Gentrification Raises Local Home Prices While Limiting Low-Income Housing Options

April 16, 2004
From left, Stu Armstrong, Joy Johnson, and Rich Collins.
From left, Stu Armstrong, Joy Johnson, and Rich Collins.

It was the yuppies beginning in the 1970s; now it's reportedly the DINKs-Dual-Income married couples with No Kids moving to cities in search of shorter commutes, access to urban living, and cheaper housing. They're renovating houses and making their neighborhoods more attractive-so attractive, that prices have skyrocketed in past decades in large metropolitan areas like New York City, San Francisco, and Washington, D.C. Closer to home, in the past five years home prices in Charlottesville have more than doubled in some cases, leaving low- and even middle-income residents hard-pressed to find affordable housing. Despite community responses, the problem isn't going away anytime soon, said participants in an April 13 panel sponsored by the Virginia Environmental Law Forum, Black Law Students Association, and National Lawyers Guild.

Lack of affordable housing "really has a profound effect on poor people's lives," said Joy Johnson, an advocate for the Public Housing Association of Residents. Johnson, who lives in public housing, said many Charlottesville residents consider it a privilege to live there because of the exorbitant rent and home prices outside the public-housing community. Rising prices are "forcing a certain class of people out," Johnson said.

Daphne Spain

Panelist Daphne Spain, chair of the School of Architecture's Department of Urban and Environmental Planning, sketched out the history of suburban development and the move back to the cities in later decades. After World War II, major cities lost people to suburbs, where development was aided by the GI Bill, which offered low-interest mortgage rates to veterans with only $100 down. The resulting 700 square-foot cracker-box houses "were great because families could live there without their in-laws," she joked.

The suburbs also boomed because federal policies granted mortgages only for new homes, and increased spending on highway construction made such properties more viable. Retailers moved to the suburbs to keep up with the population. In the meantime, "urban renewal demolished many neighborhoods," and especially affected black city residents. Often restrictive covenants prohibited real estate from being sold to African-Americans in white neighborhoods.

Spain explained that the first signs of gentrification appeared as higher-income households began moving to lower-income or abandoned neighborhoods in the 1970s. Fueled by baby boomers who found it cheaper to renovate large urban dwellings than live in the suburbs, gentrification at the time may also have been encouraged by the bicentennial and the resulting attention relished on historical homes. Those most hurt by the process included minorities, female householders, and the elderly.

"Things stalled in the 1980s when interest rates hit so high," Spain said. Low interest rates have again spurred gentrification in recent years. Spain said cities most vulnerable to gentrification typically have a strong FIRE sector-finance, insurance, and real estate.

The profile of gentrification has changed over the years. Home-buyers are more likely to be minorities, and public policies are more likely to support the process than in the 1970s.

Spain speculated there may eventually be "geezer gentrification," brought on by elderly baby boomers who will move to cities because they are more walkable and offer more health and social services.

Whether gentrification is reviled or celebrated "depends on the context in which it's occurring," Spain said. It may emerge as an attempt to curb sprawl, encourage smart growth, and help the environment.

In Charlottesville, the Fifeville and Belmont neighborhoods are most susceptible to gentrification, Spain said. Both are close to the University and are home to economically vulnerable people. "The timing is right now and the pressures are certainly visible, that gentrification is one of those processes we need to pay attention to."

Gentrification is about the "spacialization of privilege," said Rich Collins, a professor in the Department of Urban and Environmental Planning. It displaces people who will have fewer housing opportunities, he said. But on the other hand, "they can say 'I'm not going to sell,' or they can hold out for a higher price." Seeing wealth disparities in neighborhoods puts capitalism's ideals on display in a way that statistics can't bring home, he said. "Cities don't lie," Collins said. "Until you see it in your own town, often you don't think about it."

Jim Tolbert

Charlottesville leaders recently participated in a two-year planning process that resulted in a zoning ordinance designed to make the city more pedestrian-friendly and urban, while providing for more transportation services and neighborhood protection, said Jim Tolbert, Director of Neighborhood Development Services for the City of Charlottesville. The hope is that mixed-use corridors will take pressure off surrounding neighborhoods and the need to go out to counties for services.

The city also authorized more "by-rights" opportunities to encourage growth, meaning the new zoning ordinance reduced the number of locations where building required going through a complicated legislative process. The new ordinance added "more density in the right places and less density overall." The city hopes to contain the sprawl of students and the resulting pressure on prices by increasing density close to the University. With this in mind, the ordinance reduced the number of unrelated residents allowed to live in one housing unit from four to three in areas like Jefferson Park Avenue, where one-time single family homes now are often inhabited by students. The change was designed to make the neighborhood's houses less profitable to rent, thus more homes may be put in the hands of families.

"This commission wanted us to deal with affordable housing," Tolbert said, but Virginia doesn't allow the city to pass legislation requiring affordable housing. Charlottesville can only offer developers incentives to sell or rent to low-income residents.

