Running head: GENTRIFICATION

Gentrification Jordan Gillman Molloy College Gotham Course 10/18/2013

GENTRIFICATION Gentrification is a concept that seems to spark very controversial debates. According to Merriam-Webster " gentrification is the process of renewal and rebuilding accompanying the influx of middle-class or affluent people into deteriorating areas that often displaces poorer residents"(Merriam-Webster 2013). However, this is not always the stance taken by individuals. Individuals view rebuilding and renewal as an overall stimulus for the neighborhood. They see the opportunity to increase the value of a specific area, which in their minds could provide more

money to the local economy. With every situation there is always two sides or multiple pieces to fit the puzzle. Therefore, the belief and values of individuals create policies that are implemented and we have seen this throughout New Yorks history.

Its important to understand gentrification because many factors can create it. Many people realize and are aware that the country has been in a recession for some time now. But, most don't understand the linchpin in the entire situation. Mortgage backed securities. MBS's are a financial instrument that is basically structured with many mortgages bundled up into one security. Financial institutions traded these securities and rating agencies rated these investments as almost risk less and as a way to mitigate risk for portfolios. Maeckelbergh (2012), states, " In September 2008 the world became painfully aware that all was not well in the US housing market and the global securities market"(Mobilizing to Stay Put, par.1). This is important to understand because this meant that all housing around New York that was valued was actually over valued and home values dropped. But, this happened after people had already been pushed out of their neighborhood because of gentrification which promoted renewal, and began raising housing values to a point that put people out of homes they have lived in for years and made mortgages extremely high for people who could barely afford it to begin with, and to top it all off

GENTRIFICATION interest rates were high as well. With the collapse of the housing market these neighborhoods really took a hit because people couldn't afford their mortgages and that meant the MBS were actually full of risk rather than being risk less. It is not the middle-class or upper-class neighborhoods inhabited by the Wall Street traders and corporate bankers that are experiencing the highest foreclosure rates, but primarily the low-income, majority non-white neighborhoods: the neighborhoods with over 15% foreclosure rates are the neighborhoods with over 80% nonwhite residents (Bloch and Roberts, 2009).

Additionally, a major problem with the bundling of mortgages is that when a house is going to be foreclosed on who actually has ownership is a very sticky and confusing situation. The ownership is what is being traded on Wall St therefore the bank that the homeowner got the mortgage from might not actually be the owner anymore. This causes a major shift in how people are having ownership and creates a new wave of people having to leave and move to new areas. Maeckelbergh (2012), states, " The result is that in areas with high foreclosure rates, low income people end up living with several families under one roof" (p.2). A perfect example of how gentrification can impact an overall community and local stores is El Barrio. When we visited El Barrio we went to a local shop that had been there for over 20 years. Unfortunately, the owner told us that because property taxes and rent increased so much because of the new housing that came into the neighborhood he needed to move his shop to a new location. He expressed that it has been very hard to make a living with prices increasing and less people being able to spend. El Barrio is an example of a neighborhood that has undergone gentrification. In El Barrio the community formed a movement known as the movement for justice in El barrio. What was happening was with the influx of gentrification for low income housing in the neighborhood,

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new owners took over buildings that many people lived in. These new owners did not care about fixing the properties and this created an outrage in the community, which helped form, this movement. They describe the movement as an immigrant-led multi-issue organization fighting for justice in East Harlem (MJB, 2008a). Maeckelbergh (2012) states that " This backdrop of gentrification and declining housing standards is why people in El Barrio speak of two housing crises, where the first housing crisis is that of gentrification and the second is the recent collapse of the US housing market" (p. 6). According to Hackworth and Smith (2001), " Since 1993, gentrification in New York City has entered a phase that is characterized by the increased economic importance of urban regeneration as a source of income for citifies"(p. 77). This is important to understand because gentrification can be seen as a double-sided sword. The goal is to help these neighborhoods by rejuvenating and rebuilding. But, there are always unintended consequences associated with a major shift to an economy. This process results in pushing out locals and actually devastates a neighborhood.

In conclusion, gentrification is a complex issue that can be viewed from multiple perspectives. Speculators, and investors would argue that gentrification is a good way to earn a profit and give back to low-income communities by rebuilding them and creating new jobs and better places to live. However, as we have seen through our New York Experience class this is not always the case. By increasing the cost of living for communities that were already struggling does not truly benefit their lives. It actually puts a burden on the way of life they were accustomed to. They are then pushed out of neighborhoods they have grown up in because prices are to excessive to live, and because low income housing deteriorates to push out the people living there in order to rebuild a new building to turn a new profit. Gentrification occurs

GENTRIFICATION throughout the entire world and creates many debates and battles by the local neighborhoods being impacted. Before, taking this course I had no idea what gentrification was and I always thought new developments would stimulate and better the economy. However, after further

exposure to the real practice, I am aware I have a different reaction to gentrification. I now see it as destruction to local neighborhoods. The process of forcing people out of their living space because of price increases just to turn a profit is wrong. These people are displaced and forced to move around or live with many people, and instead of bettering the local community as planned, it actually just creates a new neighborhood entirely, turning its back on the locals that have lived there for years and focusing on catering to the affluent people now moving in.

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References Gentrification - Definition and More from the Free Merriam-Webster Dictionary. (n.d.). Dictionary and Thesaurus - Merriam-Webster Online. Retrieved October 20, 2013, from http://www.merriam-webster.com/dictionary/gentrification Hackworth, J. and N. Smith (2001) The changing state of gentrification.Tijdschriftvoor Economische en Sociale Geografie 92.4, 46477 MAECKELBERGH, M. (2012). Mobilizing to Stay Put: Housing Struggles in New York City. International Journal Of Urban & Regional Research, 36(4), 655-673. doi:10.1111/j.1468-2427.2012.01120.x MJB (2008b) International declaration in defense of El Barrio [WWW document]. URL http://zapagringo.blogspot.com/2008/03/join-international-campaign.html