Friday, December 23, 2011

Gentrification on Capitol Hill

In her fascinating 1974 M.A. thesis on the Capitol Hill renovation movement, Anita Rechler finds that, while DC and Ward 6 population declined from 1960 to 1970, the number of households actually increased. This shift resulted from:
  • the renovation movement, which began even by the late 1940s and attracted white, young professionals often with no children.
  • the movement of white families with children to the suburbs (since 1920) and to predominantly white areas elsewhere in DC, which increased after the 1954 court ruling desegregating schools. The change was quite abrupt. As I found in my own research, in 1954 when integration began, the Stanton Elementary School in Ward 8 had a 100% white student population; by 1960 it had 75% African American and 25% white students.
Using Census data and real estate transactions in the Lusk Real Estate Directory, Rechler examines the changes across the Hill between 1960 and 1970. In this map of 1970, the purple-blue are areas with many renovations (Restoration area), while the light blue are transitional areas with fewer, though numerous renovations (Transition area) and the yellow areas have few renovations (Unrestored area).


View Ward 6 Renovation Map (1970) in a larger map

She states that by 1958 over 100 houses each year were being renovated. Of course, renovating and improving buildings is a good thing. Yet, this trend had several problematic consequences. Areas became more segregated by race and class between 1960 and 1970. The renovation movement allowed certain groups -- white professionals and real estate developers -- to benefit from or take advantage of racist attitudes and racial/class inequalities to hoard opportunities. (Sociologists Charles Tilly and Douglas Massey discuss opportunity hoarding more generally.) In the Restoration and Transition areas, black homeownership and renting decreased, while white ownership increased. In the Transition areas, black and white renting declined, while ownership increased. In the Unrestored area, white ownership and renting decreased. In addition, the Restoration areas had households with higher incomes than the other areas. The renovation movement led to increased racial segregation, income inequality, and wealth inequality (due to shifts in homeownership).

On Capitol Hill, Friendship House, Group Ministries, and other groups voiced great concern about the economic impact of the renovation movement on the low- and moderate-income families. Many of these families could not afford renovations (or were renters). In 1972, the DC government proposed that south of North Carolina Ave and east of 1st St SE be made a Federally-Assisted Code Enforcement Area (FACE), which would have provided cash grants and low-interest loans for home improvements, thus allowing low- and moderate-incomes families to take part in the renovation movement. This proposal was never adopted.

Rechler also interviewed real estate agents, community leaders, and residents. She shows that renovation was not a spontaneous activity. Rather, from the late 1940s, real estate agents were deeply involved in renovation and reshaping neighborhoods. Real estate agents had long been renovating houses themselves as investments. By the time Rechler conducted her research, larger developers started working on Capitol Hill. St. Clair Investments, a large suburban development corporation, began buying and restoring in 1973.

Especially with the Great Migration of African Americans to northern cities around the 1930s to the 1960s, discussed in an earlier post, real estate agents stoked the fears among white families that their neighborhoods were being taken over by African Americans. Real estate agents even hired African American women to walk around the neighborhood with baby carriages and did other tactics to motivate white families to sell their houses at a low price. The real estate agents would then sell the house at an inflated price to African American families, whom agents knew could not obtain regular mortgages. So, the agents would provide high-interest loans directly to them. The African American families often could not afford these inflated loans and pay for the maintenance of these still unrenovated houses. This is called blockbusting, which led to decay.

On Capitol Hill, according to Rechler, there was an additional trend of reverse blockbusting: "Real estate agents, brokers, and speculators use sales tactics and pressure practices to displace the poor and black from their homes in order to attract the white middle class." She was told that a real estate investor might call the DC government to report a house for possible housing code violations. Low-income owners could not obtain loans to make the needed renovations and thus faced the possibility that their house might be condemned. The speculator, however, would provide cash and thus pressure the owner to sell quickly. Speculators also quickly flipped houses to each other, driving up prices. According to Rechler, the restoration movement
is encouraged by a hyperactive real estate market which vigorously solicits property to sell, real estate speculation which promises high profits for those who can afford the investment, and financial arrangements which favor the investor over the average homebuyer. In Capitol Hill restoration operates in a market where speculation is virtually uncontrolled and public access to information is greatly curtailed.
The traditional real estate market for those seeking shelter and the speculative real estate market for those seeking profits have converged more and more lately. As we rely on our houses as part of our retirement or some form of insurance, we require that our houses increase in value. Yet, as they increase in value, it means that cities become too expensive for those with low- and moderate-incomes, even those who maintained and developed community in neighborhoods, which now draws people to move to these neighborhoods.

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