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Transition areas : a study of location factors affecting low-income housing Policzer, Irene 1983

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'.TRANSITION AREAS: A STUDY OF LOCATION FACTORS AFFECTING LOW-INCOME HOUSING  by  IRENE POLICZER B. Arch. Universidad de C h i l e , 1966.  A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS  in  THE FACULTY OF GRADUATE STUDIES School of Community and Regional Planning  We accept t h i s study as conforming to the required standard  THE UNIVERSITY OF BRITISH COLUMBIA A p r i l ; 1981 © Irene P o l i c z e r  f  1981  In p r e s e n t i n g  this  thesis i n partial  f u l f i l m e n t of the  r e q u i r e m e n t s . f o r an a d v a n c e d d e g r e e a t t h e U n i v e r s i t y of B r i t i s h Columbia, I agree that it  freely  a v a i l a b l e f o r r e f e r e n c e and s t u d y .  agree that p e r m i s s i o n f o r extensive for  the Library s h a l l  s c h o l a r l y p u r p o s e s may  for  financial  shall  Iti s thesis  n o t be a l l o w e d w i t h o u t my  permission.  Department o f  School of Community and Regional Planning  The U n i v e r s i t y o f B r i t i s h 2075 W e s b r o o k P l a c e V a n c o u v e r , Canada V6T 1W5 Date  1Q\  A p r * 1981. 11  thesis  be g r a n t e d by t h e h e a d o f my  copying or p u b l i c a t i o n of this  gain  further  copying of t h i s  d e p a r t m e n t o r by h i s o r h e r r e p r e s e n t a t i v e s . understood that  I  make  Columbia  written  ii  ABSTRACT  T r a n s i t i o n areas located at the f r i n g e s of Central Business D i s t r i c t s are, i n most c i t i e s , one of the important r e s i d e n t i a l l o c a t i o n options f o r the lowest income groups.  The dynamics of c i t y growth r e s u l t i n a process of  abandonment of those areas by the high income groups and occupation by the poor; most neighborhoods i n those areas have a low l e v e l of housing  maintenance  and low r e n t a l values. Some housing programs, such as NIP, RRAP, attempt to improve the housing conditions o f the poor by upgrading the housing stock i n those areas. I t i s f e l t that, by s u b s i d i z i n g housing r e p a i r s and neighbohood improvement programs, two objectives can be achieved: better housing f o r the poor and neighborhood  stability. At the same time, there i s evidence i n some North American c i t i e s of  a r e v e r s a l of the suburbanization process: some medium-to-high income groups which t r a d i t i o n a l l y tend to locate i n suburban areas, now are l o c a t i n g i n oldc e n t r a l neighborhoods.  The houses are extensively renovated, and some of these  areas are gradually becoming new middle-to-high class r e s i d e n t i a l d i s t r i c t s . This trend  r a i s e s some concern with respect to the  e f f e c t s of t h i s process on low-income r e s i d e n t i a l options. Although there i s some evidence that the g e n t r i f i c a t i o n process may produce d i s l o c a t i o n problems f o r the poor, there seems to be l i t t l e agreement as to the . s i g n i f i c a n c e of t h i s problem and the type of housing p o l i c i e s that would be more appropriate to ensure adequate housing f o r the poor i n areas undergoing g e n t r i f i c a t i o n . This research has four major objectives: 1)  To i d e n t i f y the r o l e of t r a n s i t i o n areas on low-income r e s i d e n t i a l l o c a tion.  2)  To i d e n t i f y those v a r i a b l e s that can explain the g e n t r i f i c a t i o n process i n c e n t r a l neighborhoods.  iii 3)  To assess the e f f e c t s of g e n t r i f i c a t i o n , p a r t i c u l a r l y on low-income r e s i d e n t i a l l o c a t i o n options.  4)  To assess the e f f e c t s of housing and neighborhood improvement subsidies on low-income l o c a t i o n i n g e n t r i f y i n g areas. The method chosen was that of t h e o r e t i c a l research. A review of d i f -  ferent bodies of l o c a t i o n theory was used to derive a conceptual l o c a t i o n model which combines economic, socio-ecologic and dynamic components of r e s i d e n t i a l location.  The model, i n turn, was applied to analyze the four research areas  l i s t e d i n the o b j e c t i v e s . As a general conclusion drawn from the a n a l y s i s , i t i s suggested that the g e n t r i f i c a t i o n process defines a planning s i t u a t i o n characterized by c o n f l i c t i n g goals and long-term uncertainty.  The a n a l y s i s provided some  i n s i g h t as to the type of uncertainty involved, the nature of the goals con-. f l i c t , and some i n d i c a t o r s that can be u s e f u l f o r housing p o l i c y i n g e n t r i f y i n g areas. Since the g e n t r i f i c a t i o n process appears to be very recent i n Canada, most of the evidence presented- i n t h i s research i s based on US l i t e r a t u r e . However, the approach taken has attempted to focus on those v a r i a b l e s that would appear to be more applicable to the Canadian scene.  The model presented  i n t h i s research can be used f o r a number of planning purposes., one of which i s measuring and understanding '.the, occurrence and s i g n i f i c a n c e of g e n t r i f i c a t i o n i n Canadian c i t i e s .  iv TABLE OF CONTENTS  Page Chapter 1, Background  1  1.1.  Middle-Class Resettlement  1  1.2.  Research Outline  8  Chapter 2, Economic Factors of Location  15  2.1.  Economic Theory, Basic Concepts  15  2.2.  Economic Factors and Low-income Location  21  2.3.  T r a n s i t i o n Areas: Economic D e f i n i t i o n  23  Chapter 3, S o c i o - e c o l o g i c a l Factors of Location ,  ........  26  3.1.  Urban Ecology and C i t y Growth  27  3.2.  S o c i a l Factors of Segregation  31  Chapter 4» Dynamic Factors of Location  43  4.1.  The F i l t e r i n g Process  44  4.2.  The Neighborhood Change Process  66  Chapter 5, The Arbitrage Model 5.1.  A r b i t r a g e : Main Concepts  5.2.  Arbitrage: Discussion ,  5.3.  Arbitrage i n T r a n s i t i o n Areas  75 76 83  ...  90  Chapter 6, The G e n t r i f i c a t i o n Process 6.1. - 6.2.  102  A Multidimensional Location Model  103  The Nature of G e n t r i f i c a t i o n  1.1.5  Chapter 7, P o l i c y Implications  1.40  7.1.  Summary of Findings  7.2.  P o l i c y Implications  •  7.3.  Future Uses of the Location Model  ,  Bibliography  1-41153 -..  x6>0  166  V  LIST OF DIAGRAMS  Page  Page  Diagram 2.1  20  Diagram 4.19  62  Diagram 2.2  20  Diagram 4.20  62  Diagram 2.3  24  Diagram 4.21 .................. 62  Diagram 2.4  25  Diagram 4-22  63  Diagram 4.1  48  Diagram 4-23  63  Diagram 4-2  49  Diagram 5.1  ........... 79  Diagram 4-3  50  Diagram 5.2  84  Diagram 4.4  51  Diagram 5.3 ................ 85  Diagram 4.5  52  Diagram 5.4 •••  92  Diagram 4.6  52  Diagram 5.5  93  Diagram 5.6 ....  9496  Diagram 4«7  • ••  53  Diagram 4.8  54  Diagram 5.7  Diagram 4-9  55  Diagram 6.1  Diagram 4-10  57  Diagram 6.2  II4  Diagram 4-11  58  Diagram 6.3  123  Diagram 4-12  59  Diagram 6.-4. .......  130'  Diagram 4.13  59  Diagram 6.5  130"  Diagram 6.6  131>  Diagram 4.14  • • • 60  .  108  Diagram 4.15  60  Diagram 6.7  132  Diagram 4.16  60  Diagram 6.8  133  Diagram 4.17  61  Diagram 6.9  J34.  Diagram 4.18  61  1 .CHAPTER 1: BACKGROUND 1.1.  MIDDLE-CLASS RESETTLEMENT IN OLDER URBAN NEIGHBORHOODS: An overview. In the past twenty-five years, few issues have presented, as great a  challenge to urban policymakers as the d e c l i n e of c e n t r a l . c i t i e s .  During t h i s  period, l a r g e numbers of middle and upper-income, families, chose to l i v e i n suburban communities.  As f a m i l i e s migrate from the c i t y to the suburban r i n g ,  they often leave behind a decaying core i n c r e a s i n g l y populated by low-income and minority f a m i l i e s . Despite evidence that these trends are continuing, there are signs that considerable neighborhood r e v i t a l i z a t i o n i s occuring i n c i t i e s across US and Canada.  Though a few of these areas were s i t e s of Urban Renewal, pro-  grams, most have undergone renovation and r e s t o r a t i o n through p r i v a t e i n v e s t ment a c t i v i t y .  The s i g n i f i c a n c e of t h i s trend l i e s i n i t s stark contrast to  the urban-to-suburban migration patterns which have t r a d i t i o n a l l y predominated i n metropolitan;areas. This movement, which has been termed " g e n t r i f i c a t i o n " , "Neighborhood resettlement", "market (private) r e h a b i l i t a t i o n " , e t c . , i s not unprecedented. Theorists such as F i r e y (194-7), Hoover and Vernon (1959), and B i r c h (1971) have i d e n t i f i e d i s o l a t e d urban l o c a t i o n s where deviations from t r a d i t i o n a l norms have occurred.  But growing evidence suggests t h a t , a t l e a s t i n the US, the  incidence of middle-class immigration to older c e n t r a l areas has increased rather s u b s t a n t i a l l y .  (Dennis Gale, 1979. p. 293)  In a survey of p u b l i c o f f i c i a l s and r e a l estate o f f i c i a l s i n 143 c i t i e s i n the US, Black found that 48% of communities over 50,000 population had i n 1975 some degree of p r i v a t e market, non-subsidized housing renovation underway i n older r e s i d e n t i a l neighborhoods.  Another survey, of p u b l i c o f f i -  c i a l s and l o c a l c i t i z e n organizations i n the t h i r t y l a r g e s t US c i t i e s , d i s covered that resettlement was occurring i n almost a l l of them. p. 293).  (Gale, 1979,  In a study of f o r t y - f o u r c i t i e s done by the National Urban C o a l i t i o n  2 i n 1978, s u b s t a n t i a l market r e h a b i l i t a t i o n w a s , i d e n t i f i e d i n almost 75% of the cases.  The vast majority of those neighborhoods  (nearly 90%) reported the  onset of r e h a b i l i t a t i o n a c t i v i t y only w i t h i n the past eight years.  (National  Urban C o a l i t i o n , 1978, p. 4.). One important key to understanding the reasons f o r t h i s apparent departure from c l a s s i c a l precepts of r e s i d e n t i a l l o c a t i o n theory i s the development of broad-based data from opinion surveys of resettlement households. Unfortunately, such a comprehensive  study does not yet e x i s t .  Nevertheless, a  number of i n d i v i d u a l , separately conducted surveys have been performed r e c e n t l y i n American resettlement neighborhoods and t h e i r r e s u l t s provide some i n d i c a tions as to the i d e n t i t y of the r e s e t t l e r s , t h e i r geographic o r i g i n s , the reasons f o r t h e i r choice, and some e f f e c t s on low-income r e s i d e n t i a l displacement. The summary of evidence presented i n t h i s section has been drawn mainly from three sources: Dennis Gale (Gale, 1979) summarizes data r e l a t e d to demographic c h a r a c t e r i s t i c s of the new c i t y d w e l l e r s , t h e i r geographic o r i g i n s and t h e i r reasons f o r r e l o c a t i o n .  Howard Sumka (Sumka, 1979) centers on the  extent of the r e v i t a l i z a t i o n movement and some e f f e c t s on low-income d i s l o c a tion.  Further evidence on the displacement problem i s drawn from the study  c a r r i e d out by the N a t i o n a l Urban C o a l i t i o n (NUC,  1978).  P r o f i l e of the new i n n e r - c i t y dwellers Data sources permit observations on s i x demographic c h a r a c t e r i s t i c s of r e s e t t l e r households: household s i z e , r a c i a l composition, annual income, age, education and occupation. o r i g i n s of the r e s e t t l e r s .  There i s also evidence of the geographic  C o l l e c t i v e l y , these data lend considerable weight  to popular characterizations of the r e s e t t l e r s . "The most t y p i c a l such household i s c h i l d l e s s and composed of one or two white adults i n t h e i r l a t e twenties or t h i r t i e s .  College educated, often  possessing graduate education, the household head i s most l i k e l y a p r o f e s s i o n a l  3 or (less l i k e l y ) a manager.  The annual household income varies among metropo-  l i t a n areas but i s l i k e l y to range between $15,000 and $30,000 with several r e s e t t l e r s earning more than $4-0,000. incomes are composed of two workers.  Doubtless, many of those earning higher For the most part, the above evidence  seems to be supported by more d e s c r i p t i v e accounts of resettlement i n several American c i t i e s . "  (Gale, p. 295).  Evidence i n terms of geographic o r i g i n s of the r e s e t t l e r s , on the other hand, does not support the "Back-to-the-City-Movement"  idea.  Though  many observers have assumed, with l i t t l e or no evidence, that r e s e t t l e r s are mostly d i s s a t i s f i e d , former suburbanites, more recent research shows, that. "... a r e l a t i v e l y small minority of households moved... from the c i t y ' s enc i r c l i n g ' suburbs...  Less than 20% of r e s e t t l e r s surveyed i n A t l a n t a , Boston,  Cambridge, and Washington said that they had done so." "In f a c t , more appear to have located i n some c i t i e s from outside the metropolitan area altogether...  More than one-half (and i n some cases as many  as 90%)... moved to the renovating area from somewhere w i t h i n the municipal boundaries...  About one-half of the r e s e t t l e r s had moved from an apartment  and two-thirds had been renters i n t h e i r previous l o c a t i o n . " " I f these f i g u r e s are even roughly representative of r e s e t t l e r s i n other c i t i e s , they suggest that most are first-home buyers.  I t i s l i k e l y that  they migrated to the c i t y to attend college or graduate, school or to take employment there. A f t e r working a few years, they accumulated enough c a p i t a l to make a down-payment on a house and were encouraged to do so by .their r i s i n g incomes and favorable f e d e r a l tax p o l i c i e s . "  (Gale, 1979, .p. 296).  Causes of the g e n t r i f i c a t i o n process As already discussed, the e x i s t i n g evidence supports the notion that the new i n n e r - c i t y s e t t l e r s are not the t y p i c a l suburban family t r y i n g to move back to the c i t y ; rather, the r e s e t t l e r s are mostly new households who prefer  the i n n e r c i t y to the suburbs.  The question.arises, then, as to why these  urban households prefer the inner c i t y .  new  Several reasons have been suggested  by d i f f e r e n t researchers: A)  R i s i n g suburban p r i c e s f o r new homes due to i n f l a t i o n i n l a b o r , m a t e r i a l s , f i n a n c i n g costs, and to r e s t r i c t i v e growth controls,. have "forced buyers with l i m i t e d income to stay i n c i t i e s " .  (Gale p. 301).  The  evidence  shows, though, that the r e s e t t l e r s have r e l a t i v e l y high incomes, so suburban l o c a t i o n s are i n f a c t quite affordable fortthem. B)  Household t r a n s p o r t a t i o n costs are considerably higher when two  household  members are employed, so i t becomes economically r a t i o n a l to.minimize these costs.  The counter-argument i s t h a t , with two bread-winners,  income  i s also higher, and t h i s increased income would overcome the higher commuting costs. C)  Household s i z e and absence of c h i l d r e n .  Since the r e s e t t l e r s are mostly  c h i l d l e s s couples, they do not need spacious yards, schools and other f a c i l i t i e s associated w i t h suburban areas.  From t h i s point.of view, the. l o c a -  t i o n choice appears to be economically r a t i o n a l . D)  D i f f e r e n t values ( l i f e s t y l e changes), associated with the baby-boom generation.  The new s e t t l e r s would place a high value on the c u l t u r a l , h i s t o r i c a l ,  or a r c h i t e c t u r a l character of an area. E)  Investment p o t e n t i a l perceived by the new s e t t l e r s .  Increases i n property  values are indeed s i g n i f i c a n t i n the newly r e h a b i l i t a t e d areas.. Some neighborhoods (Chicago's Wicker Park, Houston's Heights Area, San Francisco's F i l l m o r e , C a p i t o l H i l l i n Washington) have experienced home value increases of 500% to 1,000% i n the l a s t f i v e to eight years ("Housing", June 1980, p. 16). The evidence shown by surveys i n the US supports some of these explanations moretthan others.  For instance, a survey c a r r i e d out-in the Mount  Pleasant and C a p i t a l H i l l sections of Washington (Gale 1976, 1977), showed that  5  the most highly-rated reasons f o r choosing to locate i n those areas were: Investment p o t e n t i a l of the house purchased R e l a t i v e l y affordable p r i c e A c c e s s i b i l i t y to place of employment A r c h i t e c t u r a l / h i s t o r i c a l value of the house/neighborhood.  .  Of l e s s e r importance were the s o c i a l and c u l t u r a l a t t r a c t i o n s of c i t y l i v i n g .  The stage theory Most researchers seem to support the notion that the resettlement process tends to have a s i m i l a r pattern i n d i f f e r e n t areas.  This p a t t e r n i s  b a s i c a l l y a process of change i n family composition and preferences as the 'resettlement' area consolidates over time.  Gale's study of the Mount.  Pleasant and C a p i t a l H i l l areas, f o r instance, showed that the more r e c e n t l y renovated neighborhood  (Mount Pleasant) had a higher proportion of young, male  a d u l t s , while the older area ( C a p i t o l H i l l ) had higher proportion of women and families.  