In recent months, some shops in Hochelaga-Maisonneuve and St-Henri have been vandalized and looted. The apparent motivation behind these criminal acts was to denounce gentrification — the process by which run-down areas are renovated by middle-class families and young professionals who move in.
The fear is that as this happens, poorer individuals will be displaced. In fact, though, gentrification is a tool for improving the living standards of everyone, including the poor.
Economic and social historians see gentrification as a common and recurring process that waxes and wanes with the popularity of different areas. As a neighbourhood becomes less popular, more and more individuals move out, and in doing so, they leave behind individuals with limited resources to invest in community improvements.
Gentrification puts a halt to this process. As new residents from different walks of life move in, they increase social diversity. This generates social capital, which can be defined as the connections between individuals that allow knowledge to circulate. Basically, as different individuals intermingle, they create new information, allowing opportunities to be discovered and new skills to be learned. This leads to enhanced productivity, greater employment opportunities, higher incomes, a broader range of services, and an overall improvement in the quality of neighbourhood life.
Poor people are actually the main beneficiaries of this. First of all, the increased opportunities allow them to earn higher incomes. Second, a wider range of services gives them more choices which, in many instances, leads to lower consumer prices. In addition, exposure to better neighbourhoods increases the likelihood of upward socio-economic mobility, especially for children.
How do poorer individuals actually behave when gentrification begins? Do they leave the areas that are gentrifying? In many studies, notably looking at Boston and New York, gentrification has been found to reduce the likelihood that poorer individuals will move out. Since gentrification reverses the decline or stagnation of a given area and improves living standards, poorer individuals see themselves as benefitting from the process. Insofar as the gains in terms of housing, local amenities, income and services available tend to largely offset the cost of higher rents, poorer individuals will remain in a gentrifying area.
To be sure, there are cases of displacement as rents go up, but trying to prevent all displacement would be foolish, as local populations move all the time as their circumstances and constraints change.
The best policy to limit the costs of displacement is to make sure that there is enough affordable housing within the same urban area. However, many cities tend to make housing unaffordable through overly restrictive zoning laws. The aim of zoning codes is to control the uses of land and building, and this generally means a restriction on the ability of developers to increase the supply of housing units, or of certain kinds of housing units. As supply is constrained by regulation, rents increase and housing accessibility falls.
There is a well-established consensus among economists that zoning laws tend to be detrimental to housing affordability. As Paul Krugman put it in a recent New York Times article on the American situation, “national housing prices have risen much faster than construction costs since the 1990s, and land-use restrictions are the most likely culprit.”
The burden of expensive housing falls disproportionately on the poorest members of society, but this is not the fault of gentrification. It is the result of regulatory obstacles that hinder the adaptation of housing stocks in accordance with population movements. Easing those regulations would do much more to help the poor than opposing gentrification.
Thugs who vandalize storefronts deserve no sympathy. Their means are as unacceptable as their understanding of gentrification is flawed. Montrealers should denounce them and cheer for gentrification, while demanding regulatory reforms that would help ease the cost of housing in the city.
Vincent Geloso is Associate Researcher at the Montreal Economic Institute. Jasmin Guénette is Vice President of the MEI. The views reflected in this op-ed are their own.