Thursday, July 17, 2008

Gentrification is Dead!?!

Although I think it's doubtful that the Seminole Heights Starbucks will be closing anytime soon, the mere speculation of such a tragic (*ahem*) event befalling our shining beacon of bubbledom truly illustrates how fully the times have changed here in the Heights from just a couple of short years ago. As For Sale signs fade and rust in hundreds of front yards and the frothy tide of foreclosures overwhelms the neighborhoods, it seems painfully clear that we have fully made the transition into the new post-gentrification age.

The examination of the abrupt and complete reversal of the boom is something that will no doubt keep economists and scholars busy for years. But much of the speculation of what comes after the brutal end of gentrification and the kind of economic cycle that will replace it seems like more wishful thinking from those carrying the burden of economic collapse who have maintained, in the face of all the evidence, that one can always make a profit off someone else.

On the flip side, South Florida housing activist Max Rameau released an essay this week throughly analyzing these questions, identifying the characteristics of our new "Capital Divestment" reality, and offering strategies of how to deal with the new dangers and opportunities that come with it. Whether you agree with his assessments or not, the essay is a must read for those affected by the housing crash and looking for different perspectives on the wider economic problems that created it:

The modern era of gentrification, starting approximately in mid 2002 and ending abruptly towards the end of 2007, is possibly the most extreme- and brutal- since the term was coined in England in the late 1800s. In June 2005, The Economist magazine, widely regarded as the world's most respected financial periodical, argued, with documentation, that never in history have home prices rose so high, for so long and across so many countries, bestowing upon the “housing boom” a more appropriate moniker: "the biggest bubble in history." A significant and integral component of that bubble was speculative gentrification.

Read the entire position paper HERE.

Watch a Youtube video I made about the affordable housing crisis in Miami featuring Max Rameau: Umoja Village.

14 comments:

In The Heights said...

What a load of horseshit from a bunch of brain dead Socialists.


Are there any Conservatives around here, or is everyone nuckingfuts?

Rick Fifer said...

The author of the article you site is twisting the idea of gentrification. The real estate bubble had nothing to do with gentrification. Gentrification is still around and will be for a long time.

The bubble was greed. The same pie in the sky greed that is currently creating the bubble in oil prices, created the bubble in the stock market in the 1990's, and the land boom in the 1920's. They were not grounded in real value but in speculation. "Speculative gentrification" is an oxymoron. An the position paper starts out by saying that those that agree need to be ready to fight the new economy..whatever that might be. Those are the folks that think gentrification is a bad word. They are not even waiting to see what they are fighting. On the other side are those who drank the kool-aid being served during the bubble and are still in denial.

That is completely seperate and apart from the gentrification that has been happening in the Heights for more than 2 decades. It is the increase in value by adding "real" value to neglected and neighborhoods. It has been happening in most major cities in this country for the past 45 years or so. Real value is not slapping a coat of paint on a house and expecting that to increase your value 20 to 30 percent. It is not smearing stucco over termite eaten siding to hide it's true condition and trying to flip it for a 50% profit. Then there are still those who feel that their house has doubled in value just by sitting there. That worked during the bubble but those days are past. Now like the old Smith Barney commercial, that value has to be earned.

There are many homes in this neighborhood that have had owners that have worked very hard to fix the decay brought on by neglect, age, disinvestment. That is real value. That value may be taking a beating in this market beyond the effect of the bubble. That will correct itself over time.

There are still people making those investments in their homes in this neighborhood (and that is gentrification). Some who were left with few affordable options during the peak of the bubble are begining to make their way to our neighborhood again. There are still young professionals moving to the neighborhood to buy their first home. Now there are not competing with swarms of speculators.

There are other attributes that will still draw people to Seminole Heights such as: short commutes, the charm of the homes, the tree shaded streets, and a strong sense of community that you can't find in many suburban neighborhoods. The things that we lack in the commercial areas (businesses that serve the surrounding neighborhood) will continue to increase in time as I have seen happen over the past 20 years.

Unfortunately, some (like the first comment) never did believe there was a real estate bubble. But then greed doesn't equal conservative any more common sense equals socialist.

Your home is a piggy bank not an ATM; it may be your shelter, an expression of who you are but it is not a money tree.

Tony said...

The best strategy is to sit tight, if possible. The "housing bust" is more about scandalous mortgages than about property. Right now, everything is lumped together, but as the situation gets sorted, property with real value will come back to the surface, while the sub- and ex-urban areas will continue sinking. What many people seem to forget is the old adage about real estate: "location, location, location." Seminole Heights is prime real estate in the area and in many cases it is actually under-valued. As gas prices continue to climb and people get out of their 40-mile-away McMansions, they will come to see the value of living in the urban core. Check out just about any other city and the neighborhoods that are peers to SH. Such properties are rightly valued. Tampa is slow but it will catch up. Rapid transit will come and hopefully, they will design a system based on the needs of users rather than the old idea which relies on existing track. The most optimal area for development is actually Sulfur Springs. It is the most undervalued, yet prime location, in all of Tampa. Have you seen the view from Waters and Florida aves.? It's a bluff! The high ground. A beautiful view of downtown. This can be Tampa's Buckhead, if someone with vision and funding can see the potential. There is so much space here for redevelopment, placement of a transit hub, and dense commercial and residential construction. When this happens, SH will really get a boost. Our 2/1 bungalows will finally be properly valued. Maybe we need to find some investors from Dubai???