The respondents of the two areas also showed different, degree of  committment to t h e i r house/neighborhood 'reactions to the d w e l l i n g  (as shown i n 'intentions to move' and  type of questions); those i n the. newer area showed  1  a s l i g h t l y l e s s favorable a t t i t u d e and higher predisposition, to move. . This and other s i m i l a r evidence suggest that the r e s e t t l e r s can be c l a s s i f i e d according to the stage of the r e v i t a l i z a t i o n at which they entered the neighborhood.  "Early entrants tend to be r i s k - o b l i v i o u s ; . t h e y are  followed by the r i s k - t a k e r s 1  1  1  1  and, f i n a l l y , by the 'risk-averse' (Pattison  1977, as quoted by Sumka, p. 4-82).  The f o l l o w i n g quote summarizes how the  stage process i s perceived: "Early i n the r e v i t a l i z a t i o n of a neighborhood, come the pioneers. Advance characterizes them as 'middle-class people with lower-than middle-class incomes: a r t i s t s , w r i t e r s , musicians, etc.' Others may be 'households unsure of t h e i r welcome' i n a t y p i c a l middlec l a s s neighborhood, such as gays and i n t e r r a c i a l couples. A l s o , 'persons with a s p e c i a l f e e l for. the p o t e n t i a l of a neglected grand home' - such as a r c h i t e c t s and decorators - w i l l move during the early stage of r e v i t a l i z a t i o n . "  6 "Later comes - as one Brooklyn pioneer says - 'the doctor and lawyer crowd. And then the suburban crowd w i t h b i g bucks from the sale of t h e i r homes." (From a r t i c l e i n 'Housing' - June 1980, about the report "US Housing Markets" published by Advance Mortgage Corp., USA). Neighborhood  displacement  The e f f e c t s of p r i v a t e investment i n rehab on d i s p l a c i n g low-income residents have a t t r a c t e d the a t t e n t i o n of a number, of researchers; there i s also a growing movement ( i . e . i n c i t i e s with s i g n i f i c a n t rehab a c t i v i t y , such, as San Francisco) of community groups p r o t e s t i n g against the displacement, problem occurring i n rehab neighborhoods.  Yet there seems to be l i t t l e agree-  ment as to the extent of the displacement problem, i t s nature, and i t s i m p l i cations i n terms of government p o l i c y . Those who argue that displacement i n an i n c r e a s i n g l y serious problem compare the e f f e c t s of rehab with those of Urban Renewal: "...There i s a great deal of information about the f a t e of displacees from urban renewal, highway, and other p u b l i c works displacement experience, and there is.no reason to assume that the f a t e of present day displacees i s any d i f f e r e n t . . . These e a r l i e r studies found that a large proportion of the f a m i l i e s displaced i n the 1950's and 60's i n some cases as many as 86% of the study population - relocated to substandard housing... Those who claim that t h i s gloomy p i c t u r e of . the past does not have relevance f o r today's displacement must be charged w i t h the o b l i g a t i o n of proving otherwise. U n t i l that time, i t i s important to act under the assumption that these displacement:; e f f e c t s are j u s t as true today as they were i n the 1930's, the 940's^' the 1950's and 1960's." (Hartman, _197.95Sp. 488) Displacement i s often associated to the r o l e of r e a l estate speculators who begin acquiring p r o p e r t i e s i n areas they expect w i l l be a t t r a c t i v e to middle- to upper-income households.  As speculators move i n t o an area, the f i r s t  to be affected are resident centers. Owner-occupants appear to be a f f e c t e d at a l a t e r stage, and t h e i r l o s s i s considered to be mostly the,-loss of a pot e n t i a l l y higher s e l l i n g p r i c e , since they move out w i t h the idea that the neighborhood i s s t i l l i n decline. The view that displacement i s not a serious problem i s based mostly on the f o l l o w i n g arguments: A)  The r e s e t t l e r s are a small group, and occupy r e l a t i v e l y small areas; though  7 some neighborhoods  may be.seriously affected, the nation-wide incidence of  the problem i s not s i g n i f i c a n t . B) The phenomenon i s mostly of a temporary nature, produced by the preferences of a very s p e c i a l segment of the population (The baby-boom generation). As t h i s group becomes older and t h e i r values change, the g e n t r i f i c a t i o n trend w i l l tend to disappear. C) E m p i r i c a l research to date has focussed p r i m a r i l y on the r e v i t a l i z a t i o n process i t s e l f , rather than i t s secondary e f f e c t s ; the a n a l y s i s of d i s placement r a i s e s d i f f i c u l t conceptual and measurement problems which no. one has addressed systematically.  Therefore, the e x i s t i n g evidence i s not  s u f f i c i e n t l y r e l i a b l e to assess the e f f e c t s o f p r i v a t e rehab on displacement. E m p i r i c a l research, so f a r , does not provide a c l e a r answer to the two debating p o s i t i o n s .  On one hand, the main f i n d i n g s of the study done by  the National Urban C o a l i t i o n suggest that: The incomes of households moving i n t o rehab neighborhoods  are higher than  those of the previous residents - but not s i g n i f i c a n t l y higher.. P r o f e s s i o n a l and w h i t e - c o l l a r xrorkers tend to displace b l u e - c o l l a r workers and the unemployed. The e l d e r l y are most often displaced. The study done by the. National Urban C o a l i t i o n centers on the c h a r a c t e r i s t i c s of residents who move out, but say l i t t l e about.the new l o c a t i o n of those groups.  On the other hand,  Pattison's study of the Bay V i l l a g e i n Boston suggests that many homeowners r e a l i z e d s u f f i c i e n t c a p i t a l gains from the sale of t h e i r p r o p e r t i e s to f u l f i l l a long-standing goal of moving to the suburbs.  Others were able to  r e t a i n t h e i r p r o p e r t i e s and convert them to r e n t a l s that generated..income s u f f i c i e n t to allow them to move to the suburbs.  (Sumka, 1979, p. 4-85-4-86)  The conclusions from these f i n d i n g s are often c o n t r a d i c t o r y and most of them contain important sources of b i a s , e i t h e r underestimating or overestimating the incidence of displacement.  There seems to be . s t i l l a l a c k  of a clear t h e o r e t i c a l framework and a carefully.designed part (Typical problems: how to. define displacee; other reasons f o r non-voluntary moves).  operational  counter-  how to i s o l a t e rehab from  Furthermore, the e x i s t i n g research  seems to center on the actual displacee; there i s l i t t l e ( i f any)  evidence on  the e f f e c t of g e n t r i f i c a t i o n i n terms of depriving new low-income households from a p o t e n t i a l housing option.  1.2  RESEARCH OUTLINE The purpose of t h i s research i s to provide some t h e o r e t i c a l back-  ground that can be h e l p f u l f o r the understanding of the nature of the g e n t r i f i cation process, i t s causes and i t s e f f e c t s on low-income residents. research centers on the f o l l o w i n g 1)  The  issues:  I d e n t i f i c a t i o n of the r o l e of t r a n s i t i o n areas i n low-income r e s i d e n t i a l location.  2)  I d e n t i f i c a t i o n of those variables that can explain the g e n t r i f i c a t i o n process i n , c e n t r a l areas.  3)  I d e n t i f i c a t i o n of some eventual e f f e c t s of the g e n t r i f i c a t i o n process, p a r t i c u l a r l y on low-income l o c a t i o n options.  A) Assessment on the e f f e c t s of housing and neighborhood improvement subsidie on low-income l o c a t i o n options i n g e n t r i f y i n g areas. These four major research objectives, i n turn, are used to derive some p o l i c y implications on low-income housing programs i n g e n t r i f y i n g neighborhoods. The research consists, i n a review of d i f f e r e n t approaches to r e s i d e n t i a l l o c a t i o n theory. major  The selected l i t e r a t u r e has been c l a s s i f i e d i n t o two  categories:  A) Equilibrium variables of l o c a t i o n , and B)  Dynamic f a c t o r s of l o c a t i o n .  Both categories include l i t e r a t u r e drawn  from the f i e l d s of economics and human ecology.  9 These two categories are somewhat a r t i f i c i a l , since a) the e q u i l i brium models contain some dynamic elements and-b) there i s some overlap between economic and e c o l o g i c a l approaches; rather t h a n . r e s t r i c t i v e categories, they are used as a general reference to order the d i s c u s s i o n . Because of the broadness of the t o p i c , the l i t e r a t u r e review i s n e c e s s a r i l y very general; rather than a deep and p r e c i s e a n a l y s i s of each l o c a t i o n f a c t o r , the i n t e n t i o n has been that of presenting a broad spectrum..of v a r i a b l e s and t h e i r i n t e r r e l a t i o n s h i p s .  Within theitime arid resource l i m i t a -  t i o n s , the research attempts to capture some of the m u l t i p l e dimensions, i n which the l o c a t i o n game takes place and how these m u l t i p l e dimensions i n t e r a c t and change i n the process. Diagram 1.1 shows an o u t l i n e of the research.  The f o l l o w i n g i s a  b r i e f summary of contents by chapters;, showing the major concepts developed i n each one. Chapters 2 and 3 present an overview of e q u i l i b r i u m f a c t o r s of l o c a t i o n from the point of view of economics and socio-ecology.  ECONOMIC FACTORS OF LOCATION are presented i n Chapter .2.  This chapter  includes a summary of Alonso's r e s i d e n t i a l l o c a t i o n theory and an a p p l i c a t i o n of t h i s theory f o r the d e f i n i t i o n of t r a n s i t i o n areas.  Section 2.1; Economic Theory, i s a summary of Alonso's Central Place theory. This part contains the main assumptions and concepts of economic theory. R e s i d e n t i a l l o c a t i o n i n t h i s approach i s seen as the r e s u l t of.a bidding process i n x^hich each i n d i v i d u a l and f i r m reaches an e q u i l i b r i u m by choosing an optimum p r i c e and quantity of three consumption goods: land, distance to CBD and other (composite) goods.  Section 2.2: Location and Income, discusses some i m p l i c a t i o n s f o r low-income  10  "1  CHAPTER I I ECONOMIC THEORY Location* function of: income; land q u a n t i t y ; accessibility  r  TRANSITION AREAS Definition  S0CI0-EC0L0GY Location, f u n c t i o n CHAPTER I I I of: s o c i a l segre- | gation; growth ..J CHAPTER IV J  r  HOUSING DYNAMICS The f i l t e r i n g process  CHAPTER V TRANSITION AREAS  The Arbitrage Model  CO  o NEIGHBORHOOD DYNAMICS Neighborhood l i f e cycle; i n v a t i o n succession  Dynamics of change process; e f f e c t s on lowincome housing  L I  CHAPTER VI SYNTHESIS: A MULTIDIMENSIONAL MODEL Equilibrium: a c c e s s i b i l i ty matrix Dynamics: Arbitrage modell  "1 "~I  CHAPTER V I I  I  1 POLICY IMPLICATIONS Role of t r a n s i t i o n areas; causes of g e n t r i f i c a t i o n ; e f f e c t s of g e n t r i f i c a t i o n ; e f f e c t s of rehab; uses of model 1  "~1 GENTRIFICATION Causes (from a c c e s s i b i l i t y matrix); E f f e c t s (from Arbitrage model) J  Diagram 1.1: Research o u t l i n e  11 residential location.  Location for.those groups.is suggested to be a f u n c t i o n  of the r e l a t i v e d e s i r a b i l i t y of land as compared to a c c e s s i b i l i t y f o r the high-income groups.  Section 2.3: T r a n s i t i o n Areas: d e f i n i t i o n , applies the main concepts of economic theory to define the l o c a t i o n and r o l e of t r a n s i t i o n areas.  Transition  areas are defined as those areas i n which developed urban land changes to d i f f e r e n t uses as a r e s u l t of population growth.  SOCIO-ECOLOGICAL FACTORS OF LOCATION are discussed i n Chapter Three.  This  chapter contains two s e c t i o n s :  Section 3.1: Socio-ecology and.City Growth, describes r e s i d e n t i a l l o c a t i o n as r e l a t e d to the growth process; the theory presented i n t h i s section provides a d d i t i o n a l background f o r the d e f i n i t i o n of t r a n s i t i o n areas discussed i n section 2.3.  Section 3.2: The Segregation Process, discusses r e s i d e n t i a l location, as the r e s u l t of a segregation process between d i f f e r e n t s o c i a l groups.  Groups are  c l a s s i f i e d i n the three dimensions o f s o c i a l rank, race-ethnicity.and-family status.  A summary of p e r s o n a l i s t i c and n o n - p e r s o n a l i s t i c f a c t o r s a f f e c t i n g  the segregation process i n each of these dimensions is.presented,. as w e l l as some of the i m p l i c a t i o n s of t h i s process f o r the c e n t r a l i z a t i o n of some groups i n areas around CBD. Chapters 4- and 5 center on the dynamics of the l o c a t i o n process. Location dynamics i s approached i n terms of housing turnover and neighborhood change t h e o r i e s . THE FIRST APPROACH TO LOCATION DYNAMICS, i n Chapter 4, contains the f o l l o w i n g parts:  12 Section J+.l, The F i l t e r i n g Process, which. centers on the dynamics of housing turnover.  F i l t e r i n g i s considered to be a mechanism whereby low-income groups  have access to housing under free market conditions.  The discussion centers on  d e f i n i t i o n s of f i l t e r i n g and a n a l y s i s of some f a c t o r s r e l a t e d to the r o l e of f i l t e r i n g i n providing housing f o r the poor.  Section 4-2: The Neighborhood Change Process, which describe p h y s i c a l and s o c i a l components of neighborhood change.  The two theories presented  (neigh-  borhood l i f e - c y c l e and invasion-succession) h i g h l i g h t some of the f a c t o r s a f f e c t i n g the change process i n t r a n s i t i o n neighborhoods.  THE SECOND APPROACH TO LOCATION DYNAMICS i s the content of Chapter 5. The d i s cussion i n t h i s chapter centers on the Arbitrage Model, which integrates housing and neighborhood dynamics i n t o one comprehensive t h e o r e t i c a l framework. This chapter has three sections:  Section 5.1: The Arbitrage Model, presents the main concepts and assumptions of the model.  Section 5.2: Discussion., suggests some of the p o s i t i v e and negative aspects of the model from the point of view of the preceeding  body of theory and suggests  some a d d i t i o n a l elements that could be introduced to i t .  Section 5.3' Arbitrage i n T r a n s i t i o n Areas, applies the main concepts of the Arbitrage Model f o r the a n a l y s i s of the change process i n T r a n s i t i o n areas. The a n a l y s i s i n t h i s section centers on the l o c a t i o n f a c t o r s a f f e c t ing r e s i d e n t i a l options f o r the poor and includes an assessment of the r o l e of rehab i n t r a n s i t i o n areas.  13 SYNTHESIS: THE GENTRIFICATION PROCESS, i s the content of Chapter 6.  This  chapter has two p a r t s :  Section 6.1: Summary of Location Factors: a Multidimensional Model, which suggests a framework of l o c a t i o n theory that encompasses the l o c a t i o n f a c t o r s reviewed i n the preceeding chapters.  The r e s i d e n t i a l l o c a t i o n game i s .pre-  sented as a multidimensional d e c i s i o n process i n which d i f f e r e n t groups i n t e r a c t w i t h i n the c i t y . S o c i a l groups are defined i n three dimensions:  s o c i a l rank, ..family  status and e t h n i c i t y ; i n each of these dimensions, they are assumed to. make a choice r e l a t e d to f i v e dimensions of the c i t y : geometry, geography and the three dimensions of the s o c i a l groups a t play.  The interrelationships.between  these v a r i a b l e s are summarized i n an a c c e s s i b i l i t y matrix; the i n i t i a l of the matrix i s a s p a t i a l d i s t r i b u t i o n of population and housing  output  (neighbor-  hood) q u a l i t y . Housing and neighborhood q u a l i t y , as w e l l as population d i s t r i b u t i o n , are assumed to behave as intervening v a r i a b l e s i n the a c c e s s i b i l i t y matrix: an initial  (equilibrium) s i t u a t i o n y i e l d s a c e r t a i n neighborhood and housing  q u a l i t y pattern.  This pattern would a f f e c t successive l o c a t i o n changes derived  from population, growth.  The changes would, i n turn, a f f e c t the e x i s t i n g  housing and neighborhood q u a l i t y and continue the change.process.  Section 6.2, The G e n t r i f i c a t i o n Process, applies t h e . l o c a t i o n model summarized above to derive some p o s s i b l e f a c t o r s which could explain the g e n t r i f i c a t i o n process. The causal f a c t o r s of g e n t r i f i c a t i o n are derived from the a c c e s s i b i l i t y matrix and described i n terms of changes a f f e c t i n g the d i f f e r e n t dimensions of-the l o c a t i o n game.  Thus, causal f a c t o r s are. assumed to be those  f a c t o r s which, by a f f e c t i n g the c i t y geometry, geography, and/or segregation  14  a t t i t u d e s , would r e s u l t i n d i f f e r e n t a c c e s s i b i l i t y values i n the multidimens i o n a l matrix. Possible e f f e c t s of the g e n t r i f i c a t i o n process are derived from the Arbitrage model.  Assuming that g e n t r i f i c a t i o n i s triggered by one or.more of  the suggested causal f a c t o r s , the model i s used to detect r e s u l t i n g changes i n low-income housing options i n the affected neighborhoods, i n surrounding areas and i n o v e r a l l housing supply. POLICY IMPLICATIONS are discussed i n Chapter 7.  