affordable housing the higher the rest of the home prices are going to go.
Country’s Richest Now Flocking To City’s Formerly Poorest Area
Ironically, just about 2 weeks ago Bloomberg identified the former Cabrini Green area as having the fastest growth of $200,000+ income households in the entire country. 39% of its households now fall into this strata and that’s despite affordable housing requirements in many of the early developments there.
As you probably know the Cabrini Green project was widely regarded for decades as a poster child for the failure of public housing. That’s why it’s gone. Once it was torn down zillions of dollars poured into the area, increasing the desirability of the area and providing a much larger property tax base for the city. Was there ever any other outcome possible or desirable?
#ChicagoHomePrices #Gentrification
Gary Lucido is the President of Lucid Realty, the Chicago area’s full service real estate brokerage that offers home buyer rebates and discount commissions. If you want to keep up to date on the Chicago real estate market, get an insider’s view of the seamy underbelly of the real estate industry, or you just think he’s the next Kurt Vonnegut you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.