Thursday, June 14, 2012

Gentrification vs. Revitalization

The down housing market hasn't been all bad. Homeowners have been able to refinance at lower rates, first time buyers have been able to get a little more bang for their buck or get out of rentals sooner than they thought, and there have been plenty of new opportunities for investors. When combined with the ongoing trend for urban living, this has brought some new life and some new conundrums to communities all over the United States. Chattanooga, which weathered the recession better than many cities, is now a prime example of new conditions that will no doubt be creating similar conversations elsewhere in coming years. The debate is seemingly simple: is it revitalization, or gentrification?

Knox News picked up the scoop that Chattanooga has "out-Brooklyned Brooklyn" in a new ranking by Atlantic Cities that examined which ZIP codes in the US are "fastest-whitening." Knox News remarks, "As redevelopment moves forward, it will be interesting to see if the development community and/or city is focused simply on creating better places to live, work and play, or if they also try to foster racial and economic diversity in those neighborhoods." Indeed, dramatic shifts in neighborhood demographics always create new pros and cons, and debates over which wins out.

In the 1970s and 80s, white flight to the suburbs left downtown Chattanooga polluted and languishing, until the city transitioned from a focus on industry to a focus on tourism, and made a concerted effort to create visitor and resident-friendly downtown. In the early 90s, North Chattanooga had yet to develop any of the parks, galleries, restaurants, and shops that flourish there now. Today, it is a mixture of high and low income residences, single-family homes, condos, and apartments. North Chatt is home to Normal Park, one of the best schools in the area, as well as CCCA (Chattanooga Center for the Creative Arts), a performing arts magnet school, and GPS, an all-girls private prep school. In the early aughts, the condominium trend caught on in Chattanooga, and North Chattanooga was one of the first areas in the city to see historic commercial space converted from hipster hangouts to boutique lofts. That trend continued, and really took off, in the Southside district, where well-to-do young professionals have settled into gargantuan urban lofts, tiny-but-tailored townhouses, and industrial-chic apartments.

In those neighborhoods, the new developments were always aimed at an upper middle class bracket and higher. That isn't mutually exclusive with ignoring racial and economic diversity, however. In many cities, appreciation simply means that wealthier of people of all races will move in. As "Chrissy" points out in the comments section on the Knox News article, "there are several neighborhoods in Cincinnati and Cleveland [OH] where [blackness increases with appreciated real estate values.] Kenwood in Cincinnati actually comes to mind." Some neighborhoods, like North Chattanooga, do successfully see an improvement in schools and fresh development without losing economic diversity. Other neighborhoods see shifts in racial proportions without completely losing diversity. The Highland Park neighborhood in Chattanooga comes to mind, where the old time African American community lives side by side with white and Latino newcomers.

Essentially, the gentrification vs. revitalization debate is the same as glass half empty vs. glass half full. Each neighborhood is different, and which term you use depends on your perspective. What is important for home buyers and investment developers alike to recognize is that just as there were many downsides to downtown being below the poverty line, there will also be downsides should it price out many of the people who work there. As the housing market recovers and more neighborhoods nationwide see the opportunities Southside Chattanooga has, it is important to remember the benefit of balance and prudent planning. Keep a long-range vision when making a real estate purchase, whether it's your first home or a commercial property.