The i m p l i c a t i o n s  include: A summary d e f i n i t i o n of the r o l e of t r a n s i t i o n areas on low-income l o c a t i o n . A summary of causal f a c t o r s of g e n t r i f i c a t i o n . A summary of possible e f f e c t s of g e n t r i f i c a t i o n , p a r t i c u l a r l y on low-income l o c a t i o n options. A summary of possible e f f e c t s of rehab i n g e n t r i f y i n g areas. . -  A discussion of p o l i c y implications f o r the design of low-income housing programs i n g e n t r i f y i n g neighborhoods.  -  A discussion of some future uses of the l o c a t i o n model.  15  CHAPTER TWO:'ECONOMIC;FACTORS OF LOCATION The choice of 'where to l i v e ' i s one of the most c r u c i a l decisions made by urban households - c r u c i a l not only f o r them but to the urban area as a whole - f o r the sum and synthesis of t h i s r e s i d e n t i a l d e c i s i o n by households i s one of the prime determinants of the structure and character of our urban areas.  The explanation of why households l i v e where they do, however, i s a  complex and d i f f i c u l t task; the concerns involved are numerous and diverse, ranging from the p r i c e of land and i t s determinants to the s o c i a l c h a r a c t e r i s t i c s of neighborhoods.  T h e o r e t i c a l approaches to r e s i d e n t i a l l o c a t i o n emcom-  pass areas of economics, sociology, geography; each of these, approaches highl i g h t s some of the m u l t i p l e dimensions i n which the l o c a t i o n game takes place. This chapter summarizes the main concepts of economic theory, which approaches l o c a t i o n as a trade-off process between a c c e s s i b i l i t y and quantity of land.  The concepts drawn from economic theory are used to .present an i n i t i a l  explanation of low-income c e n t r a l i z a t i o n around the Central Business  2.1  District.  ECONOMIC THEORY; BASIC CONCEPTS The basic notion o f l o c a t i o n as a f u n c t i o n of distance from other l o -  cations of i n t e r e s t has existed i n economics f o r a long time.  The.earliest  l i t e r a t u r e that d e a l t ' with t h i s r e l a t i o n s h i p centered on a g r i c u l t u r a l land. While Ricardo a t t r i b u t e d differences i n land-rents p r i m a r i l y to f e r t i l i t y d i f f e r e n t i a l s (Alonso, 1964., p. 3 ) , Von Thunen was the f i r s t to show that.the rents of land around a marketplace would also be determined by t h e i r proximity to that marketplace.  The process of competitive bidding between p o t e n t i a l  users of various parcels of land would simultaneously determine both the l e v e l and rate of decrease of rents f o r land progressively f a r t h e r from the c e n t r a l marketplace.  (Alonso, 1964, p. 3,-4-).  The r e l a t i o n between l o c a t i o n , land p r i c e and t r a n s p o r t a t i o n cost.:  16 wasapplied to urban land by R.M. Hurd (1903): "Since value depends on economic rent, and rent on l o c a t i o n , and l o cation on convenience, and convenience on nearness, we may eliminate the intermediate steps and say that value depends on nearness." (Alonso, 1964., p. 6). In 1926, R.M. Haig applied Von Thunen's basic hypothesis  to urban  r e s i d e n t i a l l a n d . Location, i n Haig's model, was presented as a trade-off between a c c e s s i b i l i t y to the Central Business D i s t r i c t and. housing, rents: "An economic a c t i v i t y i n seeking a l o c a t i o n finds, that, as i t approaches the centre, s i t e - r e n t s increase and t r a n s p o r t a t i o n costs d e c l i n e . As i t r e t r e a t s from the centre, s i t e - r e n t s decline and t r a n s p o r t a t i o n costs increase... The t h e o r e t i c a l l y perfect s i t e i s that which furnishes the desired degree of a c c e s s i b i l i t y a t the lowest cost of f r i c t i o n . " (Haig, 1926, p. 4.22-4.23) "In choosing a residence purely as a consumption p r o p o s i t i o n one buys a c c e s s i b i l i t y p r e c i s e l y as one buys clothes or food. He considers how much he wants the contacts furnished by the c e n t r a l l o c a t i o n , weighing the 'costs of f r i c t i o n involved - the various possible combinations of s i t e rent, time value, and t r a n s p o r t a t i o n costs; he compares t h i s want with other desires and h i s resources, and he f i t s i n t o h i s scale of consumption and buys." (Alonso, 1  1964-, p. 8)  These concepts were formally stated by Alonso (1964) and Wingo ( l 9 6 l ) , and form the basis of what i s now c a l l e d the 'economics of r e s i d e n t i a l l o c a tion'.  By considering the supply and demand f o r r e s i d e n t i a l , i n d u s t r i a l and  a g r i c u l t u r a l land, Alonso formulated a general theory of the .determination of urban land uses and land rents, based on the p r i n c i p l e of a c c e s s i b i l i t y .  This  theory provides a basic, common t h e o r e t i c a l framework f o r a l l . r e c e n t economic models of r e s i d e n t i a l l o c a t i o n and trip-to-work.  A summary of i t s main con-  cepts ( r e l a t e d to r e s i d e n t i a l l o c a t i o n ) i s given here. Basic assumptions of the model are: A)  The f e a t u r e l e s s p l a i n : The c i t y i s assumed to s i t on a p l a i n which i s u n i form and contains no h i l l s , views or any other, feature.  Each l o c a t i o n i s  equal i n terms of s o c i a l status, land and geographical c h a r a c t e r i s t i c s . Municipal services and tax rates are uniform throughout the ,city. B)  The economic man: I t i s assumed that i n d i v i d u a l households w i l l t r y to  17  maximize' s a t i s f a c t i o n by consuming the goods they, l i k e and avoiding those they d i s l i k e .  Each i n d i v i d u a l w i l l spend whatever income i s a v a i l a b l e i n  maximizing t h i s economic s a t i s f a c t i o n . C)  There i s no housing stock: No f i x e d structures e x i s t on the ground.  Deci-  sions of i n d i v i d u a l s and firms consider location only i n terms of amount of land and distance to employment; housing a t t r i b u t e s are considered nonexistent. D)  Market e q u i l i b r i u m : There i s a f i x e d number of households and firms i n the market.  Each i n d i v i d u a l knows- the p r i c e of land at every l o c a t i o n . Land  i s bought and sold by free contract, without i n s t i t u t i o n a l or any  other  restraints. E)  The s i m p l i f i e d c i t y : A l l employment and a l l goods and services are a v a i l a ble only at the center of the c i t y .  The c i t y has u n l i m i t e d room to expand,  and t h i s expansion i s r a d i a l around the Central Business F)  District.  The decreasing p r i c e of land: From the point of view of the i n d i v i d u a l , the p r i c e of land i s f i x e d . crease.  This p r i c e decreases as t r a n s p o r t a t i o n costs i n -  Land has a maximum p r i c e at CBD, where t r a n s p o r t a t i o n costs are  zero, and a minimum p r i c e at the f a r t h e s t l o c a t i o n . . . Within Alonso's framework, each household i s assumed .to derive u t i l i t y from the r e s i d e n t i a l s i t e ( i n terms of s i z e of the lot)., and..from a composite commodity representing a l l other goods and s e r v i c e s , while d i s u t i l i t y a r i s e s from commuting a c t i v i t y .  In order to maximize u t i l i t y subject., to budgetary  outlays, the household may trade-off a c e n t r a l i z e d l o c a t i o n . a g a i n s t l a r g e r l o t s i z e s and/or the consumption, of other goods and s e r v i c e s . The representative household's u t i l i t y f u n c t i o n i s expressed as: u =? U('z,q,d) where g_ represents the quantity of land consumed; z represents the consumption of a l l other goods and services and d i s the distance between the centre of  18 the c i t y and the household's.residence.  The household faces a budget cons-  t r a i n t of the form: Y = P.z + R(d).q + (d) where Y represents the income of the household, P represents the p r i c e per u n i t of the composite commodity ( z ) , R i s the p r i c e per u n i t of housing ( l ) and T i s the t r a n s p o r t a t i o n cost of commuting, which are both assumed to be. a f u n c t i o n of distance d from the CBD.  I t i s assumed that these expenditures exhaust  income, i . e . , there are no household savings.  (Gera, Kuhn, 1977, p. 19)  " . . . U t i l i t y i s maximized when the household a l l o c a t e s i t s income i n such a way as to equalize the r a t i o s of the marginal u t i l i t i e s of the goods to t h e i r respective p r i c e s . For achievement of l o c a t i o n a l e q u i l i b r i u m , a process of s u b s t i t u t i o n takes place between marg i n a l increases i n commuting costs... and marginal savings i n the housing expenditures... as the household considers s i t e s at i n creasing distances from the CBD. For the household's u t i l i t y to be at a maximum, i t must l o c a t e at a distance from the center of the c i t y where the marginal rent-cost i s equal to the marginal journeyto-work cost." (Gera, Kuhn, 1977, p. 21) I n d i v i d u a l e q u i l i b r i u m i s described i n terms of b i d - p r i c e curves.  A  b i d - p r i c e curve f o r a resident i s defined as "the set of p r i c e s f o r land the i n d i v i d u a l could pay at various distances while d e r i v i n g a..constant l e v e l of s a t i s f a c t i o n ; that i s to say, i f p r i c e of land were to vary with, distance i n the manner described by the b i d - p r i c e curves, the individual.would be i n d i f f e r ent among l o c a t i o n s " (Alonso, 1964, p. 59).  Alonso emphasizes three points i n  t h i s respect: l ) a b i d - p r i c e curve r e f e r s to a given i n d i v i d u a l ; . 2) a b i d p r i c e curve r e f e r s to a given l e v e l of s a t i s f a c t i o n ; since there i s an i n f i n i t e number of l e v e l s of s a t i s f a c t i o n f o r an i n d i v i d u a l , there would be f o r each i n d i v i d u a l a f a m i l y of b i d - p r i c e curves corresponding to d i f f e r e n t l e v e l s of ( l ) . v....v. To avoid thorny d e f i n i t i o n a l problems and confusions between d i f f e r e n t terms, the term 'price' i s used i n i t s generic sense and i n cludes market expressions such as contract rent, sales p r i c e and cost of ownership. P r i c e i s defined as "the amount of money the occupant pays or would pay to the l a n d l o r d f o r the r i g h t to the use of a u n i t of land (for example, a square foot or an acre) f o r a given period of time. Thus, the p r i c e of land times the quantity of land i n a s i t e represents the payment f o r the use of the s i t e " . (Alonso, 196/+, p. 16)  19  s a t i s f a c t i o n ; and 3) a b i d p r i c e bears no necessary.relation to the a c t u a l market p r i c e of the land a t each l o c a t i o n .  "A b i d - p r i c e i s h y p o t h e t i c a l , merely  saying t h a t , i f the p r i c e of land were such, the i n d i v i d u a l would be s a t i s f i e d to a given degree".  (Alonso, 1964, p. 59)  The most important c h a r a c t e r i s t i c of a b i d - p r i c e curve i s that i t has a negative slope; i t s value decreases with distance from the Central B u s i ness D i s t r i c t .  Two f a c t o r s account f o r t h i s negative slope:, i n c r e a s i n g commu-  t i n g costs and the increasing d i s u t i l i t y w i t h distance: "... Because outward movement produces d i s u t i l i t y . . . (the marginal cost of movement).... must i n e f f e c t be a saving i n order that the b i d - p r i c e curve maintain a given l e v e l of s a t i s f a c t i o n . This saving must occur i n land since commuting costs are i n c r e a s i n g . The marg i n a l cost of movement i s equal to the quantity of land times the change o f the p r i c e of land plus the increase i n the cost o f commut i n g . Bid p r i c e , then, has been defined so that, the income e f f e c t of cheaper land w i l l counteract the depressing e f f e c t of commuting costs on income, and w i l l permit the consumer to maintain.a given l e v e l of s a t i s f a c t i o n by s u b s t i t u t i n g land and the composite good f o r a c c e s s i b i l i t y as distance from the center increases." (Alonso, 1964, p. 71) The steepness of each b i d p r i c e curve can be viewed.as 'an i n d i c a t i o n of how much an i n d i v i d u a l cares to be near the center i n order to avoid commuting': "The slope, and thus the shape, of b i d p r i c e curves are u l t i m a t e l y determined by the tastes of the i n d i v i d u a l . . . The slope of a b i d p r i c e curve may be equated roughly to the added (marginal) expense and bother of commuting as distance from the center increases. Thus, an i n d i v i d u a l who does not mind walking may.be expected to have a gently sloped curve up to the l i m i t of what he considers walking distance; i f he d i s l i k e s other means of .transportation, beyond t h i s l i m i t h i s curve w i l l be f a i r l y steep... On the other hand, an i n d i v i d u a l who detests walking and i n s i s t s on d r i v i n g everywhere w i l l have decreasing increments of nuisance and expense as distance increases. His b i d p r i c e curve has decreasing steepness w i t h distance." (Alonso, 1964, p. 90) In general, Alonso argues that i n d i v i d u a l s with steeper b i d - p r i c e curves w i l l l o c a t e c l o s e r to the center of the c i t y .  This i s shown i n diagram  2.1, which i l l u s t r a t e s one b i d - p r i c e curve f o r each of three i n d i v i d u a l s .  Diagram 2.1 "... The i n d i v i d u a l or f i r m with the l e a s t steep b i d - p r i c e curve w i l l s e t t l e f a r t h e s t from the center... The next i n d i v i d u a l towards the center w i l l be the one with the next l e a s t steep b i d p r i c e curves... Thus, the chain i s formed, l i n k by l i n k , u n t i l the p r i c e paid by the user w i t h the steepests b i d p r i c e curve at the center of the c i t y i s established." (Alonso, 1964, p. 89) The process of adjusting the values of d i f f e r e n t b i d - p r i c e curves i n order to f i t a c t u a l market p r i c e s ( i . e . a s i t u a t i o n of market equilibrium) i s explained i n terms of supply and demand f a c t o r s .  The supply element i s the  t o t a l amount of land at any given distance from the center; the demand element i s the t o t a l number of households f o r any given shape of the b i d - p r i c e curves. Since each curve represents a s e t of p r i c e s and l o c a t i o n s w i t h which each i n d i v i d u a l achieves a given l e v e l of s a t i s f a c t i o n , the process of adjusting to supply and demand f a c t o r s can be viewed as a mechanism whereby each i n d i v i d u a l chooses a l e v e l of s a t i s f a c t i o n such that he f i n d s an optimum l o c a t i o n w i t h i n a given set of market p r i c e s .  — -  C  B D  .  '-  Diagram 2.2  .DISTAMCE:  21 Diagram 2.2 shows one example of- how t h i s adjustment takes p l a c e . An i n i t i a l set of b i d - p r i c e curves was derived f o r a c e r t a i n l e v e l of s a t i s faction.  I f t h i s i n i t i a l set (showed i n dotted l i n e ) y i e l d s l e s s l o c a t i o n s  than bidders i n the market, each household would have to adjust by moving to.a next l e v e l and paying higher p r i c e s .  This may i n turn r e s u l t i n more land,  a v a i l a b l e than bidders, i n which case the set of curves adjust downwards.. A f t e r a c e r t a i n number of i t e r a t i o n s , a correct s o l u t i o n should be found i n which the t o t a l land equates the t o t a l number of bidders and the envelope formed by the set of b i d - p r i c e curves coincides w i t h actual market p r i c e s .  2.2  LOCATION AND INCOME The preceeding section presented a very general overview of the main  concepts of Alonso's theory.  The next step i n the discussion w i l l be the ana-  l y s i s of how t h i s theory explains the r e s i d e n t i a l l o c a t i o n of low-income groups. The discussion should provide some elements f o r a future analysis of how the main concepts of economic theory can be applied to explain the r o l e of t r a n s i t i o n areas on low-income r e s i d e n t i a l l o c a t i o n and, i n l a t e r chapters., to derive some possible causes of the g e n t r i f i c a t i o n process. The. f o l l o w i n g quotes summarize Alonso's view of low-income r e s i d e n t i a l location: "In large American c i t i e s the higher-income residents locate f a r t h e r away from the center of the c i t y than those of lower incomes. The p r i n c i p a l explanation offered has been that, as the c i t y grows, the wealthier b u i l d t h e i r houses on the vacant land at the periphery, leaving t h e i r o l d houses near the center to the poorer. This explanation i s based on population growth. However, i t can be shown that i n a c i t y which does not grow (that i s , one corresponding to our s t a t i c model), the same pattern of p e r i p h e r a l r i c h and c e n t r a l poor obtains, given c e r t a i n t a s t e s . .