Menus Subscribe Search

Follow us


Burgh Diaspora

terminal-tower-cleveland-ohio

The Terminal Tower complex of Cleveland, Ohio. (Photo: Lisa Chamberlain/Wikimedia Commons)

Turning Real Estate Market Fundamentals on Their Head

• May 27, 2014 • 5:25 AM

The Terminal Tower complex of Cleveland, Ohio. (Photo: Lisa Chamberlain/Wikimedia Commons)

Superstar cities and the spread of gentrification.

On one side of the gentrification problem, we have a paucity of housing supply. On the other side, we see increasing demand. I labor to detail gentrification from the demand side of the equation. Daniel Kay Hertz takes me to task for misstating the results of a real estate market analysis laboring to detail gentrification from the supply side of the equation:

If the problem weren’t related to “demand for housing outstripping supply,” new construction wouldn’t matter. But here the authors are telling us, very straightforwardly, that the solution is to “[grow] the quantity of houses.” In other words, allow supply to match demand. Maybe what’s confusing is Jim’s equation of “strong population growth” with “strong demand for housing.” In a place where zoning allows new construction, those two things are the same. But where zoning makes building new homes illegal, you will, in fact, see prices go up without any increase in population. But that’s not because demand has stayed the same: it’s because there are literally no places to put the extra people. If a neighborhood has, say, 50 people for 50 apartments, and then all of a sudden 50 richer people come looking for an apartment in that neighborhood, they’ll offer the landlords more money and the original 50 people will probably have to leave. Population hasn’t changed, but demand has: there are now 100 people who’d like to live there, even though only 50 can.

The analysis in question is “Superstar Cities.” I don’t dispute Hertz’s bibliographic history of this kind of research. It’s supply side obsessed. Liberalizing zoning, making construction easier, should help ease the pressure of gentrification. But that’s not why the authors wrote the paper. The authors tell us, very straightforwardly, why their work is interesting:

In this paper, we provide evidence that these patterns of spatial dispersion in house price and income growth are related: they are the inevitable result of increasing scarcity of land in certain metropolitan areas and towns, combined with a growing number of high income families nationally. In places that are desirable but have low rates of new housing construction, families with high incomes or strong preferences for that location outbid lower willingness-to-pay families for scarce housing, driving up the price of the underlying land. As the number of high income families grows nationally, existing residents are outbid by even higher-income families, raising the price of land yet further.

Emphasis added. What defines the geographic variance in this case is the quality of demand, not the restriction of supply. Lots of places have some sort of constraint on housing. Few of those places qualify as “superstar.” Furthermore, a superstar city has more pedestrian neighborhoods than global ones. Within a metro, quality of supply matters, too. The pressure valve of neighborhoods overwhelmed with disinvestment and vacancy doesn’t figure into the equation. I cited academic research that adds to the literature about the real estate market problems caused by limited (by whatever means) supply. I highlighted the parts of the paper that spoke to the exceptional nature of demand for housing. Cleveland could have a superstar neighborhood surrounded by a sea of distressed neighborhoods with ample supply. The city and the metro are drowning in vacant houses. The population in city and metro is in decline. Northeast Ohio has a gentrification problem.

Jim Russell
Jim Russell is a geographer studying the relationship between migration and economic development.

More From Jim Russell

A weekly roundup of the best of Pacific Standard and PSmag.com, delivered straight to your inbox.

Recent Posts

December 22 • 12:25 PM

Stop Trying to Be ‘the Next Silicon Valley’

American cities often try to mimic their more economically successful counterparts. A new study suggests that it’s time to stop.


December 22 • 12:00 PM

Pill Mills and the Rise of Controlled Substance Use in Medicare

Despite warnings about abuse, Medicare covered more prescriptions for potent controlled substances in 2012 than it did in 2011. The program’s top prescribers often have faced disciplinary action or criminal charges related to their medical practices.


December 22 • 10:00 AM

Economics at the North Pole: Are Santa’s Elves Slaves?

A pair of economists seek to reconcile two conflicting schools of thought in order to predict what sort of environments increase incentives for labor coercion.


December 22 • 8:00 AM

What Influences Whether Owners Pick Up After Their Dogs?

The presence or absence of suitable receptacles for bags is not the whole picture.


