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Race, Jobs, and Gentrification

Housing supply populism avoids race and economic inequality.
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The eastern view of downtown Houston. (Photo: Hequals2henry/Wikimedia Commons)

The eastern view of downtown Houston. (Photo: Hequals2henry/Wikimedia Commons)

Go ahead and tweak the zoning code. Unleash density. Let the developers build. Houston, we have a gentrification problem:

The skyscrapers of downtown Houston are plainly visible from the city's Third Ward.

That's why developers have begun building upscale townhomes here. It's central-city living, with an easy commute downtown. To an outsider, that construction may look like signs of revival in a run-down neighborhood.

State Rep. Garnet Coleman doesn't see it that way at all. ...

... "You displace people by price," Coleman said, "because their incomes are historically lower, if you're African-American."

Listing recent challenges that historically black neighborhoods such as New York City's Harlem, Washington, D.C.'s Shaw neighborhood and southwest Atlanta have faced, Coleman said, "I don't want somebody playing Monopoly with my neighborhood. I just don't think that I can stand for that."

I'm fed up with density boosters lecturing me about Economics 101, holding up a social science abstraction like a law of the universe. Yes, a model can help all of us better understand what it going on. No, a model is not a policy prescription. Models, like maps, leave out a lot of information in order to be useful.

Housing supply populism avoids race and economic inequality. Greater density will deliver the urban oppressed. Quite to the contrary, greater density will exacerbate urban segregation:

As a developer of rental and multi-family urban housing, how do you view the challenge of housing affordability for the middle class?

We’re quite active in developing rental and multi-family urban housing. As you know, we have kind of a hybrid business model in that we develop a lot of large-scale, high-density urban housing that, frankly, is expensive, and a lot of very affordable, low-income housing, which is serving the lower-middle class. Absent a change in overall quality of life indicators and land to produce housing that appeals to that traditional middle class family, it’s a challenge.

Purely as the developer responding to market conditions, if you build high-rise, if you build high-density, it’s much more expensive. It is virtually impossible in high-rise construction to serve working and middle class families, purely on an affordability basis, even assuming that the product would appeal to them.

There are a lot of reasons, particularly along transit corridors, to have high-density housing. But almost by definition, unless land prices can be taken out of the equation by public ownership of land, that housing is going to be relatively expensive because of the high cost of constructing it.

The above quote is for Los Angeles, not "zoningless" Houston. Suffice it to say, sprawling Los Angeles isn't the physical geography conundrum of San Francisco. There are limits to what density can do. Cost-to-build, which doesn't appear in real estate supply and demand curves, impacts development proposals. What's the profit margin for your project?

Allow me an abstraction. Let's pretend the real estate market was a labor market. Talent supply is tight. Your company has one option: Increase talent supply. Talent demand is the big, immovable object. One way to increase talent supply is workforce development. Somebody else assumes the cost of training. Wicked smart, but potentially racist. Avoiding controversy, a company could offer more money in order to stoke the fires of demand. However, the budget for employees won't accommodate such a raise. Globalization commands razor thin margins and economies of scale. Go figure.

Yet here we are going on and on about the restricted supply of STEM graduates. Those workers don't deserve more money. A business has a right to a profit. Urbanists want to gouge tenured African-American residents in order to secure cheaper access to the city.