(Alonso, 1964, p. 106 - Emphasis added) "... The p e r i p h e r a l l o c a t i o n of the wealthy i n American c i t i e s may be explained without r e f e r r i n g to the growth of c i t i e s , and w i l l not be l i m i t e d to r a p i d l y expanding c i t i e s . . . Given a strong appetite for land, so that the holdings of land vary greatly.with income, the wealthier are a f f e c t e d r e l a t i v e l y l e s s by the costs of commuting because they spread these costs over l a r g e r holdings. Consequently,  the r i c h are p r i c e - o r i e n t e d whereas the poor.are l o c a t i o n - o r i e n t e d . Less a c c e s s i b i l i t y being bought .with i n c r e a s i n g income, a c c e s s i b i l i t y behaves as an i n f e r i o r .good. T h i s . i s a p o s s i b l e explanation of the paradox encountered i n American c i t i e s , , of.the poor l i v i n g on expensive c e n t r a l land and the r i c h on cheaper p e r i p h e r a l land..." (Alonso, 1964., p. 109) The explanation of the c e n t r a l l o c a t i o n f o r the poor.is based on the argument that high incomes lead to more gently-sloped curves, therefore outbidding i n the market f o r l o c a t i o n s f a r t h e r away from CBD.. The argument goes as f o l l o w s : Given a strong appetite f o r land, the wealthier w i l l tend to have l a r g e r holdings.  When holdings are l a r g e , .a small  rate of exchange i n p r i c e i s necessary to o f f s e t the increased t r a n s p o r t a t i o n costs.  For instance, a man holding one acre needs only  a.one-dollar.decrease  i n p r i c e to o f f s e t a one-dollar increase i n commuting costs.  A man holding  one-tenth of an acre needs a $10 decrease i n land p r i c e to o f f s e t the;same oned o l l a r increase i n t r a n s p o r t a t i o n costs.  This f a c t o r points to a gentler slope  f o r higher incomes. On the other hand, as land holdings increase, a c c e s s i b i l i t y becomes more scarce, therefore more valuable; i t could be expected, then,, that  indivi-  duals with large holdings would be w i l l i n g to s a c r i f i c e more.land i n order to gain a small change i n a c c e s s i b i l i t y ; t h i s f a c t o r would suggest a steeper slope as income increases. The actual steepness w i l l depend, i n the end, on the r e l a t i v e o v e r a l l value given to land quantity as compared to a c c e s s i b i l i t y .  Again, if.we assume  that the appetite f o r land i s strong, i t can be expected that the.increased desire f o r a c c e s s i b i l i t y w i l l not o f f s e t the o v e r a l l desire ...for l a r g e q u a n t i t i e s of land.  The net e f f e c t between these two opposite e f f e c t s , then, w i l l p o i n t  to a gentler slope f o r high income groups, as long as the dominant tastes are f o r large holdings. In other words: given a strong appetite f o r land, the wealthy, who can a f f o r d high commuting costs, w i l l p r e f e r l o c a t i o n s where they can purchase  23 large holdings.  The poor, who cannot a f f o r d high commuting costs, w i l l outbid  at c e n t r a l l o c a t i o n s ; they w i l l be able to do t h i s by s a c r i f i c i n g land quantity, i . e . they w i l l acquire very small holdings at a very high u n i t p r i c e . I f the dominant t a s t e s were reversed, i . e . a c c e s s i b i l i t y were considered as more d e s i r a b l e than land quantity (which i n Alonson's.view would be the case of the p r e - i n d u s t r i a l town or some L a t i n American c i t i e s ) , the l o c a t i o n pattern would reverse accordingly: the high-income groups would l o c a t e i n c e n t r a l areas and the poor would l o c a t e i n the periphery: "The American case, where the., p e r i p h e r a l , suburban l o c a t i o n s are occupied by the well-to-do, corresponds to a slowly decreasing marginal rate of s u b s t i t u t i o n . In the p r e - i n d u s t r i a l town, where there were s l i g h t d i f f e r e n t i a t i o n i n the s i z e of the l o t s , "the leading tradesmen l i v e i n the centre of town, the common people i n the periphery" S i m i l a r conditions obtain i n other c i t i e s of the world today i n countries such as India and those of L a t i n America..." "The c e n t r a l l y l o c a t e d luxury apartments correspond to a minority of the wealthy, who strongly object to commuting and do not want a p a r t i c u l a r l y spacious s i t e . This corresponds to a r a p i d l y decreasing marginal rate of s u b s t i t u t i o n , and consequently steep b i d - p r i c e curves." (Alonso, 1964, p. 108-109) V  Thus, i n Alonso's view, assuming that l o c a t i o n i s a t r a d e - o f f between a c c e s s i b i l i t y and quantity of land, the s p a t i a l d i s t r i b u t i o n by income w i l l be a f u n c t i o n of o v e r a l l preferences between these two consumption goods; the highincome groups would tend to l o c a t e where the most preferred of those goods i s maximized, and the lowest income groups w i l l tend to locate where the l e a s t preferred of those two goods can be optimized.  This notion w i l l be r e f e r r e d to  i n future chapters, when other f a c t o r s of l o c a t i o n are discussed. !  2.3  TRANSITION AREAS: ECONOMIC FACTORS T r a n s i t i o n areas located at the f r i n g e s of the Central Business Dis-  t r i c t are t r a d i t i o n a l l y considered one of the important l o c a t i o n options f o r the poor.  A review of the main economic concepts of r e s i d e n t i a l . l o c a t i o n  theory has provided some explanation of the l o c a t i o n of low-income groups i n those areas.  This explanation assumed.an 'equilibrium' s i t u a t i o n , that i s , a  21  s i t u a t i o n i n which the t o t a l s i z e of the population.is f i x e d . However, the l o c a t i o n and r o l e of t r a n s i t i o n areas may be also considered- i n a growth s i t u a t i o n .  The dynamics of• c i t y growth r e s u l t i n a process  of change of use i n those areas, o r i g i n a t e d by the expansion of the Central Business D i s t r i c t .  The economic theory of r e s i d e n t i a l l o c a t i o n , . although i t  assumes a s t a t i c model, can be used to make some inferences i n terms of popul a t i o n growth.  This p o s s i b i l i t y has been stated by Alonso:  " I t should be noted t h a t , a l l other things equal, with the poor i n the center and the r i c h i n the periphery, sheer population growth w i l l push back the boundary between the r i c h and the poor, i n c l u ding some of the houses that were r i c h i n t o the poor area. This phenomenon i s quite ancient, as noted i n a 1503 act of Parliament: •Great mischiefs d a i l y grow and increase by reason of. pestering the houses with diverse f a m i l i e s , harboring of inmates, and converting houses i n t o several tenements, and exacting the e r e c t i n g of new buildings i n London and Westminster'. However, this, process should not be confused with suburbanization, since o v e r a l l density i s increasing rather than decreasing." (Alonso, 1964-, p. 110 - Quote from L. Mumford, 'The Culture of C i t i e s ' , 1938, p. 123). The f o l l o w i n g discussion introduces some growth f a c t o r s i n t o the equilibrium model, i n order to define some c h a r a c t e r i s t i c s of t r a n s i t i o n areas.  Further background i n terms of the r o l e of growth on r e s i d e n t i a l l o c a -  t i o n w i l l be presented i n the next chapter. In an e q u i l i b r i u m s i t u a t i o n , d i f f e r e n t users w i l l .locate according to the r e l a t i v e steepness of t h e i r b i d - p r i c e curves.  In a simple ca.se where two  groups are competing, a b i d - p r i c e system can be depicted as f o l l o w s :  _PIS\AWCE:  Diagram 2.3  The f i r m s , with a steeper curve, w i l l l o c a t e between 0 and r , and w i l l pay p r i c e s ranging from p_^ to p_.  Residents w i l l l o c a t e between r and t ^  and w i l l pay land p r i c e s ranging from p_ to 0.  Point p_, i n t h i s case, i s a  t r a n s i t i o n p o i n t , i n which e i t h e r of the bidders w i l l l o c a t e and both w i l l pay the same p r i c e f o r the land.  Let us assume now that there i s an o v e r a l l expan-  sion i n the. c i t y : population has grown, and more land i s needed.for the expansion of f i r m s .  Pressures from growth w i l l r e s u l t i n an up and outwards s h i f t  of the two b i d - p r i c e curves:  CBD  ^  fV )p  7  DISTANCE  Diagram 2. J+ This s h i f t r e s u l t s i n an o v e r a l l increase i n land p r i c e s . r e s u l t s i n an expansion of the urban land (from the commercial area has grown from 0-r to 0-r'. i s now f a r t h e r away from  to t ^ ' ) .  I t also  At the same time,  The new t r a n s i t i o n p o i n t , r ' ,  CBD.  The area r - r ' can be defined as a t r a n s i t i o n area.  'Transition' i s  defined as a process of change over time, from one highest, and best use to another.  I t should be noted that what defines a t r a n s i t i o n .area i s not the  actual change of use, but the expectation of change.  A f t e r the change has  taken place, the area consolidates with the new use and a new t r a n s i t i o n area appears i n the next outer r i n g .  26 CHAPTER THREE: SOCIO-ECOLOGICAL FACTORS OF. LOCATION The f i r s t part of the analysis of T r a n s i t i o n Areas was a general overview of economic f a c t o r s of l o c a t i o n a t a c i t y l e v e l .  S t a r t i n g from the  Central Place Theory, a d e f i n i t i o n of T r a n s i t i o n Areas was derived, and two types of v a r i a b l e s r e l a t e d to the l o c a t i o n of the poor i n those areas were described: 1)  In an equilibrium s i t u a t i o n , l o c a t i o n of the poor i n c e n t r a l areas r e s u l t s from a bidding process whereby low-income groups s a c r i f i c e quantity of land i n order to gain a c c e s s i b i l i t y to CBD.  2)  In a growth s i t u a t i o n , l o c a t i o n of the poor i n T r a n s i t i o n Areas r e s u l t s from the r e l a t i v e l y lower r e n t a l values derived from the expected expansion of CBD and the r e s u l t i n g change i n land use i n T r a n s i t i o n Areas. The f i r s t type of v a r i a b l e s stems from economic theory.  The second  part, as w i l l be seen i n t h i s chapter, has been suggested by human e c o l o g i s t s who focus on urban growth as the major v a r i a b l e determining r e s i d e n t i a l location. This f i r s t d e f i n i t i o n of T r a n s i t i o n Areas focussed on those f a c t o r s that r e l a t e the l o c a t i o n of p a r t i c u l a r i n d i v i d u a l s to c e r t a i n p h y s i c a l areas of the c i t y .  A l l the'-variables considered (distance to CBD, quantity of land,  income...) r e l a t e an i n d i v i d u a l to a l o c a t i o n , but say l i t t l e about the s o c i a l dimensions of the l o c a t i o n game. The purpose of t h i s chapter i s to explore some of the socioe c o l o g i c a l v a r i a b l e s r e l a t e d to the r o l e of t r a n s i t i o n areas i n r e s i d e n t i a l location.  The discussion w i l l s h i f t from the concept of ' t r a n s i t i o n areas' to  that of ' t r a n s i t i o n neighborhoods' by focussing on the c h a r a c t e r i s t i c s and type of change process of the s o c i a l groups that tend to locate i n t r a n s i t i o n areas. This chapter contains a discussion of the f o l l o w i n g issues: 1)  A general overview of those theories i n Human Ecology which r e l a t e  27 r e s i d e n t i a l l o c a t i o n t o the urban growth process. 2)  A general overview of some of the Vsocio-ecological approaches to r e s i d e n t i a l l o c a t i o n which r e l a t e l o c a t i o n to s o c i a l segregation between d i f f e r e n t groups. The s o c i o - e c o l o g i c a l v a r i a b l e s introduced i n t h i s chapter add new  dimensions to the l o c a t i o n game.  At the same time, they provide a background  for the a n a l y s i s of neighborhood change that w i l l be discussed i n the f o l l o w ing  chapter.  3.1.  URBAN ECOLOGY AND CITY GROWTH. The term 'Urban Ecology' was introduced by Park and Burgess i n 1921  and represents an attempt t o s y s t e m a t i c a l l y apply the basic t h e o r e t i c a l scheme of plant and animal ecology to the study of urban communities. studies i n urban ecology emerged i n France and England more than  The f i r s t a.century  ago; those e a r l y studies centered on the d i s t r i b u t i o n of crime, s u i c i d e and other s o c i a l phenomena, and i n i t i a t e d what today i s an important aspect of human ecology: the study of the s p a t i a l d i s t r i b u t i o n of i n t e r - r e l a t e d s o c i a l variables. Robert Ezra Park (Human Ecology, 1936) argues that a basic process i n human r e l a t i o n s h i p s i s competition, l a r g e l y i n v o l v i n g a struggle f o r space. This competition involves an automatic.and  unplanned degree of co-operation,,  forming what i s c a l l e d competitive co-operation.  The struggle f o r existence,  based on competitive co-operation, determines the s p a t i a l d i s t r i b u t i o n of persons i n urban areas.  The organization of the e c o l o g i c a l community i s based  upon the dominance.of the Central Business D i s t r i c t .  Dominance, competition  and human m o b i l i t y are regarded as r e s u l t i n g i n the process of c e n t r a l i z a t i o n of s e r v i c e s , concentration, segregation, i n v a s i o n and succession of populations. Burgess ('The Growth of the C i t y : an Introduction to a Research P r o j e c t , 1  28 1925) developed the famous concept of the f i v e concentric zones of growth: "The t y p i c a l process of the expansion of the c i t y can best be i l l u s t r a t e d . . . by a series of concentric c i r c l e s , which may be numbered to designate both the successive zones of urban extension and the types of areas d i f f e r e n t i a t e d i n the process of expansion." "(A c i t y tends to expand r a d i a l l y ) . . . from i t s CBD ( i ) , to an area of t r a n s i t i o n , which i s being invaded by business and l i g h t manufacture ( I I ) . A t h i r d area ( i l l ) i s i n h a b i t e d by the workers i n i n d u s t r i e s who have escaped from the area of d e t e r i o r a t i o n ( l i ) but who desire to l i v e w i t h i n easy access of t h e i r work. Beyond t h i s zone, i s the r e s i d e n t i a l area (IV) of high-class apartment buildings or of exc l u s i v e ' r e s t r i c t e d d i s t r i c t s of single family dwellings. S t i l l f a r t h e r , out beyond the c i t y l i m i t s , i s the commuters' zone suburban areas, or s a t e l l i t e c i t i e s . . . " 1  "This chart brings out c l e a r l y the main f a c t of expansion, namely, the tendency of each inner zone to extend i t s area by the i n v a s i o n of the next outer zone. This aspect of expansion may be c a l l e d succession, a process which has been studied i n d e t a i l i n p l a n t ecology." Burgess' model i s based on the observation of the s p a t i a l d i s t r i b u ;  t i o n i n Chicago i n 1920 and has, therefore, a l i m i t e d g e n e r a l i t y .  However,  h i s d e s c r i p t i o n of the growth and expansion of the c i t y i n terms of expansion, succession and invasion, has had a considerable influence. As w i l l be seen l a t e r , Burgess' notion of l o c a t i o n i n terms of conc e n t r i c rings successively moving outwards as the c i t y grows and expands, constitutes the t h e o r e t i c a l foundation upon which most of the neighborhood change studies are based. Amos H.. Hawley ('Ecology and Human Ecology', 194-4-5 'Human Ecology', 1950) suggests that community structure i s based p r i m a r i l y upon, d i v i s i o n of labour. The/organization of sustenance a c t i v i t i e s - the way a community organizes i t s e l f f o r s u r v i v a l i n a p a r t i c u l a r habitat - r e s u l t s i n a s p a t i a l distribution.  Those a c t i v i t i e s l e a s t able to withstand the time and cost of  more d i s t a n t l o c a t i o n s and with a maximum need of a c c e s s i b i l i t y w i l l tend toward a c e n t r a l l o c a t i o n .  Hawley summarizes a theory of land values i n  r e l a t i o n to r e s i d e n t i a l location": "The r e s i d e n t i a l property on high p r i c e d land i s u s u a l l y i n a det e r i o r a t e d condition, f o r since i t i s close to business and i n d u s t r i a l areas i t i s being held s p e c u l a t i v e l y i n a n t i c i p a t i o n of  29 i t s a c q u i s i t i o n by more i n t e n s i v e and therefore more remunerative land use. In view of that p r o b a b i l i t y owners of such property are not disposed to spend h e a v i l y f o r maintenance or to engage i n new r e s i d e n t i a l construction. Hence the property can command a r e l a t i v e l y low rent f o r family use Conversely, new r e s i d e n t i a l structures appear on low-value lands, lands that.have few i f any a l t e r n a t i v e uses The tendency to high r e n t a l v a l u a t i o n i s minimized somewhat by the lowered general a c c e s s i b i l i t y to places of employment and s p e c i a l i z e d service that greater distance i n v o l v e s . Thus while land values, i n the main, grade downwards with distance from concentrations of a s s o c i a t i o n a l . u n i t s , r e n t a l values f o r r e s i d e n t i a l property tend to vary i n v e r s e l y with land values." (Alonso, p. 9-10) The paradox of low income f a m i l i e s l i v i n g on high p r i c e d land while wealthier f a m i l i e s l i v e on cheaper land i s explained i n Hawley's theory i n terms of a process over time i n a growing c i t y .  Growth or i t s expectation i s  i m p l i c i t i n the behavior a t t r i b u t e d to the speculators and i n the expanding area which r e s u l t s from the continuous a d d i t i o n of new houses to the p e r i phery. The concentric zones models described above explain neighborhood change process i n terms of i n v a s i o n , succession, extension, and  concentration,  i n which land use and population type i n one zone i n i t i a l l y invade and then succeed that of the adjacent zone.  