Stu Armstrong, executive director of the Piedmont Housing Alliance, a regional non-profit organization devoted to creating housing opportunities for low or moderate-income households, said it was difficult to provide affordable housing when they are not allowed to sell below the appraised value.

"We believe in socioeconomic integrated communities," Armstrong said. "We believe that's more of a sustainable model." In the 1970s developers and city planners were "warehousing poverty," but they didn't look at the long-term social costs. Armstrong cited the book White Wealth, Black Wealth as succinctly defining the problem facing many African Americans. While white and black incomes are relatively the same, he said, they have different asset growths. White baby boomers are poised to inherit and be the richest generation because of their parents' investments, and homeownership was a key way they created that wealth. Armstrong's parents started with a $30,000 house in Fairfax, made a profit when they sold it and bought a condo their kids lived in while going to school; the condo, where his mother now lives, is worth $700,000 today. "It wasn't because they were geniuses," he said. "It's because they bought real estate post-World War II."

The Piedmont Housing Alliance has a database of over 1,000 families and 250 active clients. He estimates they will need $1 million in down-payment assistance to get them all in homes. In the past his organization has bought boarded-up houses that are usually about 80 years old, and refurbished them with new plumbing, a new roof, new heating and air conditioning units, and new electric wiring. "The houses are in good shape when our clients purchase them," he said. But that begins to revitalize the neighborhood and in turn increases prices as well.

Armstrong said Albemarle County, which surrounds the city like a donut, needs to build 800 to 900 homes each year to keep up with demand, but instead has reduced the number of new units to less than 500 each year because of their smart-growth plan.

Since 1990, the median sales price of homes rose an average 11.6 percent each year in the county, and 16 percent each year in Charlottesville. The median home sales price in Charlottesville is now $196,000-$1,000 more than the regional average. In 1997, the median city home price was only $98,400, and $121,000 in the county.

When Albemarle started tightening growth, people began moving to the city and to outlying counties. "There was more of an option to come inward," he said. But in the last 24 months prices in some city neighborhoods have surged incredibly; one house that was appraised at $119 per square foot last year was recently appraised for $148 per square foot.

He predicted that more condos would be built, and noted that the rental market has softened. "You're going to see some of the older rental stock become vulnerable for redevelopment," he said. The Charlottesville market makes it very difficult for his organization to find or create housing for low-income city residents, he emphasized.

Johnson said the new zoning plan approved by the city "didn't represent those making below $20,000 a year." In the past, she added, African-Americans have been forced out of neighborhoods, but now the poor-black and white-are being forced out. "It's about class," she said. Some have enough income to qualify for loans, she said, but they have bad credit. The city has advocated for home ownership, but "we knew that rental units were still important," she said. "Everybody's not going to become homeowners.

"Public housing right now is the only affordable rental unit out there," she said.

Johnson said low-income housing is in trouble nation-wide. Housing and Urban Development Secretary Alphonso Jackson has proposed a plan where if localities can't use their Section Eight vouchers that subsidize housing, they will be given to cities that can. "Section Eight is in trouble," she said.

She alleged that the Piedmont Housing Authority was starting to look at what they can sell off as part of a stocks assessment. There are seven public housing sites in Charlottesville, and those near the Woolen Mills and units near Rose Hill, where nearby houses are selling for $300,000, "will be the two to go first.

"The plan never includes the people who are vital to this community," she said, including those who work in food and cleaning services.

Now that Fluvanna has dried up as a place to move to for affordable housing, more and more people are moving to the Waynesboro area, she said.

Armstrong said the Waynesboro-Augusta County area is attractive to the 75 percent of the market who still want a detached single-family home with a yard. Still, downtown living is here to stay, he said, and if gas goes up to $3 or $4 per gallon, "we're going to see it in a big way."

Tolbert used the example of a house on Sixth Street a low-income single mother bought five-and-a half years ago with a low-interest loan for $83,000; she sold it last May for $239,000. He said the city's housing task force is looking at those kinds of issues.

"We need to minimize the windfall and keep the price down," he said. He added that recent studies have shown that with the costs of automobiles and gas, living in the city or in the suburbs is equally expensive.

Also disruptive to the market, Collins suggested, is the influx of New Yorkers since September 11. With the wealthy migrating toward cities, spending on services has followed.

Tolbert said the city's taskforce may look at establishing a housing trust fund to help low-income residents, since they can't require that affordable units be sold.

In response, Collins suggested that the city consider co-op housing, which he said has worked well in Alexandria and Arlington.

But until the mindset of those in power changes, Johnson said, "you're always going to have that imbalance." She praised one community in New Jersey she visited that supported the idea that even part-time workers should own a home.

"My peers [don't] have a plan" for working toward home ownership, she said. "I'm fighting for the folks who [don't] have a plan." Johnson denounced Charlottesville's deal with Albemarle County in the late 1970s that agreed not to annex county property for at least 100 years, in return for a yearly multi-million dollar fee that goes to the city. The deal took away the city's ability to expand and in turn provide more housing, she said.

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