There’s room for everyone but will everyone benefit?

There are more and more people living in inner London. Some residents are benefiting more than others from this trend. The principle question this raises for public policy is how to ensure that any new wealth that is created is shared more equally.

You might be surprised to hear that the population of inner London is increasing. Surely the poor and those on middle incomes are being priced out by foreign billionaires! Some articles on this topic remind me of the old joke about New York, no one drives, there are too many cars.

Robbie de Santos‘s piece for Changing London is too nuanced to fall into this trap. In it he argues that, in rapidly gentrifying areas, more should be done to provide housing that households on £30-45,000 per year can afford.

Dave Hill at the Guardian has already pointed out that it might be controversial to argue for increasing spending on shared ownership housing when the amount being spent on social housing has been cut so dramatically.

In addition to this we need to remember that the population of inner London is increasing. As a result there are now actually more people on middle incomes living in inner London than previously.

This chart (all data from the 2001 and 2011 census) shows the significant increase in the number of people in ‘intermediate occupations’ living in a few inner London boroughs.

 

Here is a similar chart for people in ‘higher managerial’ jobs;

Here is a similar chart for people in ‘routine’ jobs

 

This is what the overall picture looks like.

 

Although some people on middle incomes may be being priced out of inner London, overall the number of people on middle incomes living in inner London is increasing, as is the number of people on high incomes, and on low incomes.

How is the increased population of inner London being housed? Robbie will be glad to see that there has been an increase in the numbers living in shared ownership, although this still accounts for a very small number of people.

 

There has certainly not been a general increase in the number of people who own their own home (although those that do have, on paper, in general made a lot of money).

 

And there has been a noticeable and much commented upon decrease in the number of people who rent from housing associations or local authorities.

 

Most importantly, there has been a dramatic increase in the number of people who rent privately (lots of these will be houses that have been split into flats).

 

This chart puts the rise in private renting into perspective.

 

The story then is not so much that people on middle incomes are being prices out of the inner London boroughs (although some may be and more may be being priced out of certain neighbourhoods within these boroughs).

In fact, there are more people on middle incomes living in the inner London boroughs but they are more likely to being renting privately than people on similar incomes would have been a decade ago. This means that rising house prices do not benefit them and in fact probably harm them, since their rents go up.

Robbie’s argument is not only that people on middle incomes are increasingly being priced out, but also that this has a negative impact on community life and the diversity of businesses in an area. This is an interesting argument. I am not sure that the splits between tenures by itself, can guarantee much about community life, which is as much a result of interaction and institutions as it is a result of population composition.

However, if we look that the situation in terms of how the new wealth that has been created by the increased population can be shared more fairly perhaps we get different answers (some earlier thoughts from me on a related topic can be found here). For example, we might start thinking about how newly built houses can be part of community land trusts, so that increased housing wealth is invested in the community and does not just go into the hands of the owners. Similarly, there may be a case for more flexible local property taxes and co-operative ownership of local businesses.

Who knows how long the current increase in population in inner London will last. As long as it does the key questions are how we can build enough houses so that rents do not force people into poverty and overcrowding and how we can spread the newly created wealth so that everyone, not just home owners, benefit.

 

Gentrification is not for everyone

Something, like nothing, happens anywhere, Larkin once wrote.

He wasn’t writing about gentrification but perhaps the sentiment applies.

Many writers are tempted to suggest that examples of gentrification and displacement in certain London neighbourhoods tells us a lot about what is happening throughout London.

For a classic example of this genre see this recent piece in the NewStateman.

A recent piece in The Atlantic makes quite a different argument, claiming that in 22 of the 55 biggest cities in America, including San Diego, Charlotte, Buffalo, Pittsburgh and Detroit, gentrification affected 5 or less percent of all neighbourhoods.

What’s the situation in London? How widespread is gentrification?

Here is a map of London in 2011. Neighbourhoods that are dark red have a higher percentage of residents that work in routine or semi-routine occupations (all data from the census).

Here is a map of London in 2001.

The picture is pretty clear. In large parts of East and West London and parts of North and South London there are lots of neighbourhoods where a large number of people work in routine or semi-routine jobs.

However, in inner London, near the Thames and to the West, there are neighbourhoods in which there are very few residents who work in routine jobs.

In contrast, here is a map of London in 2011. The neighbourhoods that are coloured darker blue are home to a higher percentage of residents that work in senior management positions.

Here is a map of London in 2001.

Again, the picture is pretty clear.  In Inner West London and bit of suburbs in the North and South there are neighbourhoods in which there are quite a high percentage of residents who work as senior managers. In large parts of East and West London there are numerous neighbourhoods in which very few residents work in senior management positions.