Change i s envisioned as being much l i k e  the dropping of a pebble i n a l a k e : a s e r i e s of r i p p l e s radiate from the point of impact pushing i n t o each other i n t h e i r outward flow.  Much of the l i t e -  rature on neighborhood change stems d i r e c t l y from the concentric zone .model. Homer Hoyt's  sector model (Hoyt; "The Structure and Growth of  R e s i d e n t i a l Neighborhoods i n the United States", 1939) minent a l t e r n a t i v e to the concentric r i n g s theory.  presents the most pro-  In a study of 14.2  Ameri-  can c i t i e s , Hoyt argued that the d i s t r i b u t i o n of population i s organized more i n terms of homogeneous, pie-shaped sectors that run from the c i t y ' s toward the periphery.  CBD  Thus, the high-income areas tended to be found i n one  or two major sectors rather than i n the concentric zones described by Burgess. CBD;  The s o c i a l status of an area would not be r e l a t e d to distance from  indeed, the types of neighborhoods that one would pass through i n  30  d r i v i n g from the center of the c i t y would b a s i c a l l y depend on the sector i n which one s t a r t e d . The sector theory explains growth i n terms of a x i a l development along major transportation a r t e r i e s and l i n e s of l e a s t resistance. i n change i s that of high-status residence.  The key element  I t s l o c a t i o n and expansion sets  the parameters f o r the development of the other areas.  Some'df the basic pro-  p o s i t i o n s describing s e c t o r a l change are (Schwirian, 1977,  p..185-186):  - High-rent r e s i d e n t i a l growth tends to proceed from the given point of o r i g i n , e i t h e r along established l i n e s of t r a v e l or toward another e x i s t i n g nucleus of b u i l d i n g s or trade areas. - The zone of high-rent tends to occupy high ground that i s free from r i s k of floods and to spread along lake, bay, r i v e r , and ocean ports where the waterf r o n t i s not used by industry. - High-rent r e s i d e n t i a l d i s t r i c t s tend to grow toward the section of the c i t y that has free open country beyond i t s edges and away from 'dead end'  sections  that are prevented from expanding by n a t u r a l or a r t i f i c i a l b a r r i e r s . - The high-priced r e s i d e n t i a l neighborhood tends to grow towards the home of community leaders. - Sometimes trends i n the construction of. o f f i c e b u i l d i n g s , banks., and  stores  p u l l the high-priced r e s i d e n t a i l neighborhoods i n the same, g e n e r a l . d i r e c t i o n . - High-grade r e s i d e n t i a l areas tend to develop along the f a s t e s t e x i s t i n g \ transportation l i n e s . - Deluxe apartment areas tend to develop near the business centers i n o l d est a b l i s h e d r e s i d e n t i a l areas. - The growth of high-rent neighborhoods continues i n the same d i r e c t i o n f o r a long period of time. - High-rent neighborhoods do not skip about at random i n the process of movement.  They f o l l o w a d e f i n i t e path i n one or more sectors of the c i t y .  - I t i s p o s s i b l e , under c e r t a i n conditions, f o r high-rent areas to 'double-  31  back', or r e t u r n toward the center of the c i t y . - High-rent areas tend to be adjoined by medium-rent areas; sharp d i s j u n c t i o n s i n r e n t a l areas are not frequent. H a r r i s and Ullman ("The Nature of C i t i e s " , 194-5) suggest s t i l l , another a l t e r n a t i v e pattern of c i t y geometry, the m u l t i p l e n u c l e i model. Change i n the m u l t i p l e - n u c l e i model i s treated in. terms of the .factors that account f o r the emergence of separate n u c l e i w i t h i n the c i t y .  The four f a c t o r s  that are involved i n the development of the nuclear p a t t e r n are.: 1.) C e r t a i n a c t i v i t i e s require s p e c i a l i z e d f a c i l i t i e s located i n only a few.sections of the metropolis.  2) Certain l i k e a c t i v i t i e s p r o f i t from adjacent congregation. 3)  Certain u n l i k e a c t i v i t i e s are a n t a g o n i s t i c or detrimental to each, other.  4)  Certain a c t i v i t i e s are unable to a f f o r d the costs of the most desirable l o c a t i o n a l sites.. The obvious question at t h i s point i s : Which of the three d i f f e r e n t models best f i t s the a c t u a l geometry of most c i t i e s ?  Although there i s no  c l e a r answer to t h i s question and researchers have d i f f e r e n t . o p i n i o n s on t h i s matter, some a d d i t i o n a l elements r e l a t e d to the shape of urban, areas can be drawn from the a n a l y s i s of the ^segregation process between .diff.erent s o c i a l groups.  3.2  This w i l l be discussed i n the f o l l o w i n g s e c t i o n .  SOCIAL FACTORS OF SEGREGATION. From the e a r l y work to the most recent formulations, Human Ecology  has seen r e s i d e n t i a l l o c a t i o n as a process of segregation between d i f f e r e n t groups: "By i t s very nature, urbanization has .led to.the r e s i d e n t i a l segregation of persons and groups w i t h i n c i t i e s . .Given large concentrations of population, given the heterogeneity.of i n d u s t r i a l society,, and given differences i n l i f e s t y l e and c u l t u r e , i t i s almost i n e v i t a b l e that persons w i l l sort themselves from other .persons on. the,basis of subj e c t i v e l y important c r i t e r i a . I t would indeed be amazing to f i n d urban concentrations where a l l neighborhoods or blocks or c i t i e s had exactly the same types of persons." (Avery Guest, p. 269).  32 A s t a r t i n g point f o r the a n a l y s i s of r e s i d e n t i a l segregation - i t s degree, s p a t i a l patterns, and i t s causes - i s tlie.Burgess theory of urban growth. Burgess' r i n g concept seemed to be p r i m a r i l y a h e u r i s t i c device to show how a c t i v i t i e s and groups become segregated, concentrated, and c e n t r a l i z e d i n the c i t y .  The zones were meant to i n d i c a t e general tendencies of l o c a t i o n ,  rather than hard and f a s t areas.  I t follows from h i s theory than lower status  persons, s i n g l e and unattached persons (including homeless men and women), and ethnic and r a c i a l m i n o r i t i e s should generally be l o c a t e d near the center of the c i t y ( c e n t r a l i z e d ) , while higher status persons, third-generation Americans and f a m i l i e s w i t h c h i l d r e n should generally be l o c a t e d on the urban o u t s k i r t s (decentralized).  Within Burgess' model, groups become segregated i n the c i t y ,  not because they have a p a r t i c u l a r l i k e or d i s l i k e f o r other gorups, but because changes i n the c i t y ' s s t r u c t u r a l or morphological features lead them to l i v e i n c e r t a i n areas of the c i t y .  Within the context of p o s s i b l e causes  of segregation, the theory emphasizes the non-personal  causes-  Following Burgess's framework, Zorbaugh developed the concept of 'natural areas', which can be considered a f i r s t attempt to explain the nature of neighborhoods.  A 'natural area' i s a geographical area characterized  by a p h y s i c a l i n d i v i d u a l i t y and by the. c u l t u r a l c h a r a c t e r i s t i c s of the people who l i v e i n i t :  r  "A n a t u r a l area i s a geographical area characterized by a p h y s i c a l i n d i v i d u a l i t y and by the c u l t u r a l c h a r a c t e r i s t i c s of the people who l i v e i n i t . . . Just as there i s a plant ecology whereby, i n the struggle f o r existence, l i k e geographical regions become associated with l i k e 'communities' of p l a n t s , mutually adapted, and adapted to the area, so there i s a human ecology whereby, i n the competition of the c i t y and according to definable processes, the population of the c i t y i s segregated over n a t u r a l areas i n t o n a t u r a l groups. And these n a t u r a l areas and n a t u r a l groups are the 'atoms' of c i t y growth, the u n i t s we t r y to c o n t r o l i n administering and planning the c i t y . " (Zorbaugh, 'The n a t u r a l areas of t h e . c i t y ' , 1926, i n Theodorson, 'Studies i n Human Ecology, 196l, p. 4-7). Zorbaugh sees these n a t u r a l areas as human communities with s i m i l a r t r a i t s which, i n the process of struggle f o r s u r v i v a l , become adapted to a  p a r t i c u l a r geographical area.  Again, the adaptation process r e l a t e s to the  geographical c h a r a c t e r i s t i c s of each area, rather than to the i n t e r a c t i o n between members of these communities. A more formal framework which provides methodological t o o l s to ident i f y the s o c i a l variables that define d i f f e r e n t s o c i a l groups i n urban areas has been more recently developed by Schevsky and B e l l (Schevsky and Bell,. S o c i a l Areas of Los Angeles', 194-9).  'The  S o c i a l Area. Analysis i s a method f o r  the study of s o c i a l d i f f e r e n c i a t i o n and s t r a t i f i c a t i o n of groups.  The o r i g i n a l  formulation of t h i s method was presented i n a study of urban phenomena i n Los Angeles.  The objective of the study was  not as i s o l a t e d , self-contained l a t i o n s h i p s ; i t was  to understand urban aggregations,  u n i t s , but as parts of a wider, system or re-  f e l t that the f a c t o r s that define d i f f e r e n t groups i n  urban areas were a r e f l e c t i o n of the more s i g n i f i c a n t c h a r a c t e r i s t i c s of modern society. S t a r t i n g from three main postulates concerning i n d u s t r i a l society, Schevsky and B e l l derived a set of indexes, obtained from census t r a c t data, which r e l a t e to each of the postulates. 1)  The three main constructs are:  S o c i a l Rank (economic s t a t u s ) , which would r e f l e c t the changing d i s t r i b u t i o r of s k i l l s as a s i g n i f i c a n t d i f f e r e n t i a t i n g f a c t o r among i n d i v i d u a l s i n modern society, and would be measured by education, employment status, value and q u a l i t y of home.  2)  Urbanization (family s t a t u s ) , which would be a consequence of the  increas-  i n g d i f f e r e n t i a t i o n of function and r e s u l t i n g changes i n the ways of l i v i n g (women entering the labor force, a l t e r n a t i v e family  patterns).  Indicators of t h i s index are: age and sex, persons per household, ownership status, house structure. 3)  Segregation (ethnic s t a t u s ) , derived from the increase i n the complexity of organization:  (increasing d i v e r s i t y , segregation and i s o l a t i o n of.  groups) and measured by race, country of b i r t h , c i t i z e n s h i p .  I t should be  noted that the term 'segregation' here i s used i n a r e s t r i c t e d meaning, since i t describes d i f f e r e n t i a t i o n by e t h n i c i t y only. Two hypotheses i m p l i c i t i n the formulation of t h i s typology were tested i n the Los Angeles study: 1) that the three types are necessary to account f o r the observed s o c i a l d i f f e r e n t i a t i o n between urban sub-populations; and 2) that the indexes constructed to measure the three f a c t o r s are u n i d i mensional measuring instruments.  The r e s u l t s of the a n a l y s i s supported these  two hypothesis and, i n a d d i t i o n , provided some evidence that the three f a c t o r s are adequate, as w e l l as necessary, to account f o r most of the observed v a r i a t i o n between sub-populations that can be detected by census data. Van A r d s o l , C a m i l l e r i , and Schmid have c a r r i e d out an extensive study i n which s o c i a l area a n a l y s i s was a p p l i e d to ten large American c i t i e s . The r e s u l t s of t h e i r study l e d them to conclude that t h i s approach has high g e n e r a l i t y and i s h i g h l y a p p l i c a b l e to the c i t i e s studied.  In eight of the  ten c i t i e s studied the data supported the construction of the v a r i a b l e s of s o c i a l rank, urbanization and segregation on the basis of the s p e c i f i c indexes u t i l i z e d by Shevsky and B e l l .  A study of c e r t a i n areas of San Francisco, done  by B e l l , provides f u r t h e r evidence on how s o c i a l area analysis, provides a framework f o r the i d e n t i f i c a t i o n of the: main d i f f e r e n t i a t i o n f a c t o r s i n urban groups.  (Theodorson, 'Studies i n Human Ecology , 1966, p. 132). 1  S o c i a l Area Analysis provides a u s e f u l set of i n d i c a t o r s . t o measure the c h a r a c t e r i s t i c s that define sub-urban groups i n urban areas.  These sub-  groups, or s o c i a l areas, are groups with s i m i l a r scores on three s o c i a l dimensions:, s o c i a l rank, family status and e t h n i c i t y .  Although these i n d i -  cators do not describe the type of i n t e r a c t i o n that takes place between d i f f e r e n t i n d i v i d u a l s or groups, i t can be hypothesized that p e o p l e . l i v i n g i n a p a r t i c u l a r type of s o c i a l area would s y s t e m a t i c a l l y d i f f e r w i t h respect to a t t i t u d e s and behavior from persons l i v i n g i n other types of s o c i a l areas. Schevsky s; and B e l l ' s typology defines .segregation to r e f e r only to 1  35 one type of group d i f f e r e n t i a t i o n , which i s e t h n i c i t y ; but i n f a c t groups separate themselves according to other f a c t o r s as w e l l . broader meaning to the concept: Urban Areas'.  Avery Guest gives a  (Avery Guest, 'Residential Segregation i n  "Contemporary Topics i n Urban Sociology, 1977, p. 269-335).  "Segregation means d i s s i m i l a r i t y i n r e s i d e n t i a l d i s t r i b u t i o n that i s , the tendency of one type of person to l i v e separately from another type of person i n one small area i n the c i t y . . . . The opposite to segregation would be i n t e g r a t i o n , and a process i n which segregation i s abolished would be c a l l e d desegregation". "Segregation... may also take the form of concentration. I f members of a group are segregated so that a l l l i v e i n one region- or large area of the c i t y , they are concentrated. In the case of black-white segregation, the existence of large r a c i a l ghettoes could be considered an example of concentration. But a group may be segregated without being concentrated, as would be i n d i c a t e d by a pattern on c i t y blocks being completely white or completely black, but these blocks being randomly d i s t r i b u t e d around the c i t y . . . " (Guest, 1977, p. 273-274). Guest d i f f e r e n t i a t e s three dimensions of segregation: by s o c i a l status, by family composition and by r a c e / e t h n i c i t y .  These three dimensions  are more or l e s s coincident with Schevsky's and B e l l ' s typology; the only difference being the d e f i n i t i o n of segregation as a general phenomena, and e t h n i c i t y as only one dimension of i t . In terms of the reasons f o r segregation, Guest d i s t i n g u i s h e s two types of f o r c e s : 1) Non-personalistic f o r c e s , which produce an i n d i r e c t type of segregation, r e s u l t of p h y s i c a l features and c h a r a c t e r i s t i c s of the c i t y , rather than the a t t r a c t i o n of r e j e c t i o n between d i f f e r e n t s o c i a l groups.  Non-  personal segregation i s considered as a product of two types of causes: Sentiment and symbolism attached to c e r t a i n areas and elements of the city.  This f a c t o r r e l a t e s to elements such as h i s t o r i c a l character  of a neighborhood, t r a d i t i o n s associated with a p a r t i c u l a r area, e t c . -  Morphological or s t r u c t u r a l features of neighborhoods, such as s i z e and age of the housing stock, p r o v i s i o n of open spaces.  2)  P e r s o n a l i s t i c forces, which are conscious acts of i n d i v i d u a l s or groups  to l i v e close or f a r away from each other.  36 Personal segregation would be  due t o : -  The actions of i n d i v i d u a l s i n terms of choosing to l i v e with groups having s i m i l a r values and l i f e s t y l e s .  -  The actions of i n s t i t u t i o n s or s p e c i a l i z e d agencies w i t h i n the communit y ; f o r instance, i t i s frequently allegued-that r a c i a l segregation i n US'.-cities, while sought by some i n d i v i d u a l s , i s a c t i v e l y created by the actions of r e a l t o r s who may refuse to show c e r t a i n neighborhoods to blacks. Guest argues that, although l i t t l e i s known about the causes of  r e s i d e n t i a l segregation, the evidence suggests that f a m i l y segregation and segregation by s o c i a l rank are p r i m a r i l y a r e s u l t of non-personal  factors,  while e t h n i c - r a c i a l segregation r e s u l t s p r i m a r i l y from the desire to l i v e close or f a r away from other groups.  A summary of the argument presented by  Guest i s given below. A)  F a m i l y - l i f e cycle segregation: In Guest's view, segregation by stage i n l i f e - c y c l e i s the d i r e c t  result  of the p a r t i c u l a r housing needs of each group i n terms of s i z e and  age of the housing.  These housing needs can be summarized by the f o l l o w i n g  categories: Households of married couples with c h i l d r e n present: t h i s group should be located i n spacious housing, and r e l a t i v e l y new housing since they can be expected to move i n t o houses when they s t a r t the c h i l d - b e a r i n g period and remain i n them f o r a long period of time.  