For at least 43 years, the San Jose-San Francisco-Oakland, California, Combined Statistical Area has been the wealthiest region in the United States. For at least 43 years, according to Gary Kamiya, the Tenderloin in San Francisco has resisted gentrification. Kamiya maps the remarkable geography:
For as long as I’ve lived in San Francisco—going on 43 years now—I’ve been fascinated by the Tenderloin. It is the strangest neighborhood in the metropolis—maybe the strangest on the planet. In the midst of one of the most affluent cities in the world, it is a 40-square-block island of poverty and squalor. Its streets teem with the people the Chamber of Commerce does not want you to see: the ragged, the mentally ill, the addicted, the paroled, the homeless. While all big cities have such denizens, they are usually scattered here and there—not clustered right next to the most valuable real estate in town. But the Tenderloin couldn’t be any more central. It’s encircled by money: to the east, Union Square; to the north, Nob Hill; to the west, Civic Center and the Van Ness corridor. From the glittering shops of Union Square, it’s only a few minutes’ walk to the crackheads, derelicts, and prostitutes at Turk and Mason. Make a wrong turn coming out of the Hilton Hotel, and in a few seconds you feel like you’re in the South Bronx—or Calcutta.
That the Tenderloin hasn't gentrified is ironic, until Kamiya digs into the unique landscape. The grand legacy protecting what should be desirable real estate are single-room-occupancy residential hotels (SROs). The quality of housing supply is repugnant. Says SRO champion Randy Shaw, “It is impossible for the Tenderloin ever to be gentrified. The gentry don’t want to live in places without kitchens or bathrooms.”
During the recession of the early 1990s, I spent many a night on the floor in an SRO located in the Dinkytown neighborhood of Minneapolis. The residents of the house were a carnival freak show. Transients like me ruled this part of town, near the university. It was a colorful and dangerous experience. In order for gentrification to occur, the type of housing would have to go. Gentrifying place in Seattle:
What’s fueling rent increases most is development itself, said Jonathan Grant, the Tenant Union’s executive director. If almost all new units cater to wealthier tenants, he said, increasing supply is no path to getting rents to go down or even level off.
“The reality is that these units are high-cost, and often these were taken out of affordable-housing stock,” Grant said. “That’s why you see this theory of supply and demand being turned on its head.”
In and of itself, increasing supply won't mitigate gentrification. Greater density won't make San Francisco or Seattle more affordable. The real estate market isn't as simple as Matthew Yglesias makes it out to be:
The influx of money, young people, and business investment into Silicon Valley hasn’t led to a construction boom and the urbanization of the area. Instead, the local towns continue to insist on strict, suburban-style zoning that essentially rules out new housing supply. Nor are city officials in San Francisco interested in rezoning to allow for more population in a city that’s currently only about half as dense as Brooklyn.
"Deregulate and densify" makes for a great bumper sticker. But ubertarians can't be bothered with messy geographies. Like gravity, the law of supply and demand is absolute. Utopia awaits. The Tenderloin doesn't exist.