the rapid gentrification of the Bay Area

Within the past decade, the Bay Area has witnessed a massive demographic shift of low-income and people of color, particularly from cities like San Francisco and Oakland. This phenomenon of gentrification refers to the process in which a neighborhood changes socially, culturally, demographically, and economically following historic disinvestment. It has notoriously been associated with significant increases in rental and for-sale housing costs, immigration of higher-income predominantly white families, and outmigration of longtime low-income predominantly people of color residents.

Several historical conditions and policies formed a repetitive system that made certain communities more prone to gentrification.  In response to the Great Depression housing shortage, the federal government created Home Owners’ Loan Corp in 1933, designed to increase America’s housing stock. The government-sponsored corporation granted long-term mortgage loans to over a million homeowners who could potentially lose their property. The policy created an economic pattern that accelerated the suburbanization of the United States and devalued urban neighborhoods. However, the policy created a “state-sponsored system of segregation”, according to author and house segregation expert Richard Rothstein, as the governmental efforts significantly barred attempts by African Americans and people of color to join these new suburban communities.

The Federal Housing Administration, established in 1934, further assisted home segregation by refusing to insure mortgages in urban areas neighborhoods as they were deemed “risky” and “unfit for investment”. The governmental agency predominantly affected the low-income African-American and people of color that dominated these regions, preventing them from buying homes in suburban neighborhoods. The phenomenon became known as “redlining”, where people of color were denied the basic access to loans that would have allowed them to buy, renovate, or repair their homes. While redlining was outlawed by the 1968 Fair Housing Act and the 1977 Community Reinvestment Act, it still has visible aftershocks in many of the largest cities across the United States, including Atlanta, Chicago, and Tampa.

“White flight” refers to the growth of mostly white suburbias and the mass exodus of capital from urban centers, as supported and driven by federal housing and transportation policies of the mid-20th century. For example, the G.I. Bill, a federal effort to provide financial and social benefits to veterans of WWII, guaranteed low-cost mortgage loans for the returning soldiers. However, the limitations were placed on specifically black veterans and their ability to purchase homes in the suburbs. The FHA financially sponsored the mass-production of suburban regions, allowing for the rapid growth of American suburbs, but they required the suburban developers to agree to not sell the houses to African Americans to guarantee the loans. Banks and other mortgage lenders grew to reject loans for creditworthy borrowers strictly based on their race, ethnicity, and their residency. Financial firms, real estate agents, and other parties demarcated geographic areas, mainly urban communities, that were effectively “off-limits” for issuing loans. The term itself refers to the way in which lenders outlined on paper maps areas deemed to be of higher risk of default on a mortgage. To this day, these historic policies of redlining are one of the leading factors for the economic inequality on the basis of race in the United States.

Gentrification confines low-income and communities of color to urban neighborhoods, leading to the mass outmigration of homes, businesses, and neighborhood institutions. The urban renewal set the scene for widespread disinvestment that primarily targeted low-income communities and people of color. A drastic increase in mortgaged property seizures in recent years have formed a foreclosure crisis, contributing to the exploitation of urban neighborhoods. The foreclosure crisis makes these urban regions more vulnerable to investors seeking to flip homes and, in turn, gentrification. Of foreclosures in 2007-2009, there were 790 foreclosures for African-Americans, 769 foreclosures for Latinos, and 452 for Non-Hispanic Whites per 10,000 loans. These incidences of high-price lending, foreclosure, and institutionalized race trace back to the shockwaves from subprime lending and past historical actions.

Urban cities’ disinvestment and investment patterns in today’s society are the results of years of subtle gentrification influences. Recent years have seen a trend of capitals flooding back to these historically disinvested neighborhoods, largely as a result of the increasingly expensive rental market in many US cities. In particular, the median rent of a typical 2BR apartment in the San Francisco Bay Area has increased by almost 70% from 2011 to 2017. Their relative affordability and close proximity to major city attractions increase their appeal to new residents. In reaction to the expanding interest, cities are investing more in such neighborhoods to improve transit access and infrastructure and draw in new residents, and thus, the cycle of gentrification and discrimination of disenfranchised populations repeat. Increased real estate speculation and investment in neighborhood amenities lead to changes in land use and predominantly support a shift of the character of the neighborhood from the small community run businesses to large-scale corporations that cater to the new resident’s needs.

This phenomenon, at first glance, may seem positive as it increases city investment in a neighborhood and community. However, gentrification is notoriously associated with the displacement of low-income long-term residents, who are unable to benefit from these new investments and have a drastically disproportionate impact on disenfranchised communities of color. Gentrification can also lead to cultural displacement, where individuals feel a loss of belonging and identity amidst the changes in their community.The Bay Area, specifically San Francisco and Oakland, have some of the highest rent rates of the nation, leading to rapid new development and city investments and a destabilization of the economic balance. The rental housing costs of the gentrifying neighborhoods in Oakland even surpass those of wealthy and affluent neighborhoods like Rockridge in 2011. Gentrification affects the housing quality available to displaced individuals and increases the economic inequities, disproportionately towards low-income people of color. This leads to the displacement of African Americans in such neighborhoods, as demonstrated by the significant loss of African American homeownership. A project led by the Urban Displacement Project and the California Housing Partnership in 2015 found that the proportion of African American residents in Alameda, Contra Costa, and San Francisco counties dropped almost 40% from 1990 to 2011, whereas the proportion of white households increased over 20%. Black households were generally concentrated in cities with lower housing costs and less access to resources. According to the Bay Area Equity Atlas, 54% of low-income households of color report living in areas that are in the process of gentrification or are at risk of gentrification. In particular, 66% of the Bay Area’s low-income African American households, 55% of Latino households, 48% of low-income Asian or Pacific Islander, and 50% of Native American households report being in neighborhoods experiencing gentrification.

Many public, private, and non-profit organizations are implementing strategies that allow long-time residents to benefit from the changes through advocating for the preservation of affordable housing stock and protection of residents. In 2018, the San Francisco Foundation, PolicyLink, and USC Program for Environmental and Regional Equity announced the Bay Area Equity Atlas. The comprehensive data support system is designed to call awareness to gentrification in the Bay Area and track the state of economic inequality across regions, taking into account race, nativity, and geography. Gentrification isn’t an inevitable result of economic growth, but the result of institutionally biased economic development policies, and these organizations hope to slow and eventually eliminate the displacing effects of gentrification.

Image credit: photo by Jon Tyson on Unsplash 

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