Since most, of the new housing  i s added at the periphery of the..urban areas, f a m i l i e s i n the c h i l d bearing stage would l o c a t e i n those suburban s i n g l e - f a m i l y dwellings. Households of married couples i n the age period over L5, generally without children present: people i n t h i s group would l o c a t e i n spacious older housing, " i f only as a r e l i c of past housing needs"; they would age along with the neighborhood.  Because of the older type of housing, they would be  37 located i n more c e n t r a l areas than the young f a m i l i e s . -  Households i n which no or very few married couples or children are present, generally containing the young, s i n g l e population, the-jolder, widower popul a t i o n , and tfeodivorced-separated population.  This group would need l e s s  spacious dwelling and should tend to l o c a t e i n higher density areas; the o l d age component may also l i v e i n o l d , spacious u n i t s i n c e n t r a l neighborhoods.  In both cases, th'eslocation Is close to the core of the c i t y .  Since t h i s group represents a r e l a t i v e l y shorter stage i n the l i f e - c y c l e , one can p r e d i c t that apartment house areas of the c i t y would be more t r a n s i e n t i n character (higher m o b i l i t y r a t e ) . In t h i s view, segregation by f a m i l y status i s p r i m a r i l y nonpersonal, and r e s u l t s from s t r u c t u r a l or morphological features of neighborhoods rather than from sentimental features. Several studies done i n recent years support t h i s notion.  For  instance, Peter Rossi (1955), i n a study of r e s i d e n t i a l m o b i l i t y i n P h i l a d e l phia, found that most of the f a m i l i e s moving or planning to move were doing so to adjust housing needs with l i f e - c y c l e changes.  The space, q u a l i t y , and  s t r u c t u r a l soundness of housing was the overwhelming concern i n t h e i r housing choice.  (Guest, 1977, p. 286).  A study of r e s i d e n t i a l segregation by l i f e -  cycle stage, i n Cleveland, Ohio (i960) showed that d i f f e r e n c e s by family status d i d not explain segregation; most of the segregation could be explained•by. differences i n housing types (Guest, 1977, p. 287).  S i m i l a r l y , Guest's  study of segregation by f a m i l y types i n 16 other metropolitan areas showed s i m i l a r f i n d i n g s .  (1970),  Guest also found that the c e n t r a l i z a t i o n - d e c e n t r a -  l i z a t i o n pattern was r e l a t e d to f a m i l y status rather than s o c i a l rank or ethnicity: "In f a c t , the c e n t r a l i z a t i o n - d e c e n t r a l i z a t i o n pattern was much more c h a r a c t e r i s t i c of f a m i l i e s than of s o c i a l status groups, white ethnic groups or r a c i a l groups, suggesting that f a m i l y composition i s the most c l e a r - c u t c h a r a c t e r i s t i c d i s t i n g u i s h i n g the center from the o u t s k i r t s of the American metropolis. On the whole, the study of the seventeen metropolitan areas showed  •38  l i t t l e tendency f o r family segregation to vary i n c l e a r c u t concentrat i o n patterns other than c e n t r a l i z a t i o n - d e c e n t r a l i z a t i o n . " B)  S o c i a l class segregation: The issue of segregation by s o c i a l rank has provoked a wide-ranging  debate on whether i t r e s u l t s from p e r s o n a l i s t i c or n o n - p e r s o n a l i s t i c causes. More has been w r i t t e n about segregation by s o c i a l rank than by any other dimension, but l e s s i s probably known d e f i n i t i v e l y .  There has also been a  long-standing debate on whether s o c i a l class groups are segregated on the basis of c e n t r a l i z a t i o n - d e c e n t r a l i z a t i o n , or whether i t follows other patterns, such as Hoyt's wedge-shaped areas emanating from the  CBD.  Exponents of the non-personal, s t r u c t u r a l f a c t o r s i n determining s o c i a l class segregation argue that persons of higher s o c i a l status have c e r t a i n tastes and desires f o r c e r t a i n types of neighborhoods,  and use t h e i r  income to purchase l o c a t i o n according to those tastes; those preferred neigh-; • borhood a t t r i b u t e s would be p r i m a r i l y : l i t t l e congestion, l i t t l e business and industry, generous amount of i n t e r n a l and open space.  Though not always ex-  p l i c i t , i t follows from t h i s argument that the lower status persons would locate not according to t h e i r tastes but i n those areas not chosen by the higher status groups. The arguments presented by Guest i n support o f . t h i s theory are based on a study done by Otis and Beverly Duncan of occupational.segregation i n the Chicago Metropolitan D i s t r i c t i n 1950. other metropolitan areas.  This study was r e p l i c a t e d i n .various  A l l those studies showed that segregation indexes  by occupation were moderate (greater than those f o r family groups, and s i m i l a r or smaller than those f o r ethnic groups).  Segregation was found to be  generally c o r r e l a t e d to income and occupational p r e s t i g e . Another study done by Guest on 17 SMSA (Guest, 1971) shows that the proportion of w h i t e - c o l l a r workers i n each area (as opposed to b l u e - c o l l a r workers) was h i g h l y r e l a t e d to the types of housing, p a r t i c u l a r l y number of rooms and s t r u c t u r a l conditions of the house.  39 How t h i s evidence supports the non-personalistic theory i s not c l e a r i n Guest's discussion.  The study by Duncan and Duncan appears to show that  there i s segregation by s o c i a l status, but says l i t t l e about i t s causes. Guest's study, on the other hand, r e l a t e s l o c a t i o n to differences i n housing types by occupational c l a s s ; the c o r r e l a t i o n between housing type and occupat i o n a l class does not explain whether housing q u a l i t y i s a cause, an e f f e c t or a concomitant f a c t o r to l o c a t i o n preferences. Another type of non-personalistic l o c a t i o n factors commonly associated  with s o c i a l rank i s that of sentiment and symbolism attached to c e r t a i n  neighborhoods.  One leading proponent, Walter F i r e y ('Sentiment and Symbolism  as E c o l o g i c a l V a r i a b l e s ' , 194-5), maintains that space has a symbolic value, not only cost-imposing q u a l i t i e s .  Space takes meaning f o r man through c u l t u r a l  d e f i n i t i o n , and c u l t u r a l values intervene between the p h y s i c a l environment and the human community.  F i r e y suggests that the maintenance of Beacon H i l l , i n  c e n t r a l Boston as an upper-class r e s i d e n t i a l d i s t r i c t can only be explained i n terms of symbolic values. In Guest's view, however, the Beacon H i l l  case would be a r e s i d u a l ,  rather than a dominant phenomenon, since the o v e r a l l pattern i n Boston, w i t h only that exception, i s s t i l l that of - c e n t r a l i z a t i o n - d e c e n t r a l i z a t i o n - b y 'social rank. S t i l l another c r i t i c i s m of the e c o l o g i c a l view sustains that actions of groups may r e s u l t i n class segregation. Higher status neighborhoods  would  defend t h e i r t e r r i t o r y and prevent the entrance of others by c o l l e c t i v e behavior,  or by i n d i r e c t means such as r e s t r i c t i v e zoning and land use c o n t r o l s . In terms of geographical l o c a t i o n by s o c i a l rank, current evidence  seems to suggest that income-class v a r i a t i o n s with distance from CBD.are not very s i g n i f i c a n t .  Rather, segregation would f o l l o w patterns r e l a t e d to the  l o c a t i o n of t r a n s p o r t a t i o n c o r r i d o r s , i n d u s t r i a l areas and other geographical features.  40 In Guest's words: "As I have shown r e c e n t l y (Guest 1971, 1972b), the a c t u a l tendency of s o c i a l status to vary with each mile of distance from  CBD  i s not great, and thus we are r e a l l y t r y i n g to e x p l a i n s l i g h t tendencies, i f present at a l l , of status to increase with distance from CBD."  (Guest,  1971,  p. 299). Kent P. Scwirian (p. 187-193) shows that, i n a study of US c i t i e s i n I960 by Schnore and Winsborough (1972), while 90 c i t i e s showed a c e n t r a l i z a t i o n pattern (higher status i n outer r i n g s ) , 24 communities showed a reverse . gradient (higher status i n c e n t r a l areas), and 70 urbanized areas showed .a pattern i n which both the lowest and highest classes were c e n t r a l i z e d while middle-class was decentralized. The same study, though, showed that changes i n time pointed to upper-class groups becoming l e s s c e n t r a l i z e d and lower groups becoming more c e n t r a l i z e d . The f o l l o w i n g quote from Scwirian £p-—192-)- gives an i n t e r e s t i n g i n s i g h t on how the e x i s t i n g evidence might be suggesting a developmental theory of land use: "Schnore speculates that there might w e l l be a sequential pattern of e c o l o g i c a l change as s o c i e t i e s modernize. In the e a r l y pattern of c i t y development the 'inverse gradient' characterizes the c i t y i n which the a f f l u e n t population l i v e s near the c i t y ' s center and the lower groups l i v e towards the periphery. With growth, modernization, and aging the c e n t r a l portions of the c i t y become l e s s a t t r a c t i v e r e s i d e n t i a l l y and the upper classes migrate towards the periphery. The vacated areas i n the inner portions of the c i t y become targets f o r those urbanites who cannot survive the s t i f f e r competition f o r f r i n g e housing." (Schwirian, 1977, p. 192) In other words, the.*location d i s t r i b u t i o n of highest and  lowest  groups, or the r e l a t i v e c e n t r a l i z a t i o n of the:poor, would be an i n d i c a t o r of the degree of urbanization of an area. C)  Ethnic segregation: U n t i l r e c e n t l y , most s o c i o l o g i s t s t r e a t e d . e t h n i c i t y as.an aspect of  s o c i a l rank.  Ethnic i d e n t i f i c a t i o n was seen as a temporary manifestation of  the migrant's low economic status i n American s o c i e t y . And i t was presumed that d i s t i n c t i v e ethnic t r a i t s would disappear as the migrant was a s s i m i l a t e d economically i n t o the s o c i e t y .  -41 ' This perspective, i n seeing status and e t h n i c i t y as very s i m i l a r , seems to f o l l o w the view that r e s i d e n t i a l segregation a r i s e s p r i m a r i l y from nonpersonal causes.  Ethnic groups would become segregated p r i m a r i l y because  t h e i r income status relegate them to c e r t a i n types of housing and neighborhoods i n the c i t y .  However, there may be c e r t a i n p e r s o n a l i s t i c components of  segregation .because the ethnic group, due to i t s low status, seeks out others of the same e t h n i c i t y i n order t o protect and defend i t s i n t e r e s t s . More recent research seems to suggest, however, that segregation by e t h n i c i t y cannot be explained by income alone. Kantrowitz  For instance, Nathan  (1973). (Guest, 1977, p. 304.) suggests, using the New York metropoli-  tan area as an example, that a high degree of r e s i d e n t i a l segregation remains among the f o r e i g n stock population of New York.  This view i s supported i n two  studies of r e s i d e n t i a l segregation i n the Toronto metropolitan area: In one study, A. Gordon Darroch and W.G. Martson (1971) found that segregat i o n among ethnic groups i n Toronto could be explained only s l i g h t l y , by the s o c i a l c l a s s differences of the groups.  In another study, Darroch and  Nartson (1969) argued f o r a multidimensional concept of ethnic . r e s i d e n t i a l segregation, showing that ethnic segregation could be explained by a v a r i e ty of f a c t o r s : period of immigration to Canada, r e l i g i o n , mother tongue, and country of b i r t h .  They showed that ethnic segregation could not be  explained by period of immigration to Canada alone, i n d i c a t i n g .that i t was not simply an a r t i f a c t of having new, low status immigrants.  (Guest, 1977,  p. 305). -  The a c t u a l l o c a t i o n patterns a r i s i n g from ethnic segregation are not w e l l understood.  There i s no c l e a r evidence to prove that e t h n i c i t y produces  e i t h e r a c e n t r a l i z a t i o n p a t t e r n , a s e c t o r a l pattern, or some other type of clustering.  Some studies suggest that ethnic groups s p a t i a l l y  on non-personal symbolic bases.  concentrate  For instance, Christen Jonassen  (1945),  (Guest, 1977, p. 307) argues that Norwegians i n New York C i t y have located  L2 close to the sea and semi-rural areas, because they remind Norwegians of t h e i r native land. S i m i l a r l y , a study by Kosa ('Hungarian Immigrants i n North America: t h e i r Residential Mobility, and Ecology', 1956)  suggested that location and  movement of Hungarian groups could be explained i n terms of t h e i r c u l t u r a l values. A good summary of what seems to be the current view i n terms of r e s i d e n t i a l segregation i n the three dimensions suggested by the Social Area Analysis typology i s K.P.  Schwirian  'club sandwich' theory: -(-Schw-i-rian-,—1-9-7-7T  .p..~-1987"' "While the s o c i a l area analysis perspective developed f a i r l y independently of the c l a s s i c models there has been some i n t e r e s t i n investigating the patterns of urban s o c i a l areas i n terms of concentric zones, sectors, and multiple n u c l e i . In studies of c i t i e s i n the United States and Canada i t was found that, o v e r a l l , status tended to be d i s t r i b u t e d more i n terms of sectors than distance gradient. Familism was d i s t r i b u t e d more by distance gradient than by sector. The main reason for this i s that the familism's index major component i s the r e l a t i v e concentration .of single-dwellings . as opposed to multiple-dwelling units. New housing.at the fringe tends to be single-family while other neighborhoods i n the urban . core are being converted from single-family to multiple-dwelling units. E t h n i c i t y was d i s t r i b u t e d neither by sector nor by distance but tended to appear more i n terms of highly clustered n u c l e i . . . Thus i t seems that the c i t y i s much l i k e a multilayered club, sandwich. Over the basic grid of streets we have a layer of s o c i a l status sectors; then a layer of housing types d i s t r i b u t e d primarily by density gradient; a l l topped o f f by a layer of nucleated r a c i a l and ethnic minorities. S o c i a l Area Analysis attempts to separate these layers and examine t h e i r r e l a t i v e contribution to the c i t y and then recombine them to observe t h e i r t o t a l configuration." (Schwirian, 1977, p. 198)  43 CHAPTER FOUR: DYNAMIC FACTORS OF LOCATION The review of l o c a t i o n theory presented i n the preceeding chapters has centered on economic and s o c i a l f a c t o r s r e l a t e d to the c e n t r a l i z a t i o n of low-income groups around the Central Business D i s t r i c t . From the point of view of economic theory, t r a n s i t i o n areas were defined as those areas i n which a change i n land use process i s underway, t h i s , change being produced by the dynamics of growth and the r e s u l t i n g expansion o f the Central Business D i s t r i c t .  Growth, and the expectations of land use  change derived from i t , were suggested to r e s u l t i n a d e t e r i o r a t i o n of maintenance standards i n t r a n s i t i o n areas; t h i s i n turn would r e s u l t i n r e s i d e n t i a l l o c a t i o n of low-income groups i n those areas. On the other hand, the overview of some of the s o c i a l . components of r e s i d e n t i a l l o c a t i o n suggested that c e n t r a l i z a t i o n of tha.-poor • i n areas around the Central Business D i s t r i c t i s one of the s o c i a l dimensions i n which the l o c a t i o n game takes place.  Other types of s o c i a l segregation (by family  status and e t h n i c i t y ) are l i k e l y t o ' r e s u l t i n the c e n t r a l i z a t i o n of p a r t i c u l a r family types and ethnic groups. Since the main element defining t r a n s i t i o n areas i s the change process taking place i n them, a key element t o understand t h e i r r o l e i n terms of low-income r e s i d e n t i a l , l o c a t i o n i s the a n a l y s i s of t h i s change process,, i t s causes and mechanics, and the e f f e c t s of the process on r e s i d e n t i a l segregation. Studies of l o c a t i o n dynamics stem p r i m a r i l y from the same body of s o c i a l ecology presented i n Chapter Three (section 3.1).  The basic notion  underlying a l l the studies of l o c a t i o n dynamics i s that, as the c i t y grows and expands, new housing i s added i n p e r i p h e r a l areas.  Housing a d d i t i o n s , com-  bined w i t h the expansion of the Central Business D i s t r i c t , produces an outward flow of the urban r e s i d e n t s . This outward flow has been described e i t h e r i n terms of successive  u  concentric rings around CBD (as described by Burgess), or i n terms of a x i a l movements along d i f f e r e n t sectors of the c i t y (as described by Hoyt's sector model).  In both cases, they assume that d i f f e r e n t groups move to successively  outward areas as the c i t y expands. This chapter contains a discussion of some of the dynamic f a c t o r s that influence the .role of t r a n s i t i o n areas i n terms of low-income r e s i d e n t i a l location. 