Protesters clashed with police this June outside a Texas piñata store that was demolished and replaced by a cat cafe.
The demonstrators, who scuffled with supporters of the cafe, were part of a group called Defend Our Hoodz, which is working to protect the historically working-class, largely Latino and African American neighborhood of East Austin from developers looking to “reshape it in their image.” Defend Our Hoodz, which declined to speak to Crain's, says such reshaping has forced out longtime residents, and have directed much of their ire at the businesses they feel are responsible—including the Blue Cat Cafe.
Defend Our Hoodz isn’t the only group in the nation protesting gentrification, a word that varies in meaning among researchers, but is often used by critics to describe the process in which privileged people move into and change the neighborhoods inhabited by the poor or less privileged. On the West Coast, for example, protesters in Los Angeles’ Boyle Heights neighborhood have targeted Weird Wave Coffee, calling it a “gentrifying hipster coffee shop.” On the East Coast, demonstrators are coordinating a Sept. 9 march through Brooklyn to protest gentrification, racism and police violence. And in the Midwest, a group of youth leaders in Chicago’s Logan Square neighborhood is trying to pass an ordinance designed to keep gentrification at bay along a popular local bike path.
Experts, meanwhile, say these groups are facing forces much larger than gentrification—forces that have been making cities less affordable for a wider demographic. If left unabated, they say, these phenomena could mean a change in the types of people and businesses able to survive in urban areas. And it means a potential switch in the mindset of elected officials, urban planners and economists, who have long been dedicated to fighting blight in cities—not necessarily to ensuring their affordability.
Costs on the rise
Cities are generally becoming more expensive places for people to live and do business, and the poor aren’t the only ones feeling the pinch. A report from Trulia, an online residential real estate website, found that home values in eight of the 10 most expensive metro areas rose 12.5 percent between 2010 and 2014. And according to a report from the New York University Furman Center and Capital One, seven out of the 11 largest metropolitan areas in the U.S. became less affordable to the median metro-area renter between 2006 and 2014.
Austin is among the cities seeing a significant uptick in housing costs, said Dean Almy, an architecture professor at the University of Texas at Austin, and the former chair of the City of Austin’s Design Commission. Because Texas has no income tax, Almy said, the state leans heavily on property taxes to fund public services, which means popular places like Austin have become pretty expensive.
As of last month, Austin had three of the top five most expensive zip codes in Texas, with average rents of $2,475, $2,393 and $2,102, according to the internet listing service RENTCafé. The zip code of 78702, where the cat cafe is located, had the twelfth highest rent of any zip code in Texas, at $1,711—making it the fourth most expensive place to rent in Austin.
“It was not like that 10 to 15 years ago,” Almy said.
Among the forces driving up costs: Young people of means.
Between 2000 and 2010, more college-educated individuals moved to urban centers than to the suburbs in a majority of the 50 largest U.S. metropolitan areas, according to a study conducted by professors at the University of Pennsylvania and the University of California, Berkeley. And that trend to urban centers was particularly strong among people aged 25 to 34, the study said.
"We find that urban revival in the 50 largest cities is accounted for almost entirely by the rising share of college educated individuals in urban areas," the authors note.
Researcher Jed Kolko, who serves as chief economist at the jobs website Indeed, argues that the group is even narrower than that. In a blog post on the topic, Kolko wrote that individual-level U.S. Census data shows that the movement is heavily skewed "toward rich, young, educated whites without school-age kids.”
Experts disagree on why these particular people prefer the city; some chalk it up to their aversion to buying homes, others to their distaste for driving, or to their preference for service amenities like theaters and bars, or a desire to be closer to their jobs. Many say it’s a combination of these factors.
Harvard University Sociology Professor Robert Sampson says the forces affecting cities today go beyond simply gentrification, which he says has been traditionally used to describe the process in which severely poor, inner city areas “experience a reversal, reinvestment, and the in-migration of a relatively well-off middle- and upper middle-class population.”
“You can’t gentrify an area that’s already middle class,” Sampson said in an interview.
“What we are seeing now is a newer phenomenon, in a sense, because people who aren’t necessarily poor are unable to afford housing—or they’re spending a higher proportion of their income on housing than has traditionally been seen as reasonable,” he continued.
For this, Sampson blames a different dynamic.
“First and foremost, this is a housing crisis, and it’s tied to income inequality,” he said.
Although the housing market and economy have recovered since the housing-bubble collapse, a report from Apartment List found that new construction is still lagging behind. Whereas the number of households grew by 11.2 million between 2005 and 2015, the report showed, only about 9.9 million new housing units were constructed.
New housing has kept pace with job growth in only 10 of the country’s 50 largest metros, according to the report. San Francisco is among the most under-supplied metros in the country, having added three jobs for every new housing unit permitted from 2005 to 2010 and 6.8 jobs for every new unit permitted from 2010 to 2015. San Jose, Boston, Salt Lake City, San Antonio, Denver, Dallas, New York, Austin and Seattle also made the top 10.
The report also found a strong correlation between the number of jobs per permit and rent growth between 2005 and 2015.