In both cases, what is striking is not an image of constant change but of continuity.

So what? It’s probably no surprise to anyone that Barking and Dagenham has lots of residents that work in routine jobs and Kensington & Chelsea has lots of senior managers.

A few observations follow;

• Even if you believe that attracting new rich residents to your neighbourhood is the best way of regenerating it, ultimately this strategy cannot work for most neighbourhoods in London because there simply aren’t enough rich people to go round.
• Gentrification is a curious mixture of the global and the local. International developments such as the march of the knowledge economy interact with specific neighbourhood traits such as transport infrastructure. This probably means that well resourced Local Authorities are best positioned to be the principle public agency that manages the process of gentrification (not national or city government) and to ensure that any wealth created can be shared equally.
• Perhaps most importantly, we need strategies of neighbourhood improvement and community development that rely on building on the strengths in working class neighbourhoods since these will always be a large part of London life.

Everybody disagrees on good neighbourhoods

How should we improve neighbourhoods, especially those with a high percentage of households on low-incomes?

The fact that people can disagree so vehemently over the merits of the changes that have taken place in the U St neighbourhood of Washington DC shows how hard this topic is to get right, and how important it is (I wrote about these changes here and I gave this topic a run last year here).

Where to start? Well, the first and most obvious thing to say is that different neighbourhoods are very different from each other and they require very different approaches. However, there are a few general things we can say.

(btw I’m going to write “neighbourhood”, as the Brits do, throughout, hope this isn’t too annoying for any American readers).

Risks – displacement or stagnation

There are two broad risks facing neighbourhoods that have a large number of low income residents, displacement or stagnation.

Firstly, there is a risk that the neighbourhood improves on lots of objective measures (e.g. crime goes down) and this means that rents and property taxes increase forcing those low income residents out. Now, we might say that the neighbourhood has improved but it hasn’t really benefited those people on low incomes who have been displaced.

Secondly, there is a risk that the neighbourhood continues in the way it has done previously, and residents continue to suffer a number of problems such as high crime levels, poor environment, over stretched public services, stigma and so on.

Principles of neighbourhood improvement

Here are three principles that could inform efforts to improve neighbourhoods with a high percentage of people on low incomes. Neighbourhood improvement should be; managed, asset based and inclusive.

1. Neighbourhood improvement should be a managed process

This means creating a recognised body to oversee the improvement. This body does not have to be lavishly funded and can follow the neighbourhood management approach that was tried under the New Labour government in the UK.

This body needs to do a lot of outreach work and a lot of listening. This means going to where people are and understanding the issues that they care about.

This body should join up what is already going on. This means joining up services (street sweepers, police, health workers, teachers and so on) but also joining up people and associations. Often tenants associations do not know each other and people do not know they have a tenant association.

It also means working with local businesses, for example through a Business Improvement District.

2. Neighbourhood Improvement must be Asset based

Often efforts to improve neighbourhoods focus on what is wrong with the area. Too often this leads on to thinking that the people who live in the neighbourhood are what is wrong with the area! From that conclusion it is not too long before you start to think it would be great if we got new residents in and then we have fallen into one of the risks we were talking about earlier.

A different approach that is more asset based is possible. Jim Diers has won many plaudits for the work he did in Seattle using this approach. There is a great video of him here discussing the underlying principles of Asset Based Community Development.

This approach means identifying and building on those things that people already value. It means supporting and galvanising aspect of the neighbourhood that people love rather than attempting to solve the things that people hate. It also means reward and celebrating sucess.

This can be combined with the ‘business cluster‘ approach that Porter has advocated. This should not involve using, for example, public money to support an individual business but that it could involve promoting a certain industry that the neighbourhood is well known for. For example, it’s one thing to say that everyone loves a certain bar so we should give it money and quite another to say “come to our neighbourhood and enjoy our bars”.

3. Neighbourhood Improvement should be inclusive

Perhaps it is inevitable that when neighbourhoods improve, some people will win and some will lose, some people will celebrate and some people will commiserate. However, it is vital that efforts are made to ensure that the improvements that are brought about are done so in as inclusive a manner as possible.

This means having lots of time and resources dedicated to deliberation and feedback. People should be constantly able to give their opinions on what is happening and be able to find out what is happening.

It is possible to structure economic development so that it benefits and empowers existing residents. This doesn’t necessarily mean guaranteed work placements or training courses but it does mean, for example, creating and supporting co-ops that are partially owned by residents.