1)  The discussion centers on two approaches to r e s i d e n t i a l m o b i l i t y :  The F i l t e r i n g process, which explains m o b i l i t y from the point of view of housing q u a l i t y .  The f i l t e r i n g process i s considered to be a market  mechanism whereby low-income residents have access to housing. 2)  The Neighborhood Change process, which includes those theories that describe p h y s i c a l and s o c i a l components of neighborhood change.  4.1  THE FILTERING PROCESS. One of the concepts underlying p o l i c i e s of maintenance subsidies f o r  deteriorated housing i s the f i l t e r i n g down concept.  The basic.idea of f i l t e r -  ing i s that additions to the housing stock w i l l s t a r t a chain of moves i n which each household, of the chain moves to a better housing; successive users of each b u i l d i n g belong to lower income groups.  At the end, of the process,  the u n i t s are ' f i l t e r e d ' to the lowest income group.  This process i s consi-  dered to be the mechanism whereby the poor acquire housing under free market conditions. In t h i s scope, housing maintenance p o l i c i e s assume that f i l t e r i n g i s an e f f i c i e n t mechanism to provide housing f o r the poor.  Subsidies f o r  maintenance have the objective of improving the q u a l i t y of the housing thus provided, and at the same time these p o l i c i e s are supposed to protect the p h y s i c a l and s o c i a l f a b r i c of neighborhoods by preserving theold, deteriorated buildings. The a n a l y s i s of f i l t e r i n g i n the f o l l o w i n g section w i l l center on  45 the issue of how f i l t e r i n g provides housing f o r the low-income groups.  This  section contains: -  A review of d i f f e r e n t d e f i n i t i o n s of f i l t e r i n g ; An a n a l y s i s of the mechanics of f i l t e r i n g and i t s e f f e c t s on low-income housing.  4.1.1  DEFINITIONS OF FILTERING. The concept of f i l t e r i n g can be traced back to Hoyt's sector theory.  Hoyt's e s s e n t i a l notion was t h a t , as a c i t y grows, the fashionable, r e s i d e n t i a l d i s t r i c t moves outwards from the center, always i n the same d i r e c t i o n .  Obso-  l e t e houses l e f t behind by the well-to-do become occupied by the poor, p a r t i c u l a r l y the new immigrants, so that the wedge-shaped path taken by the highincome group contains both extremes i n the income spectrum.  Middle-income  f a m i l i e s group themselves about the well-to-do, hoping that some of the status of the fashionable areas w i l l rub o f f to them (Wallace Smith, ' F i l t e r i n g and Neighborhood Change; 1970,  p.  65).  William Grisby (The . F i l t e r i n g Process, 1963)  provides a good review  of a l t e r n a t i v e d e f i n i t i o n s of f i l t e r i n g : A)  The t r a d i t i o n a l d e f i n i t i o n ( R a d c l i f f , Urban Land Economics, 1949)  relates  changes i n housing p r i c e to changes i n occupancy: "This process ( f i l t e r i n g ) i s described most simply as the change i n occupancy as the housing that i s occupied by one income group becomes a v a i l a b l e to the next lower income group as a r e s u l t of decline i n market p r i c e , i . e . i n sales p r i c e or rents value." ,(Grisby,1963, p.96) This d e f i n i t i o n assumes that rent and occupancy changes occur simultaneously and are simply two sides of the same coin.  Of these, the key ele-  ment i s considered to be occupancy change, the value change being the permissive f a c t o r . B)  A reformulation was.provided by F i s h e r and Winnick (Ernest F i s h e r and Louis Winnick,. 'A Reformulation of the F i l t e r i n g Concept', 1951).  This  d e f i n i t i o n recognizes that change i n p r i c e and change i n occupancy do not  46 always occur simultaneously: " F i l t e r i n g i s defined as a change over time i n the p o s i t i o n of a given u n i t or group of dwelling u n i t s w i t h i n the d i s t r i b u t i o n of ' housing p r i c e s and rents i n the community as a whole." (Grisby, 1963, p. 96) Thus, f i l t e r i n g i s measured i n terms of change i n r e l a t i v e value rather than i n terms of changes i n occupants. C)  Grisby suggests s t i l l another concept - that of f i l t e r i n g as an improvement i n r e a l housing standards among low-income f a m i l i e s .  This welfare concept  suggests that f i l t e r i n g occurs only i f low-income housing standards have been r a i s e d : "Such a d e f i n i t i o n would hold that f i l t e r i n g (change i n housing p r i c e s and rents) must be measured while holding income, q u a l i t y and space per person constant, or i n more relaxed form, that f i l t e r i n g occurs only when value declines more r a p i d l y than q u a l i t y so that f a m i l i e s can obtain e i t h e r higher q u a l i t y and more space at the same p r i c e , or the same q u a l i t y and space a t a lower p r i c e than formerly." (Grisby, 1963, p. 97). Grisby's d e f i n i t i o n also excludes the change i n occupancy  element.  The only difference between t h i s and Fisher's concept seems to be the welfare notion that f i l t e r i n g occurs only when a r e a l improvement i n housing f o r the poor occurs.  As such, i t does not consider the concept of ' f i l t e r i n g up* (or  change to a lower q u a l i t y housing) a.s.part of the f i l t e r i n g concept. D) Wallace Smith ( F i l t e r i n g and Neighborhood Change, 1970) argues that the key element i n the d e f i n i t i o n of f i l t e r i n g i s the change i n occupancy, rather than the q u a l i t y change.  He approaches the concept of f i l t e r i n g i n  terms of market behavior: "Optimization i n the use of a durable good requires s h i f t i n g i t about among d i f f e r e n t classes of users as i t s r e l a t i v e usefulness declines or r i s e s . T h e . s h i f t i n g about, i n i t s e l f , a f f e c t s welfare only as i t i s an e f f i c i e n t or an i n e f f i c i e n t r e a l l o c a t i o n . . . F i l t e r i n g i n response to d e t e r i o r a t i o n of the housing stock could w e l l leave aggregate and i n d i v i d u a l housing welfare unchanged." " I f f i l t e r i n g i s to be understood as a basic pattern of market behavior, then i t must be defined as a response to any change i n condit i o n s of supply or demand - i n the number or types of households and t h e i r incomes, i n the p h y s i c a l q u a l i t y of the stock or any portion of i t , or i n construction of p a r t i c u l a r types of new u n i t s . The response must be measured i n terms of occupancy of p a r t i c u l a r houses or neighborhoods by some d i f f e r e n t c l a s s of households."  47 " F i l t e r i n g . . . i s simply a change i n the a l l o c a t i o n of housing u n i t s among households of d i f f e r e n t types." (W. Smith, . 1 9 7 0 , p. 74--75) In summary, the concepts of f i l t e r i n g discussed above seem to describe two d i s t i n c t types of processes which, although i n t e r e l a t e d , do not always occur simultaneously. The f i r s t approach, or market approach, defines f i l t e r i n g as a process of change i n the a l l o c a t i o n of the housing good to d i f ferent submarkets; t h i s approach centers on the housing u n i t i t s e l f and the way i t changes i n occupancy w i t h i n a market system.  The second d e f i n i t i o n , or  welfare approach, centers on the r e l a t i o n s h i p between housing q u a l i t y , neighborhood c h a r a c t e r i s t i c s and o v e r a l l housing standards. In the analysis that f o l l o w s , the two concepts w i l l be used at. d i f ferent stages. . The f i r s t part of the analysis (mechanics of f i l t e r i n g ) be based on the market concept of f i l t e r i n g .  will  The welfare approach w i l l be  discussed at a future stage, as part of the. f a c t o r s determining neighborhood change.  4.1.2  MECHANICS OF FILTERING. Wallace Smith defines f i l t e r i n g as a basic pattern of market behav-  ior.  As such, he argues that f i l t e r i n g i s the market response to changes i n  conditions of supply and demand: changes i n the number or types of households, changes i n income., changes i n the p h y s i c a l q u a l i t y of the housing stock or portions of i t , construction of p a r t i c u l a r types of new u n i t s .  Each of these  external changes would have an e f f e c t i n terms of housing turnover. The a n a l y s i s that follows centers on the e f f e c t of each of these external f a c t o r s on. the process of housing turnover. The a n a l y s i s w i l l attempt to show how the f i l t e r i n g process works i n terms of providing housing for the poor, and how t h i s process i s a f f e c t e d by subsidies to housing maintenance. General assumptions f o r the a n a l y s i s are:  A)  An hypothetical community c o n s i s t i n g of three f a m i l i e s , d i f f e r i n g as to income but hot otherwise, and three houses d i f f e r i n g as to q u a l i t y .  B)  An i n i t i a l a l l o c a t i o n i n which the lowest-income family occupies the lowest q u a l i t y house (house 1 i n diagram 4.1) and the highest-income family occupies the highest q u a l i t y house (house 3 i n diagram). ( l )  O  O  Diagram C)  O  4.1  Housing quality, r e f e r s to the b u i l d i n g c h a r a c t e r i s t i c s only.  There are no  l o c a t i o n differences between the dwelling u n i t s . The a n a l y s i s i n t h i s sense would be s i m i l a r f o r the a l l o c a t i o n of any other durable goods (cars f o r instance) that can be r e s o l d i n the.market.. D)  High-income household i s defined as a household which has access to new housing; low-income household i s a household which cannot a f f o r d new housing; middle-income household i s defined as a household.which cannot purchase new housing but can purchase a high-quality  E)  A l l the households are home-owners.  accommodation.  A discussion on some eventual e f f e c t s  on tenants w i l l be included at a l a t e r stage. The f i r s t part of the a n a l y s i s centers on some l i k e l y e f f e c t s on housing moves of the f o l l o w i n g v a r i a b l e s : housing d e t e r i o r a t i o n ; income changes; population changes, and additions to the housing stock.  The second  part of the a n a l y s i s w i l l . i n t r o d u c e rehab as an a d d i t i o n a l v a r i a b l e i n the process. (•i)-'-< *,»..*A discussion of why t h i s i s an optimum market d i s t r i b u t i o n can be found i n Wallace Smith, 1970, p. 77-78.,"  In a no-rehab s i t u a t i o n , then, the f o l l o w i n g s i t u a t i o n s can be expected: Case I : Housing d e t e r i o r a t i o n .  (Population and income remain constant.) I f  the change i s just, a time change, the^overall housing stock can be expected to. d e t e r i o r a t e due t o age alone.  Housing d e t e r i o r a t i o n w i l l produce, d i s s a t i s -  f a c t i o n with the e x i s t i n g a l l o c a t i o n and pressure to add a new housing u n i t i n the market.  The e f f e c t of d e t e r i o r a t i o n can be depicted as f o l l o w s :  z  i  3  ASANDOMED HOUSE  WEUJ  HOUSE  'Diagram L.2 The new u n i t added w i l l be purchased by the highest-income household.  This w i l l s t a r t a chain of moves whereby each household w i l l move to a  higher q u a l i t y housing and the l a s t house i s eventually abandoned.  In t h i s  case, there has been a f i l t e r i n g process but no r e a l improvement of the o v e r a l l housing s i t u a t i o n : the e f f e c t of f i l t e r i n g i s that of recuperating the housing standard e x i s t i n g before aging.  I f no u n i t s are added to the market, aging,  w i t h no investment i n rehab r e s u l t s indeed i n an o v e r a l l d e t e r i o r a t i o n of housing standards. Case 2: Income increases. (Time and population are held constant.)  Overall  income increases can be expected t o r e s u l t i n d i s s a t i s f a c t i o n . w i t h the e x i s t - , ing housing a l l o c a t i o n , since each household can a f f o r d higher housing q u a l i t y . To the extent that t h i s pressure produces the construction.of a new dwelling u n i t , the e f f e c t can be depicted as i n the f o l l o w i n g diagram:  50  1  o  o  2  3  HOUSE  IB  UEAJ  MOUSafc  Diagram 4.3 I t should be noted that i n t h i s case, though income i s the ^triggering element, the d i r e c t cause of the improved housing s i t u a t i o n , i s i n f a c t the f i l t e r i n g process; to the extent that income increases are spent on other goods, there i s a housing improvement i n terms of a f f o r d a b i l i t y , but no r e a l improvement i n housing q u a l i t y . Thus, income increases have a p o s i t i v e e f f e c t i n terms of housing improvement through f i l t e r i n g .  I t i s worth p o i n t i n g out that t h i s  improvement  occurs regardless of the d i s t r i b u t i o n of the increased income.... Taking the extreme case: only the high-income household has a higher income, i t can be expected that t h i s household w i l l be w i l l i n g to s e l l h i s former.unit at a r e l a t i v e l y lower p r i c e i n order to purchase the new u n i t i n the market; the lower p r i c e w i l l make t h i s u n i t more affordable f o r the next...household, which i n t u r n can lower h i s p r i c e by a f r a c t i o n of h i s gain; thus, the e f f e c t of higher income can be expected t o percolate t o a t l e a s t some extent a l l the way down to the bottom group. On the other hand, i f only the bottom household has an income improvement, t h i s household w i l l be w i l l i n g to pay a premium f o r the next housing i n the chain; the middle-income household w i l l f i n d that he can s e l l . at gain and spend part of t h i s gain i n o f f e r i n g a premium price, f o r the highest q u a l i t y house; t h i s i n turn w i l l improve the high-income household's p o s s i b i l i ty t o purchase a new u n i t .  51 Case 3: Population increase, income and age remain constant.  The e f f e c t of  population growth v a r i e s , depending of the income group of the new  households.  Let us consider,them case by case: 3a)  New  household, high income: Population growth creates pressure f o r addi-  tions i n the housing stock.  I f the new  u n i t i s added, the e f f e c t s arenas  follows:  o  o  House HOUSE.HO  Diagram The new  4«4  household w i l l compete with the e x i s t i n g t o p - l e v e l household  to purchase the new u n i t ; whoever gets the new u n i t , the ' f i l t e r i n g ' , i f any, i s blocked at the top l e v e l , and the chain w i l l not continue.. At the same time, the bidding f o r the new  house w i l l r a i s e the p r i c e of t h i s ..unit.  The  owner of the f i r s t ' e x i s t i n g ' house w i l l t r y to pay at least., part. of the higher p r i c e by r a i s i n g , i n turn, the s e l l i n g p r i c e of h i s unit., To the extent that t h i s process continues a l l the way are 'pulled up'  down, i t can be argued that prices-  (raised by p u l l i n g from the top).  The e f f e c t of a new  high-income household,, then,:is n e u t r a l i n terms  of f i l t e r i n g but negative f o r a l l groups i n terms of prices.. case both an increase i n p r i c e s and a d e t e r i o r a t i o n of housing  There i s i n t h i s conditions  (less a f f o r d a b i l i t y ) . 3b)  New  household, medium income:. The diagram on.the next, page shows the  e f f e c t of a new u n i t i n t h i s case, which can be summarized as f o l l o w s :  52  Diagram  4.5  The newcomer w i l l b i d f o r the house a v a i l a b l e f o r the o l d resident of the same income l e v e l ; e i t h e r of them w i l l move to i t , and the other w i l l block the f i l t e r i n g a t . t h i s l e v e l .  Again, there w i l l be a pulled-up increase  of p r i c e s f o r the lower, l e v e l s of the chain. At the same time, the bidding r a i s e s the.price of the t o p - l e v e l u n i t s , which w i l l then experience a 'pushed-up' p r i c e .  As opposed to the.bottom  h a l f , t h i s pushed-up p r i c e can be considered b e n e f i c i a l f o r those groups, since i t improves their, p o s s i b i l i t y of moving up the chain. Thus, a medium-income newcomer w i l l improve the housing s i t u a t i o n of the  top groups and deteriorate that of the bottom groups.  For the e x i s t i n g  medium-income household, the new s i t u a t i o n may be e i t h e r better, or worse, depending on the selling-price/purchase-price d i f f e r e n t i a l he can achieve i n the bidding. I t i s worth considering the e f f e c t of a newcomer i n a case where no u n i t s are added t.o_the market:  . . . .  -  .......  vJ_ HOUSEHOLD .  Diagram  4-6  As the diagram shows, the e f f e c t would be n e u t r a l f o r the top group and an a d d i t i o n a l d e t e r i o r a t i o n f o r the lower group, which would experience a reverse f i l t e r i n g and crowding at the bottom of the housing supply.  53 3c)  New household, low income;  The low-income newcomer can be expected to  bid f o r the house occupied by the existing low-income household.  Diagram 4 . 7 The effect i s a 'pushed up' price a l l the way up the chain.  For the  bottom household, again, the, new situation depends on the r e l a t i v e price he gets f o r the house he s e l l s and the one he purchases. If the pressure created by the;new household i s not enough to r e s u l t i n a new dwelling unit, the effect can be expected to be, again, crowding at the bottom l e v e l and no f i l t e r i n g process. In general, a l l the cases of f i l t e r i n g produced by population growth can be expected to have some effects i n common: A)  Population growth results i n some degree of f i l t e r i n g down only when i t i s accompanied by housing additions.  