Menus Subscribe Search

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

July 31 • 4:00 PM

Thank You for Your Service: How One Company Sues Soldiers Worldwide

With stores near military bases across the country, the retailer USA Discounters offers easy credit to service members. But when those loans go bad, the company uses the local courts near its Virginia headquarters to file suits by the thousands.


July 31 • 2:00 PM

A New York State of Fracking

Court cases. A governor’s moratorium. Pending health study. A quick guide to the state of fracking in New York.


July 31 • 11:17 AM

How California Could Power Itself Using Nothing but Renewables

We don’t need fossil fuels.


July 31 • 8:00 AM

Should Athletes Train Their Memories?

Sure, but it probably won’t help.


July 31 • 6:00 AM

Universal Basic Income: Something We Can All Agree on?

According to Almaz Zelleke, it’s not a crazy thought.


July 31 • 4:00 AM

Medical Dramas Produce Misinformed, Fatalistic Viewers

New research suggests TV doctor dramas leave viewers with skewed impressions of important health-related topics.


July 30 • 4:00 PM

Still the World’s Top Military Spender

Although declining in real terms, the United States’ military budget remains substantial and a huge drain on our public resources.



July 30 • 2:04 PM

The Rise of the Nuisance Flood

Minor floods are afflicting parts of Maryland nearly 10 times more often than was the case in the 1960s.


July 30 • 2:00 PM

The (Mostly Awful) Things You Learn After Investigating Unpaid Internships for a Year

Though the intern economy remains opaque, dialogue about the role of interns in the labor force—and protections they deserve—is beginning to take shape.


July 30 • 12:00 PM

Why Coffee Shortages Won’t Change the Price of Your Frappuccino

You’re so loyal to Starbucks—and the company knows it—that your daily serving of caffeine is already marked up beyond the reach of any fluctuations in supply.



July 30 • 10:00 AM

Having Difficult Conversations With Your Children

Why it’s necessary, and how to do it.


July 30 • 8:00 AM

How to Make a Convincing Sci-Fi Movie on a Tight Budget

Coherence is a good movie, and its initial shoot cost about the same amount of money as a used Prius.


July 30 • 6:00 AM

Are You Really as Happy as You Say You Are?

Researchers find a universal positivity bias in the way we talk, tweet, and write.


July 30 • 4:00 AM

The Declining Wage Gap for Gay Men

New research finds gay men in America are rapidly catching up with straight married men in terms of wages.


July 30 • 2:00 AM

LeBron James Migration: Big Chef Seeking Small Pond

The King’s return to Cleveland is a symbol for the dramatic shift in domestic as well as international migration.


July 29 • 4:00 PM

Are Children Seeking Refuge Turning More Americans Against Undocumented Immigrants?

A look at Pew Research Center survey data collected in February and July of this year.


July 29 • 2:00 PM

Under Water: The EPA’s Ongoing Struggle to Combat Pollution

Frustration and inaction color efforts to enforce the Clean Water Act.


July 29 • 12:40 PM

America’s Streams Are Awash With Pesticides Banned in Europe

You may have never heard of clothianidin, but it’s probably in your local river.


July 29 • 12:00 PM

Mining Your Genetic Data for Profit: The Dark Side of Biobanking

One woman’s personal story raises deep questions about the stark limits of current controls in a nascent industry at the very edge of the frontier of humans and technology.


July 29 • 11:23 AM

Where Should You Go to College?


July 29 • 10:29 AM

How Textbooks Have Changed the Face of War

War is more personal, less glorious, and more hellish in modern textbooks than in the past. But there’s still room for improvement.


July 29 • 10:00 AM

The Monolingual American: Why Are Those Outside of the U.S. Encouraging It?

If you are an American trying to learn German in a large German town or city, you will mostly hear English in return, even when you give sprechen your best shot.


July 29 • 8:00 AM

The Elusive Link Between Casinos and Crime

With a study of the impact of Philadelphia’s SugarHouse Casino, a heated debate gets fresh ammunition.


Follow us


Subscribe Now

The Rise of the Nuisance Flood

Minor floods are afflicting parts of Maryland nearly 10 times more often than was the case in the 1960s.

America’s Streams Are Awash With Pesticides Banned in Europe

You may have never heard of clothianidin, but it's probably in your local river.

How Textbooks Have Changed the Face of War

War is more personal, less glorious, and more hellish in modern textbooks than in the past. But there’s still room for improvement.

NASA Could Build Entire Spacecrafts in Space Using 3-D Printers

This year NASA will experiment with 3-D printing small objects in space. That could mark the beginning of a gravity-free manufacturing revolution.

The Big One

One in two full-time American fast-food workers' families are enrolled in public assistance programs, at a cost of $7 billion per year. July/August 2014

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