KombatRock! said...

Rick,

You seem to view the organic positive growth that this and other urban neighborhoods have steadily seen over the past 20 years as gentrification, but (and I think we had this exact exchange 6 months on here) the kind of changes that have occurred here in the past few years could have only been accomplished with an influx of capital, whether that be urban professionals moving here or folks taking out massive home equity lines of credit based on inflated home values. This didn't happen in the 80s and 90s when economic development in Seminole Heights was largely stagnant, it took the bubble to bring it on and that's exactly why the real estate boom is directly related to gentrification. I don't see how you can separate the two. Without a bubble there would have been no Starbucks; the defacto symbol of gentrification that both satiated and helped lure higher income earners to the Heights. How many agents used it as a selling point in their listings?

I agree with your point about "real value" capital investments that aren't based on making quick profits, but again, that's not typical gentrification. Those tend to be people making longterm investments the old fashioned way, adding a room on because they need the space not because they hope to pull a profit in 6 months.

I think Mr. Rameau knows exactly what he's fighting. The causes and effects of bubble gentrification have been in peoples faces in Miami Dade for years now, far more so than Tampa, and led to a severe low income housing crisis which in turn led to the Take Back the Land movement. It's important to put the paper in perspective and realize that there's a very large portion of society that have always been denied access to ownership and have been at the whims of market forces since the beginning.

As a sidenote, I don't really buy your oil bubble idea either. Sure, there's a lot of greed and obscene profits in the industry, but there's a real global demand and a dwindling supply too, which I think in the long run will begin to force the reshaping of American cities that have been designed around the automobile and cheap gas for 60 years. It's already happening as more and more folks decide that the suburbs are less and less desirable places to live due to mostly to the rising costs of commuting. That's what I think will be the saving grace of older urban neighborhoods like Seminole Heights. As a new urban transit infrastructure is created in the coming decades out of necessity, core neighborhoods will be revived, and sprawled suburbs doomed. Not such a bad thing, but that's all assuming we survive the looming total economic collapse.

KombatRock! said...

You have a point Tony, I'll work on those Dubai connections.

Rick Fifer said...

Beating a dead horse. You have defined gentrification to fit you particular perspective. Unfortunately that perspective does not jive well with the literature on gentrification. As I have already stated over the last 40 years it has occurred in cities all over the country. Read some of the literature that doesn't have a blatant political axe to grind. Those weren't bubbles.

secondly you seem to think the activity was stagnant prior to what 2002? 2004? That fact that you were not aware that the process was under way does not invalidate reality.

As to the oil issue. Since I actually remember the 1973 oil embargo, that was a shortage. Stations ran out of gas. The supply was limited to punish the US and the Netherlands for their support of Israel. Today production exceeds demand, no one is restricting supply, demand has not outstripped production, no one is unable to buy gas. Therefore, this is by it's very definition speculation that demand will outpace production. Therefore, the price is not based on reality. As long as supply is less than demand there is no justification for the run-up in prices. Ergo...a bubble. Your arguement sound just like those I heard regarding real estate.

Oil has spiked and crashed before during the last 10 yrs. As soon as we have a president who does't go around lauching pre-emptive wars the price will begin to fall. The Bush administration announces talks with Iran and oil prices do their biggest 1 week drop. Another bubble!

kombatrock said...

It's interesting to note that the wikipedia entry on gentrification is consistently disputed because of perceived left wing bias. This is one of those issues where one's perception on the subject tends to be dictated by where you sit on the class divide and where your politics lie.

The fact is that neighborhoods change when incomes increase, real estate values rise, and the culture and character of the area is noticeably altered. Contrary to what you're saying, this jives well with ALL the literature I have read on the subject regardless of political orientation.

For sure, the process has been common in cities around the country and has not always coincided with a real estate bubble. (Ybor City gentrified in the mid-90s) What I'm saying is, in our neighborhood, the process WAS directly related to the boom and although the neighborhood association no doubt cheered it on every step of the way, their activity, although certainly related to it, is only peripherally involved with bringing it about. And that's not to disparage all the years of prostitute patrols and home tours and committees to get historic designation, and other civic activism, but the fact is money talks. Take my mom's old house for example. She bought it in 1982 for $60 grand. By 2000 it was worth $79. 19 grand in 18 years seems like pretty "stagnant" appreciation compared to the absurd returns during the 00's.

I guess one way to look at it is that there was a snail's paced gentrification taking place during the 80s and 90s (if the influx of gay people or the neighborhood associations meetings can constitute it), but come the zeros the process slipped into hypermode with the turnover of properties and the crazy value leaps and the alteration in character as the Starbucks indicated.

