Can Cities Build Their Way to Housing Equity? A New Book Suggests Not.

Sam Stein's Capital City offers a blistering and persuasive critique of how real estate dominates city planning—to the detriment of most residents.
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Luxury apartments are advertised in a realtor's window on the West Side of Manhattan on July 24th, 2018.

Luxury apartments are advertised in a realtor's window on the West Side of Manhattan on July 24th, 2018.

Solange Knowles, when asked about her song "Cranes in the Sky" by her sister Beyoncé for a 2017 feature in Interview, said the lyrics had been a response to luxury construction in her then-home of Miami. She felt the buildings kept ascending, without solving the social problems of the world below.

Solange told her sister the song was about "this idea of building up, up, up that was going on in our country at the time, all of this excessive building, and not really dealing with what was in front of us."

Released in 2016 but written before the 2008 financial crisis, "Cranes in the Sky" captures something honest and ugly about America's over-reliance on market forces, including luxury housing, to resolve entrenched social problems, like housing insecurity.

Housing inequality is reframing our politics, exacerbating racial wealth gaps and spurring waves of homelessness, all while real estate continues to shape policy in insidious ways. A new book by Sam Stein, Capital City: Gentrification and the Real Estate State, provides a much-needed critique of the resulting affordable housing strategies in American cities, framing them as overly reliant on the whims of real estate. Stein, a self-professed radical city planner, looks mostly at New York City, which he chooses because he knows it well and because it's "a place where real estate's rule is clearly seen and deeply felt."

Capital City offers ample historical context and a big-picture view of the financialization of housing from the 19th century to the present. Globally, as Stein points out, wealth has shifted into buildings: The United Nations Human Rights Council estimates that real estate now accounts for 60 percent of all global gross domestic product, or $217 trillion—a shift accelerated by the 2008 financial crisis. When markets crashed, luxury housing came to be seen as a safer place to store wealth.

Against this backdrop, in the United States, nearly half of all renters are cost-burdened, which means that they spend more than 30 percent of their income on rent. Renters are slower to transition to homeownership now than they were before the 2008 recession, and the rise in renters, driven mostly by seniors, has decreased vacancies to historic lows, further driving up rents. All the while, wages have not budged.

Capital City: Gentrification and the Real Estate State.

Capital City: Gentrification and the Real Estate State.

Many cities, viewing the housing crisis largely as a problem of supply and demand, have courted developers to build more and build higher. To accommodate this arrangement, many cities are rewriting zoning laws to allow developers to build for more occupants. Sometimes the new rules mandate that buildings include some small percentage of affordable rental units. A 2017 study found over 800 jurisdictions with these arrangements, called "inclusionary zonings," across the US, with the majority emerging since 2000.

Zoning changes have led to clashes across the country among conflicting factions. Middle-class homeowners may oppose the loosening of single-family zoning, fearing that denser development will drain property values and dilute "neighborhood character"—rhetoric that's usually a euphemism for anxieties around race and class. These concerns are derisively called NIMBYism by those who advocate for more enlightened city planning. ("NIMBY" is an acronym for "Not in My Backyard.") Another group of middle-class, pro-growth transplants, called "YIMBYs," have also emerged. Buoyed by Silicon Valley money, they take the opposite view from NIMBYs, aligning themselves (often uncritically) with developers. Where NIMBYs often oppose any new housing anywhere, YIMBYs seemingly want to build housing everywhere, trusting that the free market will bring down housing costs for everyone and create equity. Then there are anti-displacement activists—the group with whom Stein most aligns himself in this book—who contest market-oriented "affordable housing" plans because, like Stein, they're skeptical of profiteering—and they understand these policies' historical links to traumatic displacement.

It doesn't help that the topic is pretty opaque. Cities pitch rezonings with hopeful projections, often shrouded in city-planning jargon that residents in danger of displacement are not always equipped to parse.

Through his lucid analysis of how these housing policies are warped by their dependence on the real estate market (from which cities hope to leverage some social good), Stein argues persuasively that these "affordable housing plans" are not enough to make cities affordable without further investment on behalf of the most rent-burdened tenants.

Stein describes urban planners as unwitting, well-meaning pawns for real estate capital. Inspired by Jane Jacobs, the iconic urban planner who authored The Death and Life and Great American Cities, they wish to build cities that are "livable." But even as they pepper the landscape with amenities and parks, Stein argues, they're sculpting an environment that caters mainly to commercial interests. As he puts it, "the main lesson many planners pull from Jane Jacobs ... is that gentrification is the best way to make cities more livable."

