Gentrification’s Impact on Homelessness

On average, about half a million people will spend tonight without a place to call home. There are myriad reasons, varying from individual to individual, but perhaps the most frustrating reason for an already established family to be uprooted from their home is gentrification. Gentrification, as defined by Merriam-Webster as, the process of repairing and rebuilding homes and businesses in a deteriorating area accompanied by an influx of middle-class or affluent people and that often results in the displacement of earlier, usually poorer residents.14 Many of these residents are only barely able to eke out a living in these lower-class neighborhoods; when they are kicked out either by landlords or unsustainably high costs of living, they will most likely require longer than most to get their assets in order, resulting in a prolonged period of homelessness.

This accidental targeting of lower class individuals is something people seldom consider when moving into a newly renovated neighborhood. Homelessness is essentially a housing issue, so it is safe to say that as housing prices increase, so does the homeless population. However, there are actions to be taken to help those in need: various types of federal housing programs specifically designed to aid struggling families financially and physically. Gentrification can be defined as the process of refining and revamping a district so it conforms to middle-class taste. As gentrification causes real estate market to increase prices on housing, the numbers in the homeless population incrementally escalates. Households that are below the median income are often at risk for not being able to afford housing.

One of the causes for increases in housing prices is the Starbucks Effect. A real estate research group called Zillow found that between 1997 and 2014, homes within a quarter mile of a Starbucks increased in value by 96 percent, on average.1 Julie Lerch, a woman mentioned in the website, can confirm the Starbucks effect. A little over a year after she moved into her condo in Chicago, a Starbucks opened approximately 1-2 blocks away from her. Three years later, she sold her 2-bedroom condo for $100,000, which is 53 percent more than what she paid for.1 Across the metro areas, cities such as Chicago, Boston, Washington, and Philadelphia, homes near a Starbucks are generally more preferential than homes without. In Chicago, the median value of homes near Starbucks rose 59 percent.2 In an excerpt from the book Zillow Talk, CEO Spencer Rascoff and Chief Economist Stan Humphries came to the conclusion that: In Boston, the median value of all homes in 1997 was $155,600, and that increased by December 2013 to $351,100, an increase of 125.6 percent. Boston homes within a quarter mile of a Starbucks in January 1997 were valued at a median of $175,930. In December 2013, their median value was $476,778 a 171 percent increase.3 From the quote above, we can see that Starbucks has made its mark in Boston. Another popular coffee chain is Dunkin Donuts. As Dunkin Donuts are being built near homes, their price value increases but not as high as Starbucks. Shwartz4 In the graph above, we see that with the placement of Dunkin Donuts in certain areas, the cost in housing does increase.

However, with Starbucks, the housing prices differ up to 50K which could be a detrimental difference when owning a home. The affordability and availability of the general housing market correlates with homelessness. The costs of living increases while household salaries remain the same. In a research conducted by the University of Utah, they saw that the housing affordability in Utah, over the long term, is threatened due to the difference in increases between housing prices and household income. From the study, they found that the annual rate of increase in housing prices 3.32% versus the annual rate of increase in household income which is only 0.36%7.

To alleviate the pressures and fears of losing a home and ensure the preservation of housing affordability, existing affordable housing units should be protected. The nation loses more than 400,000 affordable housing units every year due to disinvestment and disrepair4. The U.S. Department of Housing and Urban Development (HUD) program's goal is to provide financial aid for supportive housing for low-income families. A branch within this program is called Rental Assistance Demonstration (RAD). RAD's primary purpose is to give public housing agencies a tool to protect and improve public housing properties. By doing this, RAD's aim is to preserve these limited public housing units by converting them to other federal based housing assistance, an example would be project based vouchers15.

As of October 2015, more than $2.5 billion of external funding has been raised for about 19,000 units.8 Four major programs that account for almost all of the federal spending on affordable housing assistance for people with low incomes are: Tenant-Based Assistance (TBRA), Project-Based Rental Assistance (synonymous for Project-Based Section 8), operating funds, and capital funds. Through this, the programs set a limit that allows tenants to pay no more than 30 percent of their income towards their rent. Together, all four programs stipulate affordable housing for more than 5 million people in over 2 million households16. A challenge that is faced when preserving affordable housing units can be seen in California. In order to address housing needs, California must be able to plan for the continuous building of housing developments. Unstable subsidy can make it difficult when planning for new, affordable housing development over time. It also makes it difficult to narrow down construction, fees, and program requirements18. In the figure below, we see that the decline in federal HOME and Community Development Block Grant funding to California between 2003 and 2015. In general, funding levels for federal housing programs have slowly decreased over the years.

Several families endure additional challenges besides the affordability of available homes. For example, people who leaving homelessness might not have a sufficient credit score that is required to rent a home or apartment. Even with the Housing Choice Vouchers that aid with rent, it is still difficult for many households to find affordable homes. On a more positive note, a more recent action that took place in San Diego in efforts to preserve and create more affordable housing units. At the beginning of September 2018, San Diego's Housing Commission announced that they will administer up to $50 million to build and preserve affordable housing and rental units. Los Angeles County also has leveraged $1.7 billion in public and private funds towards the construction and preservation of 3.362 affordable apartments over the last five years19. Two-thirds of those apartments are reserved for persons that are dealing with homelessness, mental illness, and physical disabilities.

According to a report by the County Chief Executive Office and the Community Development Commission/Housing Authority of the County of Los Angeles has helped house over 21,000 households though the Section 8 Housing Choice Voucher Program19. In the time frame of 2017-2018, a total of 29,081 families have been assisted with housing matters through the County Chief Executive Office and the Community Development Commission/Housing Authority of the County of Los Angeles. An additional approach to fight against the negatives of gentrification was a program that was established specifically for homelessness is rapid re-housing. Rapid re-housing is an intervention that helps individuals and families experiencing homelessness to return to permanent homes as quickly as possible. Rapid re-housing was developed by local service providers attempting to address a specific problem in their communities: homelessness13. These providers saw that there were many families either in temporary housing situations or just homeless due to the lack of housing affordability.

