How to Shorten the Gentrification “Misery Gap”

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Great point from Greg Meckstroth in this post updating us on a few multifamily buildings going up in Philly:

The Sansom will include 122 apartments, first-floor commercial space and zero parking spots in eight stories. Of all the new construction projects going up, this one has by far and away gone up the fastest. Just goes to show how quickly you can get construction done when you don’t have to worry about expensive and complicated parking structures. The building is now topped out in places and final framing will likely be complete in the next few weeks before the end of the year. Expect this to be complete before the other two projects, even though it started after them.

The biggest actual problem posed by gentrification is that there’s a time lag between when neighborhoods start getting more popular and when they start adding new housing. The demand for housing outstrips the supply, and you see rent inflation. More people want to live in the neighborhood than are able to, and that pushes up rents.

Eventually developers start building more housing, but the time lag (Shall we call it the Misery Gap?) between when rents start rising and when new housing units become available sucks for renters. Politicians who want to do something to help keep rents affordable need to focus on shortening the Misery Gap.

One way to do that is to stop requiring developers to bundle parking with housing in so many new buildings, like the new zoning code is supposed to do. As Greg points out, the construction time for buildings with no parking is shorter, so that means new apartments are coming onto the market faster.

Another policy that shortens the Misery Gap is the land value tax. If Philly’s property tax mostly fell on land value instead of property improvements, vacant land owners in developing neighborhoods would start feeling the bite first, not tenants. The land tax would go up when demand for land increases, and they would face pressure to build sooner. Right now, vacant land owners in up-and-coming neighborhoods have an incentive to wait to build – to extend the Misery Gap and keep rents high for as long as possible.

And finally, there needs to be more by-right zoning. Development pressure on poor neighborhoods is all about underbuilding in the already-nice neighborhoods with lots of amenities. Neighborhoods become attractive, but then people start resisting further housing development, so developers start looking to further out places to build housing. While it’s not hard to understand why rich homeowners in nice areas would want to keep housing prices high and not share their nice neighborhoods with more people, it’s up to the city whether those folks have strong enough political tools to actually shut down new development.

Under the old zoning code they did, but the new code allows more “by-right” development – developers don’t need to get political approval for every new building. Some Council members want to go back to doing it the old way, which is kind of tragically amusing since some of those same folks openly worry about gentrification, perhaps not realizing that the lengthy political approval process for new housing construction contributes to making the Misery Gap bigger.

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