Nationwide, many are finding it increasingly difficult to live in the same metropolitan communities they serve. An analysis from the National Housing Conference and the Center for Housing Policy showed that neither a teacher nor a social worker making the median national salary in their respective professions could afford the fair market rent for a two-bedroom home in the Boston, San Francisco, San Jose, or Washington, D.C., metro areas. The analysis defines affordable housing as that which does not exceed 30 percent of a household’s income, which squares with federal guidelines.
Consequences for small businesses
Rising rents are hurting not just renters, but existing independent businesses, too. The nonprofit community-development group Institute for Local Self-Reliance last year found that retail rents in cities such as Oakland, Nashville, Milwaukee and Portland, Maine, had increased by double-digit percentages in one year. As a result, local businesses are being forced out and replaced by national chains that are better able to negotiate more-affordable rents.
Erik Madsen, assistant professor at New York University’s Department of Economics, said that the effect on nearby shopping districts starts out positively, as the spending power of consumers and the demand for local services at higher prices increases.
“Of course, individual businesses may be hurt if their products don’t cater to the new clientele, so there are typically winners and losers,” Madsen said in an email.
In the long-run, though, the effects are not so positive, as landlords raise commercial rents to soak up the profits of local businesses, and the real estate shortages prevent businesses from negotiating down their rent.
“A side-effect of these rent increases is that only the most profitable businesses survive, which tends to push gentrified shopping areas toward homogenous expensive restaurants and retail outlets,” Madsen said.
Madsen said that the pricing out and replacement of preexisting local businesses with more homogenous expensive restaurants and retail outlets was a chain of events protested long ago by Jane Jacobs’ in her 1961 book, “The Death and Life of Great American Cities.”
“It’s eerie to read some of the things she was pointing out back then, and see the exact same things happening today,” Madsen said.
So how does the story end for areas that get too expensive?
“Ultimately, in some cases, the neighborhood burns itself out because rents become so expensive, there’s a homogeneity in the types of stores being offered, it gets boring, and people move elsewhere,” Madsen said.
It's not just high rents and homogeneity that Defend Our Hoodz fears, but erasure of the neighborhood's historic diversity. The group describes East Austin as “the front line for gentrification, where trendy cat cafes, bars, and high-end restaurants all work to erase the working-class Mexican-American community that stood here, neglected."
Planning scholar Jacob Wegmann, a professor at the University of Texas at Austin, said the confluence of forces driving up costs in cities has put urban planners in a predicament.
“Thirty or 40 years ago, planners working in big cities in the U.S. thought that part of their job was figuring out how to arrest their economic decline,” Wegmann said in an interview. “All of the sudden, planners in places like Austin are trying to figure out how to make them more inclusive and equitable.”
In line with the laws of supply and demand, many experts say the solution to the affordability issue is more housing. But making more housing available is easier said than done, especially in California, said Judith Innes, a city and regional planning professor at the University of California, Berkeley.
Innes said the state's Proposition 13 plays a role in this. Under the 1978 law, homeowners’ property values aren’t reassessed at market value until their properties are sold. After that, property-tax increases are limited to no more than 2 percent per year.
Some real estate leaders are pushing for measures such as tax breaks to make selling more palatable. But until then, “you don’t want to move if you don’t have to because it’s so expensive,” Innes said.
Those hoping to construct the supply face another uphill battle, Innes said, because homeowners generally don’t want to see it lower their property values—a feeling not unique to Californians.
The ways in which cities can try to keep housing affordable depends on the city, experts say. San Francisco’s zoning laws, for example, are nearly air-tight.
“The politics of changing the land use regulations to allow more housing to be built in San Francisco are almost impossible,” planning professor Wegmann said.
In Texas, meanwhile, “spot zoning”—the practice of zoning a single tract of land in a particular way—is illegal, making preservation efforts tougher in rapidly changing neighborhoods like East Austin.
In Austin, however, city planners have some other tools to use.
The University of Texas School of Architecture, for example, formed an initiative to try to tuck some affordable housing into alleys. And East Austinites are now allowed to build and rent out accessory dwellings on their properties to help defray the increased costs of living.
Architecture professor Almy said that increasing “missing middle” housing—or small-footprint, multi-unit housing that’s said to be more affordable than other housing options—is also a big topic of discussion for the City of Austin’s Planning and Zoning Department.
Should costs continue to rise, Wegmann suspects, cities could become what they were before Americans with money and cultural cachet moved out to the suburbs en masse after World War II.
“Throughout most of human history, and throughout most of the world, people who had a choice in the matter chose to live closer to the center of the city,” Wegmann said. “It’s kind of like we’re reverting back to that now.”
Sampson echoed that idea. “I think many U.S. cities are moving toward a European model, where the most desirable areas are at the center, and [the] impoverished are in the suburbs,” he said.
Almy, Innes, Madsen, Sampson and Wegmann said they didn’t know for sure how the situation would ultimately play out. Almy, however, doesn’t think that targeting coffee shops will do much to keep gentrification in check.
“Those businesses aren’t the canaries in the coal mine,” Almy said. “I think they’re coming in because they already see that the economics have changed.”