Perhaps most important of all is thinking about ways in which any new housing value that is created is partially re-invested into the neighbourhood. This could be done, for example, through community-land trusts.

Avoid parochialism

Finally, there is a danger that any discussion of neighbourhood improvement starts to sound a bit parochial. It can mean drawing red lines on maps and saying “we are going to help you because you are on this side of the line and not you because you are on that side of the line”.

This temptation needs to be guarded against. Structures that are created need to take into account the fact that all areas mean different things to different people. Sometimes exactly the same area can be called very different things by different people and have completely different resonances.

Emotional impact of neighbourhood change

Living in the U St neighbourhood there is a feeling that the changes that have taken place have just kind of happened, almost at random. People’s response to them is along the lines of “I like this change” or “I do not like this change”. It is not “we did this” or “they didn’t listen to me”. Perhaps one of the best things that we could do to change the way neighbourhoods are improved would be to understand how people can have a sense of control over the direction of change.

Has U Street been ‘swagger-jacked’?

There has been quite a debate about this article which claims that the neighborhood I live in (U Street) has ‘swagger jacked’ Washington’s African-American culture.

The most thoughtful response I have read has been in The Atlantic. You can find that piece here.

I will write my own contribution to this debate but first here are some charts showing the dramatic changes that have occurred in the area.

CRIME IS DOWN

There are fewer people in poverty and more in employment and with a high school diploma

The average household income is dramatically higher

There are fewer people receiving the TANF benefit but a steady number on food stamps

There are fewer empty properties to rent and more people own their homes

There are more occupied housing units

House prices have risen dramatically

The total number of people living in the area had been declining but is now increasing

The area has gone from being a predominately black neighborhood to being a majority white neighborhood

There are far fewer households with children than there used to be. Those that do have children are much more likely to be living in poverty than previously

Pictures of housing and homelessness in DC

This is a short photo essay on housing and homelessness in Washington DC.

There are many homeless people in DC.

The city government’s hostels look like prisons.

In some areas, housing for people on low incomes is being replaced with housing for people on higher incomes.

While in other areas, housing has been abandoned.

The city is planning to give away public land for free to developers so that they can build more houses for people on high incomes.

But some people are organizing against this.

It’s hard for homeless people to organize because they have limited social networks.

That’s why I am working with the Father Mckenna centre on a project that encourages homeless people to grow their social networks.

Everybody needs good neighbours

Are there such things as ‘neighbourhood problems’ and can they ever be solved given current levels of income inequality?

A recent report from the Brookings Institute argues that regulation of the housing market is the best way to improve the schooling that poorer children get. They propose that lower income families are supported to live near excellent schools.

This is an interesting and provocative argument. Most discussions on education assumes that individual schools can be improved and that this will help children from low income families. In fact, improved schools are just as likely to lead to increased house prices and low income families being prices out of the neighborhood as middle class families move in. This in turn can lead to the schools continuing to improve since middle class people are better at accessing and using public services, and so the cycle of gentrification and displacement continues.

This same pattern can be seen more broadly in approaches to improving neighbourhoods. Just last week it was announced that the local government wanted to ‘transform’ 6 neighbourhoods in Prince George’s County. Can this possibly work? And by work, I mean, can the grievances of the people who currently live in the neighbourhood by resolved without them being priced out of the neighbourhood? Greivances such as crime, poor quality enviroment, lack of well paying jobs, health hazards and so on.

I had a deeper look at the data on this very question for London. There is information available in London down to the neighbourhood level on; average house prices, the percentage of people from different social grades and the amount of neighbourhood problems (using what is known as the Index of Multiple Deprivation). I found that there are very strong correlations between these different factors.

For example, here is a graph showing the connection between the average house price of a neighbourhood and the percentage of people in that neighbourhood who are in social grades A or B (upper and middle class) using the NRS social grading system.

As you can see, the higher the percentage of people from grades A or B in a neighbourhood the higher the average house price. The correlation coefficient is 0.65 which means there is a strong correlation between these two factors. According to my calculations, in London an extra percentage point of people from grads A or B is associated with an increase in house prices of nearly 11,000 pounds.

The exact opposite is true of the percentage of people from grades D or E (i.e. low skilled or on government benefits). The higher the percentage of people from grades D or E in a given neighbourhood the lower the house price. An extra percentage point of people from grades D or E is associated with a decrease in house prices of nearly 8,000 pounds.

We see a similarly strong relationship when we compare neighbourhood populations with neighbourhood problems. This graph show the relationship between neighbourhood problems and the percentage of people who are in grades A or B.

