What Fraud Tell Us About Gentrification

Do higher-income people move to a neighborhood because it started getting wealthier first? Or do they move first, causing the neighborhood to become wealthier after they arrive? That is, are your new neighbors the cause, or a symptom, of gentrification? A new paper from researchers from UT Austin takes a look at pandemic assistance fraud to find out what happens when local incomes rise suddenly.

Their findings: in neighborhoods with more fraudulent Paycheck Protection Plan loans, home prices rose by as much as 6% more than in other locations. Once the PPP loans dried up, prices rose more slowly or even decreased.

The new research draws a clear conclusion that increasing the incomes of even a handful of people can cause a noticeable increase in property prices for the entire neighborhood. That’s true whether the higher-income residents already lived there, or moved in from out of town.

Regardless of which people are bidding up the cost of housing, the solution remains the same: build enough homes to make room for everyone.

Mayor Wilson recently spoke with the Gilman Square Neighborhood Council and numerous other neighbors about the fate of the long-vacant Homan’s site in Gilman Square. For numerous reasons ranging from steel prices to the COVID-19 pandemic, the city-owned lot has been underutilized for years, but the mayor is unveiling new plans, including childcare on the ground floor and social housing — mixed-income, city-operated apartments that set rents based on the tenant’s ability to pay.

We’re thrilled to hear that the city’s first attempt at social housing is on the horizon. We’re less impressed to find out that, despite the fact that the city owns the land, the administration expects to spend at least three years working on financing and permitting before they break ground.

The first truly hot days of summer are here, and that’s a reminder to check out the Somerville Road to Net Zero program, which offers assistance to both tenants and property owners seeking to reduce their energy costs, increase efficiency, and switch from fossil fuels to electric appliances.

The City has restarted their Davis Square Neighborhood Plan process. As part of that they are convening a Technical Advisory Committee to provide specialized guidance, feedback, and recommendations throughout the planning process. We encourage interesting readers to apply here.

June 17: Good Intentions, Bad Outcomes — Join Newton for Everyone for a deep dive into the city’s current permitting pipeline and the new zoning approaches. Urban designers and planners from Utile will discuss recent zoning reforms and innovative zoning initiatives across New England. 7 pm, hybrid via Zoom and at Congregation Dorshei Tzedek, 60 Highland Street, West Newton, MA.

June 18: Land Use/Planning Board Joint Hearing — Agenda includes tax incentives and regulations on homeless shelters.

The Call Is Coming From Inside the House — Shane Phillips is researching where people come from when they move into newly-built housing (it’s mostly nearby locations).

Why boardinghouses could make a comeback — A short radio segment from Planet Money about the fall and possible return of boardinghouses.

How Upzoning Affects Housing Supply — Urban Institute researchers examine several decades’ worth of zoning changes to find out which ones are most effective, finding that while it is necessary, upzoning alone will not solve all our housing problems.

Housing Supply Is Not Primarily a Financing Problem — Over at the AEI, researchers note that cheaper financing alone will not solve all our housing problems: “in many markets, policy-induced costs and local feasibility barriers act as the primary constraint on new housing production.”

Should European housing politics be Americanized? — Europe has even more expense housing than America and yet does not have a strong YIMBY movement. Works In Progress explores the history and identity of suburbs in Europe and why build more housing is not yet a rallying cry there.