Mr. Rameau's essay does have a "political ax to grind" and that's exactly why I thought it interesting and posted it here. It's refreshing to look at these economic cycles in a broader scope and although the circumstances in Miami are a bit more extreme than Tampa, the parallels are significant: removal of housing projects, lack of affordable housing...

Now, I dont know if oil prices dropping slightly below $130 a barrel, a peak price unheard of not long ago, indicates a bubble bursting, but I'm not going to hold my breath.

Rick Fifer said...
This comment has been removed by the author.
Rick Fifer said...

Won't argue your point on your mother's home appreciation of 19k over 18 years. You keep equating sale price with gentrification as if they are one in the same. Over the years I have watched repaired, renovated, and restored homes command significant prices for the time. I also saw people who lived here for decades who had done squat to their homes all those years who thought they were entitled to pull down close to the same price as the renovated, updated, restored home. Or who would say the house down the street wasn't worth what somebody else paid.

Dylan sang "he who's not busy born is a busy dying." Sort of works with houses: if your not investing in and maintaining it, it is declining in real dollars.

As to the issue of the political left or right, both tend to be intellectually dishonest. Class divides will always be there. A much more Utilitarian ala Jeremy Bentham would be far more useful; focusing on the greatest good for the greatest number. In contrast to socialist thinking that would make us all paupers. Or unrestrained capitalism with it's extremes of wealth and poverty.

I think there is much be gained from a focus on Community. You might want to read some Amitai Etzioni writings as to communitarian thinking (not so keen on some of his other writings).

(A re-write since my grammar sucked in the original comment)

kombatrock said...

Rick,
If you're trying to say the reason my mom's house didnt rise in value is because she didnt improve the property, you're being presumptuous and totally missing the point.
Claiming people on both the political right and left are "intellectually dishonest" without backing it is a copout. I spent half the summer in "socialist" Europe; they're not a bunch of paupers amigo. But trying to tie that Bob Dylan line to the housing market takes the cake man.

You're out of control!

rfifer said...

I have merely responded to your comments. I don't know your mother's house, wouldn't know you without the silly cow's head.

I am not the one being presumptuous.

I never brought Europe into the discussion but the British Labour party which was very socialist nearly ran the country into the ground. In fact most of the governments in Europe have moved to the right (which is still too left of our center).

As to my Dylan reference, I often quote and use lines from songs. The metaphors are often much better at making points than what I might come up with on my own. Since my collection of Dylan music spans from 1961 to the present, I can find a lot of imagery to draw upon.

I am not looking for a cop-out but I was also not looking for a long drawn out discussion on political philosophy. But having looked at writings of philosphical musings of both the right and the left I find both lacking for what they presupose. Humanity is generally not self-sacrificing enough to bring about socialist egalitarianism without the coercive force of government. Nor is humanity altruistic enough to level the disparities of classical liberalism. Neither side acknowledges the holes in their respective positions nor merits in the other side. That is my point on intellectual dishonesty. The proponents, whether on the right or left are not intellectually feeble.

Oh this could be fun. But I am not fond of all this typing. And I am trying so hard to find the perfect Dylan metaphor too close....

Anonymous said...

Kombatrock-
Just a note that oil has dipped to as low as $115 pb. That is 78% of it's peak. I say the bubble is deflating. At this rate $100 pb could be here by labor day. Numerous analysts have said that fundamentals support around $65 to 75 pb oil.

The thing with bubbles is is once they start deflating the process is hard to stop. Kind of like what we are dealing with with real estate, which no one wanted to call a bubble either.

RF

Anonymous said...

T made bets of $10 and $50 that gas would drop to $3 a gal. or oil $80 a barrel by the end of the year.

They ppl I made the bet with hope they lose.

KombatRock! said...

I know it's tempting to look at this short-term pullback in oil prices and declare "bubble!"-Alot of folks really want that to be the case, and it's been getting press lately (locally, this week's creative loafing article by Wayne Garcia) but the oil pricing business is more complicated than it appears, and the bubble theory has a few holes, the biggest of which is punched by the fact that we live on a planet with a finite supply of the stuff. New sources arnt showing up in large quantity and the cost of drilling in remote untapped areas is astronomical.

The bottom line is, even if there is a short term pullback (or bubble if you insist), as sure as the sun rises, oil prices will go back up. This ain't real estate. Which, ultimately, is a good thing. As we've already seen this year, rising prices bring a dent in demand and force people, governments, and think tanks, to scrabble for alternatives. Which is what we desperately need because cheap oil *is* gone and the fossil fuel culture we live in, although not widely accepted in this country, IS totally archaic, poisonous, and destructive on a grand scale.

So, instead of debating about whether there is a bubble or not, which in the long term there isn't, we should be in agreement that it is high time to seek post-carbon fuel alternatives.

Check out the Oil Depletion Protocol.
http://www.oildepletionprotocol.org/