by
Samuel Stein
89
This should not have come as a surprise. Simply adding housing supply does not necessarily drive down overall prices. In many cases, it does the opposite, since developers almost always build for the top of the market, not for the greatest need; real estate functions as plural—rather than singular—markets, meaning that increasing supply at the top of the market does nothing to reduce demand at the bottom; purchasers of luxury housing often do not live there full time, thereby creating an enormous market for empty apartments; people generally do not move frequently, so the kind of “self-sorting” required for residents to meet their “market equilibrium” does not actually take place; and in the absence of tight and universal rent controls, the rise of big flashy buildings is more likely to raise than diminish neighbors’ rents. Because luxury real estate is such a reliable and under-taxed investment in New York City, it is exceedingly rare for tall new buildings in gentrifying neighborhoods to rent or sell at rates that are affordable to those who live nearby. In most cases, they are the kinds of luxury projects that result in displacement—either directly through demolition, or indirectly by elevating rents in the surrounding area.
This should not have come as a surprise. Simply adding housing supply does not necessarily drive down overall prices. In many cases, it does the opposite, since developers almost always build for the top of the market, not for the greatest need; real estate functions as plural—rather than singular—markets, meaning that increasing supply at the top of the market does nothing to reduce demand at the bottom; purchasers of luxury housing often do not live there full time, thereby creating an enormous market for empty apartments; people generally do not move frequently, so the kind of “self-sorting” required for residents to meet their “market equilibrium” does not actually take place; and in the absence of tight and universal rent controls, the rise of big flashy buildings is more likely to raise than diminish neighbors’ rents. Because luxury real estate is such a reliable and under-taxed investment in New York City, it is exceedingly rare for tall new buildings in gentrifying neighborhoods to rent or sell at rates that are affordable to those who live nearby. In most cases, they are the kinds of luxury projects that result in displacement—either directly through demolition, or indirectly by elevating rents in the surrounding area.
164
To beef up the stock of such land and properties, cities can adopt policies that facilitate the transfer of private land to the public.14 When property owners fail to pay taxes, cities can stop selling liens to speculators, as New York City currently does, and instead transfer tax-deficient properties into a scatter-site community land trust.15 Cities could pass “right to sell” bills, giving households at risk of foreclosure the opportunity to sell their home to the city, which would operate it as public housing.16 Cities could also institute a “right of first refusal” on home sales, as is being established in parts of Paris. Under this system, the city has a first pass at any property for sale, and can pay the seller market value for their home and convert it into social housing.17 Thanks to a ballot referendum, San Francisco’s Small Sites Program has started buying out rent-controlled buildings and transferring ownership from private landlords to community land trusts.18
To beef up the stock of such land and properties, cities can adopt policies that facilitate the transfer of private land to the public.14 When property owners fail to pay taxes, cities can stop selling liens to speculators, as New York City currently does, and instead transfer tax-deficient properties into a scatter-site community land trust.15 Cities could pass “right to sell” bills, giving households at risk of foreclosure the opportunity to sell their home to the city, which would operate it as public housing.16 Cities could also institute a “right of first refusal” on home sales, as is being established in parts of Paris. Under this system, the city has a first pass at any property for sale, and can pay the seller market value for their home and convert it into social housing.17 Thanks to a ballot referendum, San Francisco’s Small Sites Program has started buying out rent-controlled buildings and transferring ownership from private landlords to community land trusts.18
178
Where manufacturing capital dominates, the industrial workplace becomes a main site of struggle and the union movement the leading voice of labor. Where real estate is the dominant sect of capital, however, the importance of a strong and dedicated housing, tenant and anti-gentrification movement increases and becomes a crucial conduit for labor action. This is not to say that workplace struggles matter any less in places where real estate rules—deindustrialization simply means working for a different form of capital, not ceasing to work and be exploited. But just as a globalized economy means that workers at particular logistical chokepoints can effectively shut down the entire system with targeted strikes, an urban economy overdependent on real estate means that a large and effective tenant movement has the power to deny speculators the chance to use the city as an investment vehicle.
Where manufacturing capital dominates, the industrial workplace becomes a main site of struggle and the union movement the leading voice of labor. Where real estate is the dominant sect of capital, however, the importance of a strong and dedicated housing, tenant and anti-gentrification movement increases and becomes a crucial conduit for labor action. This is not to say that workplace struggles matter any less in places where real estate rules—deindustrialization simply means working for a different form of capital, not ceasing to work and be exploited. But just as a globalized economy means that workers at particular logistical chokepoints can effectively shut down the entire system with targeted strikes, an urban economy overdependent on real estate means that a large and effective tenant movement has the power to deny speculators the chance to use the city as an investment vehicle.
183
In New York, there is growing momentum around the activist slogan “Not For Sale.” It is chanted at rallies and plastered over posters for posh new developments. In early 2016, a network of activists called “New York City Not for Sale” released a five-point platform that is, ultimately, a radical anti-gentrification plan:
- End homelessness in New York City. Immediate housing for all homeless people through new construction or seizure of vacant “warehoused” properties. Citywide moratorium on evictions.
- Universal rent control. Apply rent control laws to all rental properties in New York City. Institute an immediate rent freeze, and phased rollback of rents to 20 percent of tenant income.
- Transfer distressed buildings to tenant ownership. Transfer properties using the 7A receivership process or eminent domain. Tenant ownership in the form of cooperatives, mutual housing associations, or community land trusts.
- Repair and expand high-quality public housing. Full funding for the NYC Housing Authority (NYCHA) and full repairs and enhancements for all NYCHA properties. Begin construction of new, high quality public housing with community centers and art spaces.
- Democratize development. Institute direct election of community boards with veto power over development decisions. Expand public input into the Uniform Land Use Review Procedure (ULURP). Moratorium on upzoning until these reforms are completed.67
In New York, there is growing momentum around the activist slogan “Not For Sale.” It is chanted at rallies and plastered over posters for posh new developments. In early 2016, a network of activists called “New York City Not for Sale” released a five-point platform that is, ultimately, a radical anti-gentrification plan:
- End homelessness in New York City. Immediate housing for all homeless people through new construction or seizure of vacant “warehoused” properties. Citywide moratorium on evictions.
- Universal rent control. Apply rent control laws to all rental properties in New York City. Institute an immediate rent freeze, and phased rollback of rents to 20 percent of tenant income.
- Transfer distressed buildings to tenant ownership. Transfer properties using the 7A receivership process or eminent domain. Tenant ownership in the form of cooperatives, mutual housing associations, or community land trusts.
- Repair and expand high-quality public housing. Full funding for the NYC Housing Authority (NYCHA) and full repairs and enhancements for all NYCHA properties. Begin construction of new, high quality public housing with community centers and art spaces.
- Democratize development. Institute direct election of community boards with veto power over development decisions. Expand public input into the Uniform Land Use Review Procedure (ULURP). Moratorium on upzoning until these reforms are completed.67