December 22 • 7:04 AM

Coming Soon: This Is How Gangs End


December 22 • 6:00 AM

Politicians Gonna Politic

Is there something to the idea that a politician who no longer faces re-election is free to pursue new policy solutions without needing to kowtow to special interests?


December 20 • 10:28 AM

Flare-Ups

Are my emotions making me ill?


December 19 • 4:00 PM

How a Drug Policy Reform Organization Thinks of the Children

This valuable, newly updated resource for parents is based in the real world.


December 19 • 2:00 PM

Where Did the Ouija Board Come From?

It wasn’t just a toy.


December 19 • 12:00 PM

Social Scientists Can Do More to Eradicate Racial Oppression

Using our knowledge of social systems, all social scientists—black or white, race scholar or not—have an opportunity to challenge white privilege.


December 19 • 10:17 AM

How Scientists Contribute to Bad Science Reporting

By not taking university press officers and research press releases seriously, scientists are often complicit in the media falsehoods they so often deride.


December 19 • 10:00 AM

Pentecostalism in West Africa: A Boon or Barrier to Disease?

How has Ghana stayed Ebola-free despite being at high risk for infection? A look at their American-style Pentecostalism, a religion that threatens to do more harm than good.


December 19 • 8:00 AM

Don’t Text and Drive—Especially If You’re Old

A new study shows that texting while driving becomes even more dangerous with age.


December 19 • 6:12 AM

All That ‘Call of Duty’ With Your Friends Has Not Made You a More Violent Person

But all that solo Call of Duty has.


December 19 • 4:00 AM

Food for Thought: WIC Works

New research finds participation in the federal WIC program, which subsidizes healthy foods for young children, is linked with stronger cognitive development and higher test scores.


December 18 • 4:00 PM

How I Navigated Life as a Newly Sober Mom

Saying “no” to my kids was harder than saying “no” to alcohol. But for their sake and mine, I had to learn to put myself first sometimes.


December 18 • 2:00 PM

Women in Apocalyptic Fiction Shaving Their Armpits

Because our interest in realism apparently only goes so far.


December 18 • 12:00 PM

The Paradox of Choice, 10 Years Later

Paul Hiebert talks to psychologist Barry Schwartz about how modern trends—social media, FOMO, customer review sites—fit in with arguments he made a decade ago in his highly influential book, The Paradox of Choice: Why More Is Less.


December 18 • 10:00 AM

What It’s Like to Spend a Few Hours in the Church of Scientology

Wrestling with thetans, attempting to unlock a memory bank, and a personality test seemingly aimed at people with depression. This is Scientology’s “dissemination drill” for potential new members.


December 18 • 8:00 AM

Gendering #BlackLivesMatter: A Feminist Perspective

Black men are stereotyped as violent, while black women are rendered invisible. Here’s why the gendering of black lives matters.


December 18 • 7:06 AM

Apparently You Can Bring Your Religion to Work

New research says offices that encourage talk of religion actually make for happier workplaces.


December 18 • 6:00 AM

The Very Weak and Complicated Links Between Mental Illness and Gun Violence

Vanderbilt University’s Jonathan Metzl and Kenneth MacLeish address our anxieties and correct our assumptions.


December 18 • 4:00 AM

Should Movies Be Rated RD for Reckless Driving?

A new study finds a link between watching films featuring reckless driving and engaging in similar behavior years later.


December 17 • 4:00 PM

How to Run a Drug Dealing Network in Prison

People tend not to hear about the prison drug dealing operations that succeed. Substance.com asks a veteran of the game to explain his system.


December 17 • 2:00 PM

Gender Segregation of Toys Is on the Rise

Charting the use of “toys for boys” and “toys for girls” in American English.


Follow us


Stop Trying to Be ‘the Next Silicon Valley’

American cities often try to mimic their more economically successful counterparts. A new study suggests that it's time to stop.

Don’t Text and Drive—Especially If You’re Old

A new study shows that texting while driving becomes even more dangerous with age.

Apparently You Can Bring Your Religion to Work

New research says offices that encourage talk of religion actually make for happier workplaces.

Canadian Kids Have a Serious Smoking Problem

Bootleg cigarette sales could be leading Canadian teens to more serious drugs, a recent study finds.

The Big One

One in two United States senators and two in five House members who left office between 1998 and 2004 became lobbyists. November/December 2014

Copyright © 2014 by Pacific Standard and The Miller-McCune Center for Research, Media, and Public Policy. All Rights Reserved.