In some cases, in Stein's view, affordable housing policies can be reckless and counterproductive, intentionally exploding land values and sparking gentrification in order to fund affordable units with the inflated property taxes. Or to put it in the words of former NYC housing czar Alicia Glen, "You try to redistribute some of that growth." In this view, everyone wins: Developers get incentives, middle-class and wealthy residents move into the new properties, and their taxes are used for social programs to help the people they are potentially displacing.

Stein argues that the error of many rezonings is the mistaken premise that cities should "marshal a multitude of rich people into places that are already experiencing gentrification." A few affordable units are unlikely to mitigate the impact of an influx of wealthy residents.

Stein portrays the current wave of neighborhood rezonings as historically descended from urban renewal, the federal program that displaced over a million people, mostly black, across the U.S in the 1950s and '60s. Communities were destroyed while amenities were added, and the beneficiaries of these developments were mostly white and well-off. In the present day, Stein argues, crudely executed rezonings can similarly privilege capital flows over communities, as "cities are incentivized to drive out anything that is understood to reduce property values: types of buildings, businesses, land uses, or even people."

Cities' dependence on real estate markets for revenue extends beyond affordable housing. Many NYC parks, like the Highline and Central Park, were funded through luxury housing, as Stein points out.

Funding schemes of this type are sometimes called "value capture." Stein outlines how NYC has used this approach to fund everything from public housing to transit. The practice is unyielding, and even climate change is poised to spur luxury development: A recent city plan to build landfill into the East River and erect a seawall would be funded by new real estate.

Despite some new affordable housing, asking rents in NYC have gone up, as have the number of low-income, severely rent-burdened households. The city needs more affordable housing, but it has a staggering number of apartments already floating on the private market unused: A 2017 housing survey found 75,000 were off the market and being used only seasonally, a combination of vacation homes and residential hotels.

Fears that rezonings can spur rent hikes are not imaginary; in East Harlem, one of the first neighborhoods rezoned under New York Mayor Bill de Blasio's affordable housing plan, tenants are facing pressure from real estate speculation. And a study this year of Chicago rezonings found that they triggered price increases in the short term, without leading to new housing.

Stein is critical of rezoning but not inherently opposed to it; as he puts it, "rezoning does not equal gentrification; under the right circumstances, rezoning can be used to slow or even prevent gentrification." Stricter rent controls are one strategy for ensuring fairness, and building more affordable housing in upscale neighborhoods rather than lower-income neighborhoods would prevent the displacement of poor residents.

Neighborhood activism can make a difference as well. Stein urges anti-displacement activists to draw sharper contrasts between their visions and the visions of city officials, who often attempt to corral support around predetermined outcomes.

Released just a few months ago, Capital City has already found enthusiastic readers among anti-gentrification activists in the Bronx and Queens, who immediately set up reading groups around the book. These activist organizations include Take Back the Bronx, which opposed a controversial rezoning of the Inwood neighborhood of Manhattan, and the Queens Anti-Gentrification Project, one of the groups that successfully lobbied against Amazon building a major hub in the borough earlier this year.

Stein's book exhorts activists to imagine boldly, arguing that real estate's hold on municipal power can be "unmade by political movements." He sketches a few aspirational possibilities, in which land is socialized, public housing is prioritized, and planning becomes more democratic. But these ambitions may sound distant to communities already in crisis. And neighborhood activism, while vital, can only do so much of the necessary work. Often "success" in these local battles amounts to no more than a few community investments or a few more affordable units. Movements will inevitably have to look to national policy.

The developer-oriented affordable housing strategies that Stein critiques are born of long-term federal disinvestment; no significant U.S. housing investment has arrived in over 30 years, with housing subsidies trailing the growth of the national budget. And the programs that have emerged usually focus on helping homeowners rather than renters, who tend to have lower incomes and greater need.

The most detailed housing plan in the 2020 presidential race so far comes from Senator Elizabeth Warren, who has proposed half a trillion dollars of funding to states to build affordable housing for extremely low-income households. This mandate, which would subsidize housing for the most income-distressed, could lessen cities' reliance on the free market in the pursuit of affordability.

But even Warren's plan is incomplete. It includes a necessary incentive to remove zoning restrictions—to build more affordable units where state and local laws currently restrict such construction—but no plan for rent relief in rezoned neighborhoods, should market-rate units arrive in low-income areas.

The boon of Capital City is that it provides a clarifying language through which to understand the byzantine world of affordable housing in the 21st century, and its analysis rejects premises about the inevitability of displacement. Our solutions will inevitably be untidy and fragmentary, but a book that strengthens our collective moral imagination will only improve these designs. We can and should strive for housing choices that don't stoke the very problems they purport to solve. If not, we will get more cranes in the sky, and the world those cranes build may not be one most of us wish to live in.

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