Promoting Equitable Revitalization

Promoting Equitable Revitalization: Change in the real estate market will inevitably change the affordability of housing in the neighborhood. As demand grows, prices rise to reflect the additional value associated with buying or renting a home in the neighborhood. Equitable revitalization calls for both preserving and creating affordable housing, as well as taking steps to minimize untimely and forced displacement of a neighborhood’s lower-income residents.

Much of the material in this section is drawn from Managing Neighborhood Change by Alan Mallach (2008) published by the National Housing Institute. https://shelterforce.org/wp-content/uploads/2008/05/ManagingNeighborhoodChange.pdf

Matching Strategies for Equitable Revitalization to Stages of Neighborhood Change

Equitable revitalization strategies in changing neighborhoods need to be highly sensitive to the housing market conditions and trends affecting the neighborhood. These strategies relate to housing-market trends rather than baseline conditions.

To compare alternative strategies, trends in neighborhood change can be divided into six stages starting at the lowest level in the neighborhood typology presented in Table 1. In Table 3 below, Stage 6/5 represents movement from category 6 to category 5, 5/4 represents movement from category 5 to category 4, and so forth. CDCs and local governments can use indicators to track the change in a neighborhood from one stage to the next.

Table 3: Stages of Neighborhood Change

The stages of change shown in Table 3 above are schematic, and do not necessarily represent the actual course of change in any particular neighborhood. Not only is the course of change in the real world uneven and inconsistent, but few neighborhoods move across the entire range of the spectrum from the weakest to the strongest market conditions. Most neighborhoods will change, if they do, within a narrower band reflecting their particular assets and constraints, with respect to their location, their housing stock and other features.

The suitability of each of the various strategies that can be used to preserve or create affordable housing varies significantly from one stage to another [see Table 4 below]. Actions to preserve or create affordable housing always interact with the private market, and are directly affected by change in real-estate prices and land availability. Actions that are designed to affect decisions by private owners, such as a rent-control ordinance or a program to offer improvement loans in return for a commitment to keep units affordable, will rise and fall on the owner’s economic calculations, which are determined by his or her understanding of the state of the local housing market.

Table 4: Suitability of Affordable Housing Preservation and Creation Strategies

Strategies to mitigate displacement or preserve lower-income homeownership are less market-sensitive. While the need for many of those strategies arises from market pressures, some of these strategies – such as ensuring adequate relocation assistance for displaced tenants or measures to limit property tax hikes for homeowners – are sound public policy at any point, even though the demand for relocation assistance or the pressure from property taxes may not be great in neighborhoods in the early stages of change.

Promoting Equitable Revitalization

Change in the real estate market will inevitably change the affordability of housing in the neighborhood. As demand grows, prices rise to reflect the additional value associated with buying or renting a home in the neighborhood. Lower-income residents of the neighborhood may find it increasingly difficult to afford to continue to live there, while fewer new lower-income households will be able to move into the neighborhood. Over time, lower-income residents will be displaced and replaced by more affluent households.

While this is change, it is not equitable revitalization. To the extent feasible, revitalization should be a balanced process that benefits neighborhood residents at all income levels, owners or renters, young or old, and of all racial and ethnic backgrounds, and is designed to lead to economic integration as a long-term reality rather than a transitional state. Equitable revitalization calls for both preserving and creating affordable housing, as well as taking steps to minimize untimely and forced displacement of a neighborhood’s lower-income residents.

The effects of change will vary widely, depending on the pace of change and the
nature of the new demands driving it. In some neighborhoods, sale prices of owner-occupied housing may increase much more quickly than rent levels. In others, modest single-family houses may not appreciate as much, but older apartment buildings may be converted to condominiums. Three distinct types of housing and residents are affected by change in different ways:

Owner-occupied housing and homeowners
Private-market rental housing and renters
Subsidized or government-assisted rental housing and renters