This is done through housing identification, and move-in assistance, and case management.10 Housing identification is the process when households are matched to their appropriate and affordable housing. Move-in assistance is a time-limited financial support that is provided to help individuals and families get back on their feet. Case management services are provided to help the families and individuals understand the barriers of homelessness and how they can prevent it. For example, these services include addressing credit history and lease agreements etc. After they receive housing, these services also provide knowledge in other amenities such as public benefits, employment, and health care etc. A study called the Family Options Study found that the average program cost for rapid re-housing was approximately $6,578, rather than $16,829 for an emergency shelter10. In 2014, 29,506 beds, funded from multiple sources, was obligated to rapid re-housing for families across the country13. This represented about 8 percent of beds for homeless families which increased from 2013 which was 5 percent, represented in the graph below. An additional benefit from rapid re-housing is that it has lower barriers to entry rather than other housing programs such as project-based transitional housing. For example, only 10 percent of families reviewed for rapid re-housing were unable to gain it while 17 percent of families reviewed for project-based transitional housing were unable to gain housing13.

An evaluation was conducted by HUD's to see the statistics of families that entered rapid re-housing. Of the 23 sites that received funding for rapid re-housing: Over one-fifth (22 percent) exit in fewer than 30 days, 11 percent exit in 31 to 60 days, 34 percent exit in 61 to 180 days, 22 percent exit in 181 to 365 days, and 9 percent exit in 366 to 547 days (HUD 2013b). 13 Nation-wide, about 82 percent of families who entered rapid re-housing exited successfully into permanent housing (from summary report on year two of HPRP (HUD 2013b). Several studies of this found that the rates of these individuals and families returning back to becoming homeless are low. Although the rates are low, most families that leave rapid re-housing, about 76 percent, move to another home at least once13. There were also families that faced challenges after exiting the program. In all, 70 percent worried about food security, 57 percent struggled with money for rent, 14 percent had a child expelled or suspended from school within the last year, and 17 percent reported deteriorating health (Oliva 2014; Spellman 2015).13 Despite the statistics above, the rates of individuals that go back to becoming homeless are lower than the years before. Although gentrification is seen as a positive action on neighborhoods among the upper-middle class, it has a negative effect on the lower-class individuals and families. By pushing out these lower-class individuals to build more fancy buildings that fit the upper-middle class's standards and aesthetics, it leaves the lower-class individuals homeless in the dust.

Homelessness is the mere product of economic and societal policy choices. This accidental targeting of lower-class individuals makes it hard for them to find affordable housing. A possible solution that was previously mentioned were the various types of housing programs specifically designed to aid homeless families financially and physically by giving a temporary home and then placing them into permanent homes after. These programs are specifically designed to help individuals that have been removed from their homes get back on feet. Data from the rapid re-housing program has shown that it reduces returns to homelessness. According to the Annual Homeless Assessment Reports of 2017, it seems that these federal housing programs helped in the decrease of the homeless population. Homeless families with children had decreased by 5.4 percent throughout the nation since 2016. The report also found that 553,742 people experienced homelessness in the United States which is only a 0.7 increase since 2016 and a 13.1 percent decrease since 201012. Thirty states have reported decreases in homelessness between 2016 and 2017.

Works Cited

1. Markets Where Starbucks Boosts Home Values the Most. Mortgage Learning Center, 28 Oct. 2016, www.zillow.com/blog/starbucks-home-values-170734/.
2. Anderson, Jamie. Starbucks: Inspiring and Nurturing the Human Spirit... by Caffeinating Home Values. Mortgage Learning Center, 3 May 2016, www.zillow.com/research/starbucks-home-value-appreciation-8912/.
3. Cappadona, Bryanna. Zillow's 'Starbucks Effect' Has Venti-Sized Holes. Boston Magazine, Boston Magazine, 12 Mar. 2015, www.bostonmagazine.com/property/2015/03/12/starbucks-effect-zillow-boston/.
4. Schwartz, Elaine. How the Starbucks Effect Relates to Housing Prices. Econlife, 12 Sept. 2018, econlife.com/2018/09/housing-price-starbucks-effect/.
5. https://gardner.utah.edu/wp-content/uploads/HousingBrief.pdf
6. https://www.nationalhomeless.org/publications/facts/Federal.pdf
7. https://www.huduser.gov/portal/sites/default/files/pdf/Insights-Ensuring-Equitable-Growth.pdf
8. https://www.usich.gov/resources/uploads/asset_library/evidence-behind-approaches-that-end-homelessness.pdf
9. https://www.hudexchange.info/resources/documents/2017-AHAR-Part-1.pdf
10. https://www.hud.gov/press/press_releases_media_advisories/2017/HUDNo_17-109
11. https://www.urban.org/sites/default/files/publication/54201/2000265-Rapid-Re-housing-What-the-Research-Says.pdf
12. https://www.merriam-webster.com/dictionary/gentrification 15. https://www.nlchp.org/ProtectTenants2018
13.  https://endhomelessness.org/ending-homelessness/policy/affordable-housing/
14. https://www.sdhc.org/wp-content/uploads/2018/09/SDHC-50-Million-to-Create-and-Preserve-Affordable-Housing.pdf 18. https://www.hcd.ca.gov/policy-research/plans-reports/docs/California's-Housing-Future-Main-Document-Draft.pdf

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