A larger the percentage of ABs in a given neighbourhood means fewer neighbourhood problems. Inversly, the larger the percentage of DEs in a given neighbourhood the greater the likelihood is that we will find neighbourhood problems. The correlation here is a whopping 0.83.

All this adds up to the fact that, unsurprisingly, areas with higher house prices have fewer neighbourhood problems.

There are some dramatic conclusions that we can draw from this. Imagine a neighbourhood that has mutliple problems and a very fed up population of mostly low skilled workers or people who disabled and unable to work. The neighbourhood has lots of crime, poor quality physical enviroment, a lack of decent jobs and health hazzards galore.

Now imagine that through some miracle a government programme, such as the one mentioned earlier from Prince George’s County, was able to start combating the levels of crime, improving the public realm, getting people healthy and bringing new and good jobs to the area. What would happen?

I would bet that the area would become more attractive, wealthier people would move in, house prices and rents would rise and those same residents that were so fed up with all the old neighbourhood problems would not get a chance to enjoy their improving area. Instead they would be priced out of the area and have to move to another neighbourhood, possibly one that was just as bad as the one they started off in.

What should we do in the face of this problem? I would love to hear your thoughts. Please put them in the comments below and I will return to the problem next week.

DC displacement facts

The White population of DC is growing, from 217,000 in 2007 to 244,000 in 2010.  The black population is declining, from 326,000 to 314,000
Black households usually earn less than White households. More than one in four Black DC residents lived in poverty in 2010 (8.5 percent for non-Hispanic White residents)
Black residents are less likely to be in work than White residents. The unemployment rate for Black DC residents has doubled since 2007, from 10 percent in 2007 to 20.6 percent in third quarter 2011. From 2007 to third quarter 2011, the unemployment rate for White (non-Hispanic) DC residents rose from 1.9 percent to 3.7 percent.  
The number of households earning over $75,000 per year has increased, the number of families earning less than $50,000 per year has decreased.

Percentage change between 2000 and 2009

Household incomes	Renters	Homeowners	Overall
Less than $50,000	-24 percent	-32 percent	-26 percent
$50,000 to $75,000	Unchanged	Unchanged	Unchanged
More than $75,000	+81 percent	+58 percent	+63 percent

The number of low cost rental properties has decreased. The stock of low-cost rental stock has shrunk by more than one-third since 2000. The number of rental units with rent and utility costs of $750 or less fell from 69,000 in 2000 to 45,000 in 2007.  (all figures are adjusted for inflation to equal 2007 dollars.)

Low-cost homeownership options also shriveled, the number of DC homes valued at $250,000 or less fell from 58,000 to 15,000 between 2000 and 2007.

There is a shortage of housing that people on less than 50% of the Area Median Income can afford.

Certain neighbourhoods are becoming less black and more white.

A growing number of DC households are finding it difficult to afford housing. Nearly 100,000 DC households — or two of five — spent more than 30 percent of their income on housing in 2007 (20,000 more than in 2000)

Four of five DC households with incomes below 30 percent of the Area Median Income (about $28,000 for a family four) spent more than 30% of their income on housing. 62 percent of this group spent half or more of their income on housing in 2007 — up from 50 percent who had housing costs this high in 2000.

In 2009, 24.8 percent of District renter households (34,140 households) had severe housing costs (spending 50 percent or more of their income on housing)

In 2006 the National Low Income Housing Coalition estimated that a full-time worker would have to earn an hourly wage of $24.73 — three and a half times the minimum wage — to afford the rent for a modest two-bedroom house or apartment. The minimum wage is $8.25 per hour in DC. A person making that much would have to work 153 hours a week to afford to rent a two bedroom apartment in the open market.

Funding for all of DC’s major housing programs has been cut in recent years, however, which means that the city is unlikely to have made much progress on the affordable housing problems highlighted in this report.  The budget for core housing programs in FY 2010 is $64 million, a nearly 50 percent cut from 2008 and the lowest level since 2004.  The Housing Production Trust Fund will receive $18 million in 2010, compared with $62 million in 2008.

The 160 unit Columbia Heights Village development 14th Street and Columbia Road Northwest recently started accepting applicants. It is a project-based Section 8 development that bases tenant rents on their income level. People waited in line for over 4 hours for a chance to put their name down on the list for these properties. One woman in line said

“They are pushing us out! … Average people deserve to live in the city.”

Another said

“I was born and raised here I’m not moving. I will find affordable housing.”

D.C.’s old Capitol Gateway housing project during demolition in 2005

Capitol Gateway today.

Capper/Carrollsburg site in 2006

The unfinished site in 2008

Partially completed in 2010 with properties going “from $781,300”