Population growth without housing addi-  tions produces i n a l l cases crowding at the bottom level.; depending on the income l e v e l of the new household, there may be also a ' f i l t e r i n g up' process which r e s u l t s i n a deterioration of housing quality for. the medium-income household as well. B)  In a l l cases, the l a s t (bottom) dwelling unit remains occupied, either by the same household or by a low-income newcomer. Additions to the housing stock produce d i f f e r e n t degrees of f i l t e r i n g , but the process never reaches the bottom household.  The effect, of population, growth i s , thus,  that of lengthening the f i l t e r i n g chain and blocking the f i l t e r i n g process at the l e v e l . o f the newcomer income group. C)  The effect of population growth on the f i l t e r i n g process i s regressive:  5A the lower the income.group, the higher the p r o b a b i l i t y of having a d e t e r i oration of housing q u a l i t y r e s u l t i n g from growth.  In t h i s respect, the  lowest income groups are indeed paying the highest cost originated by population growth, and the eventual gains f o r other groups. D)  The e f f e c t of f i l t e r i n g on improvement of low-income housing has a negative - c o r r e l a t i o n with population growth: the more growth and the higher the • income of the newcomer, the lower the p r o b a b i l i t y of improved housing f o r the poor.  Case A: Income decreases:  (Other factors are held constant.)  Lower purchasing  power produced by f a c t o r s such as i n f l a t i o n , or economic recession can be expected to deteriorate the a f f o r d a b i l i t y aspect of housing.  To the...extent that  higher costs (such as taxation) are s i g n i f i c a n t , someitype of reverse f i l t e r i n g process can be expected:  Diagram 4-»8 In the t h e o r e t i c a l s i t u a t i o n i n which no investments i n rehab are considered, the e f f e c t can be expected to be vacancy f o r the top l e v e l dwelling u n i t and crowding at the bottom l e v e l .  The vacancy i s l i k e l y to  occur at the l e v e l i n which the income d e t e r i o r a t i o n i s most severe.  For  instance, i f only the medium-income household suffers an income d e t e r i o r a t i o n , t h i s i s l i k e l y to r e s u l t i n vacancy at the medium l e v e l and no change f o r the high-income household. bottom households.  In a l l cases, though, crowding can be expected f o r the  Thus, the r e l a t i v e rank of e x i s t i n g vacancy i n an urban  area could be an i n d i c a t o r of decreasing purchasing power f o r the corresponding income group.. Case 5: Population decrease:  The e f f e c t of population reduction I s more or  l e s s s i m i l a r to that of income increases: a vacancy w i l l occur a t the l e v e l of the out-moving household, and t h i s vacancy can be expected to t r i g g e r a chain of moves whereby the remaining households down the f i l t e r i n g chain may move to better housing.  Q  HOUSEHOLD  o '.  our  o  KBAWOOWED HOUSE  Diagram 4 . 9 The diagram depicts a s i t u a t i o n i n which a medium-income household moves out. In general, i t can be expected that the e f f e c t of population decrease i s favorable f o r the.lowest income groups, regardless of the income l e v e l of the out-moving household.  56 L.1.3  The E f f e c t s of.Rehabilitation.. Some housing programs i n Canada, such as the R e s i d e n t i a l R e h a b i l i t a t i o n  Assistance Program (RRAP) and the Neighborhood  Improvement Program (NIP), attempt  to improve the housing conditions of the poor by s u b s i d i z i n g investment i n housing and neighborhood improvement.  For instance, the main objective of RRAP  has been stated as f o l l o w s : "... To improve the housing conditions of low and moderate income people through a s s i s t i n g i n the r e p a i r and conservation of e x i s t i n g r e s i d e n t i a l b u i l d i n g s . " (CMHC, RRAP d e l i v e r y handbook.,- 1978, p..2) This type of program makes grants and loans a v a i l a b l e . t o households that meet c e r t a i n conditions i n terms of income, type of occupancy and e x i s t i n g housing q u a l i t y .  The loans and grants are used to undertake r e p a i r s and/or  improvements required.to meet minimum standards of  maintenance.  This section attempts to apply the main, concepts of the f i l t e r i n g process to assess some e f f e c t s of government subsidies f o r housing improvement.. Two types of subsidies w i l l be considered: A)  Subsidies provided f o r d i f f e r e n t groups with a decreasing amount as income increases.  This type of subsidy would l e v e l - o f f the capacity by group to  invest i n housing maintenance and upgrading; t h i s type of .subsidy i s described i n the f o l l o w i n g analysis as a s i t u a t i o n - i n which . a l l income groups invest i n r e h a b i l i t a t i o n . B)  ...  Subsidies with an income c e i l i n g that makes them a v a i l a b l e f o r the lowest income group only.  This subsidy i s described as a s i t u a t i o n i n which  only the bottom group Invests i n r e h a b i l i t a t i o n . . The a n a l y s i s that follows centers on the same variables,discussed i n the preceeding section.  To each of the external f a c t o r s of f i l t e r i n g , the  option of i n v e s t i n g on housing improvement ( r e h a b i l i t a t i o n ) i s introduced. Case 1: R e h a b i l i t a t i o n i n a s i t u a t i o n of housing deteriorationCase 1 i n the preceeding a n a l y s i s r e f e r r e d to the e f f e c t s ;of housing d e t e r i o r a t i o n i n terms of f i l t e r i n g .  I f r e h a b i l i t a t i o n i s introduced as an  a d d i t i o n a l v a r i a b l e i n t h i s case, the f o l l o w i n g e f f e c t s can,be expected: -  R e h a b i l i t a t i o n in.general can be seen as a f a c t o r reducing.the pressure f o r adding new u n i t s i n the market.  To the extent that r e h a b i l i t a t i o n i s i n  f a c t preferred over new construction, the e f f e c t would be that of recoverin the  housing q u a l i t y l o s t by aging, with the advantage that the s o c i a l costs  of moving are avoided. -  R e h a b i l i t a t i o n f o r the bottom group i s l i k e l y to r e s u l t i n the l e v e l l i n g off of the two lower groups, with eventually some swaps between them. The groups that do not invest i n r e h a b i l i t a t i o n w i l l create pressure to add a new u n i t i n the market:  ABAWDOMED House  Diagram  NEUJ OMIT  4.10  In t h i s case, group 3 w i l l move to the new u n i t , and group 2 w i l l move to u n i t 3, but group 1 w i l l not move.  I f we assume that the cost of  moving to the next u n i t i s at l e a s t p a r t l y financed by the .selling, p r i c e of the  u n i t c u r r e n t l y occupied by each group, then group 2 i s i n f a c t worse-off  i n t h i s case, since the u n i t he leaves w i l l have no buyer and therefore h i s cost of moving w i l l be higher. the  So the benefit obtained by r e h a b i l i t a t i o n i n  bottom group w i l l be paid by the next group i n the chain.  I t can be  argued that t h i s cost w i l l extend to some degree a l l the way up the chain and produce an o v e r a l l "pulled-down" decrease i n demand/price; t h i s effect, w i l l most l i k e l y be higher f o r the lower groups (with the exception of the very bottom one) and d i f f u s e upwards. This assumes that the e f f e c t of r e h a b i l i t a t i o n i s . that of l e v e l l i n g off the two lower groups.  I f the. investment i n r e h a b i l i t a t i o n i s n o t . s u f f i -  cient to upgrade u n i t 1 to a 2 l e v e l , then u n i t 1 w i l l move to p o s i t i o n 2  58 anyways.  The e f f e c t of r e h a b i l i t a t i o n w i l l . b e i n t h i s case n i l , since nobody  w i l l use the improved house. On the other hand, i f the r e h a b i l i t a t i o n investment upgrades u n i t 1 to a l e v e l higher than u n i t 2 (say, between 2 and 3), the e f f e c t to be expected would be a re-ranking of the households i n order to match the new q u a l i t y rank:  s  o  >  o  7^ ABANDONED HOUSE.  UWlT  Diagram 4.11  Household 2 w i l l want to move to u n i t 1 which, though not as good as 3, i s probably more affordable.  Household 1 may want to move to u n i t 2 which,  again, w i l l l e t him end up with a better house and s t i l l have some money, l e f t i n h i s pocket.  This r e l o c a t i o n reaches an equilibrium when the new q u a l i t y  rank coincides with the income rank. The r e s u l t i s a net gain f o r groups 2 and t  1 ( q u a l i t y improvement at a lower cost) and a net l o s s f o r group 3,. which now has no buyer f o r the house he wants to abandon.  In terms of o v e r a l l s o c i a l  cost, though, addition of a new u n i t r e s u l t s i n the abandonment of house 3, the best one of the o l d units« The f o l l o w i n g p o l i c y i m p l i c a t i o n s can be derived from the preceeding analysis: -  A subsidy f o r r e h a b i l i t a t i o n should be s u b s t a n t i a l i n order to have any e f f e c t a t a l l ; i f :.tbe'subsidy i s not s u f f i c i e n t , the bottom group w i l l abandon the r e h a b i l i t a t i o n u n i t anyways, or w i l l not be i n t e r e s t e d i n the subsidy.  -  A subsidy f o r r e h a b i l i t a t i o n should not be t i e d to permanence .clauses.  In  the cases described above, such a permanence clause would not allow the r e arrangement of the ranks a l l o c a t e d to each household, thus impeding the  59 optimum a l l o c a t i o n to occur.  Case 2: Income, increases.  The e f f e c t of r e h a b i l i t a t i o n i n t h i s case i s s i m i l a r  to s i t u a t i o n 1, depicted i n diagrams 4.10 and 4.11.  The only difference i s  that 'benefits' i n t h i s case are actual gains i n q u a l i t y , while i n case 1 they are only the recovery of q u a l i t y l o s t with aging and d e t e r i o r a t i o n .  Case 3a): Population increase, high income. A)  R e h a b i l i t a t i o n f o r a l l groups:  This case would be s i m i l a r to a no-rehabi-  l i t a t i o n case i n which r e h a b i l i t a t i o n does not o f f - s e t the pressure f o r adding a new u n i t .  E i t h e r w i t h or without r e h a b i l i t a t i o n , i f there arev_no  additions to the housing stock, the e f f e c t to be expected i s a reverse f i l t ering w i t h crowding at the bottom of the f i l t e r .  Q  O  O  O 7F  -  HOUSEHOLD  Diagram  4.12  A d d i t i o n of a new u n i t r e s u l t s i n a one-step f i l t e r i n g at the top and q u a l i t y improvement at a l l l e v e l s :  o  o  o T—  ..*L2I  it  (Ota) HOUSEHOLD  Diagram B)  4.13  R e h a b i l i t a t i o n . f o r the bottom group only: R e h a b i l i t a t i o n at the bottom level'without housing additions produces again crowding at the bottom,, with a l i k e l y higher pressure from upper groups to occupy the improved dwelling:  60  Q  O  O  -.2  O NE.UJ  HOUSEHOLD  Diagram 4-. 14R e h a b i l i t a t i o n combined with housing additions r e s u l t s i n a v a r i a n t of case 1, i n which there i s now a p o t e n t i a l purchaser f o r the top e x i s t i n g unit:  o  o  o 'NEW 1'HOO: HOUSEHOLD  ME.LJ UMIT  Diagram 4-. 15 Depending on the l e v e l reached by u n i t 1 a f t e r the upgrading, a swap of occupants may occur between households 2 and 1; the newcomer will.purchase e i t h e r the e x i s t i n g top u n i t or the new u n i t added to the market. . I f the improvement i s not s i g n i f i c a n t , household 2 w i l l be r e l a t i v e l y worse-off, since the opportunity to upgrade h i s housing standard i s blocked.  o  o  o WE.U  l/MELJ /NEI j HOU HOUSEHOLD  UfJlT  Diagram 4-.16 3b) A)  Population increase, medium income, age and income constant. R e h a b i l i t a t i o n f o r a l l groups w i l l have an e f f e c t s i m i l a r to that of a high income newcomer. goes a step lower.  The only d i f f e r e n c e i s that the f i l t e r i n g  chain  In other words, there i s crowding at the bottom i f no  u n i t s are added, and o v e r a l l improvement when.new u n i t s are introduced. 0  R e h a b i l i t a t i o n f o r the bottom group, with no new u n i t s added increases the pressure f o r crowding at the bottom of the chain:  Q  O  O  O  NE.UJ HOUSEHOLD  Diagram  4.17  With a d d i t i o n of new u n i t s , the s i t u a t i o n i s as follows:  O  o  Z/f* s /  Diagram  WE.lO HOUSEHOLD  o 3-  NE.U) OMIT  4.18  The newcomer o f f s e t s the decrease i n p r i c e imposed upon house 2 by the lack of i n t e r e s t from household 1.  Or the newcomer may outbid, him .for the  purchase of u n i t 3, i n which case the medium income household ends, up at the bottom of the q u a l i t y scale.  Again, a swap between 2 and 1 may occur ( i f the  improvement i s b i g enough to r a i s e u n i t 1 above a 'medium' l e v e l ) . In. terms of p o l i c y i m p l i c a t i o n s , t h i s i s probably the optimum case f o r a RRAP-like type of program.  Note that the permanence clause, though not  a problem, does not improve the case e i t h e r ; furthermore, i f a  re-ranking  r e s u l t s with the upgrading, the permanence p o l i c y can prevent the. two lower groups from re-ordering  t h e i r p o s i t i o n s to a q u a l i t y rank equivalent to t h e i r  income p o s i t i o n s .  3c) A)  Population increase,  low-income.  R e h a b i l i t a t i o n f o r a l l groups: i f no u n i t s are added to the housing  62 market, there i s no f i l t e r i n g process; the.new household w i l l t r y to occupy the lowest q u a l i t y house; t h e . r e s u l t to be expected i s e i t h e r crowding or displacement at the-lowest-income l e v e l .  Q  o  o  o  NEU HOUSEHOLD  Diagram L.19 If. additions to the housing stock occur as w e l l as r e h a b i l i t a t i o n , a f i l t e r i n g process a l l the way up the chain can be expected.  o  l/  !WEU  o  s  o  -WEI HOUSEHOLD HOO  oj NEW UMlT  Diagram i.20 There i s an o v e r a l l improvement i n t h i s case.  The only, problem i s  t h a t , i f r e h a b i l i t a t i o n i s subsidized, the cost of the subsidy i s , i n f a c t , paid by the newcomer, who w i l l not have to purchase an improved, more expensive house. B)  R e h a b i l i t a t i o n f o r the bottom group, no housing a d d i t i o n s : again, the e f f e c t to be expected i n t h i s case i s an a d d i t i o n a l pressure to displace the occupant of the improved u n i t :  Q  O I HOUSEHOLD  Diagram A.21  o  .  Additions to the housing stock produce, again, a l i k e l y  levelling-  off of the two lowest groups, and a higher, housing cost for.the newcomer.  The  newcomer may occupy e i t h e r u n i t 2 or u n i t 1, but i n both cases w i l l encounter an a f f o r d a b i l i t y problem.  o  ^  ' o  •<t-  ^  >  o.  El NEW  HOUSEHOLD  Diagram  Case. 4- Income decreases.  4.22  T h e - l i k e l y e f f e c t of r e h a b i l i t a t i o n f o r the lowest  income household i n a s i t u a t i o n of decreasing incomes can be depicted as follows:  ' 1^  o  •  Diagram  "  o  o  4.23  Households 3 and 2 can be expected to compete i n t h i s case f o r the purchase of the renewed u n i t ; t h i s w i l l push-up the p r i c e of t h i s u n i t , and household 1 w i l l l i k e l y move.  Since h i s income i s also assumed to be de-  creasing, though, i t i s not c l e a r where t h i s household w i l l move. lord-tenant s i t u a t i o n the r e s u l t would be outright displacement. owner's situation,- the most l i k e l y r e s u l t seems to be  In.a landIn an  higher a f f o r d a b i l i t y  problems f o r a l l groups. I t should be noted that most of the preceeding a n a l y s i s r e f e r s to homeowners.  In case where the low-income occupants are tenants, a 'displace-  ment e f f e c t can be expected i n a number of cases.  For instance, i n cases of  population growth and no housing additions (see diagrams 4.1V,  4.19, 4.21) the  l i k e l y r e s u l t i s a high proportion of e v i c t i o n s and higher r e n t a l values f o r  64 tenant-occupied dwellings.  4.1.!4 SUMMARY OF FINDINGS The preceeding a n a l y s i s showed how, i n an hypothetical community c o n s i s t i n g of three households (high, medium and low-income), the f i l t e r i n g process takes place.  The a n a l y s i s centered on the e f f e c t s on .housing improve-  ment through f i l t e r i n g of the f o l l o w i n g v a r i a b l e s : population changes, income changes, housing d e t e r i o r a t i o n , additions to the housing stock and r e h a b i l i t a tion policies. The f i n d i n g s can be summarized as f o l l o w s : A)  In a l l cases, the f a c t o r that t r i g g e r s the f i l t e r i n g down process i s the a d d i t i o n of a new dwelling u n i t i n the market.  This a d d i t i o n may be e i t h e r  the construction of a new dwelling, or a vacancy l e f t by out-migration. I f no new houses are a v a i l a b l e , the f i l t e r i n g down process does not occur and i n some cases (such a population increase) a reverse process.takes.place, i n which the bottom households experience crowding and/or displacement. B) The e f f e c t s of income increase are generally p o s i t i v e i n terms of housing improvement through f i l t e r i n g . -  The improvement occurs regardless of the  d i s t r i b u t i o n of the increased income. C)  The e f f e c t of pupulation growth i s negative, p a r t i c u l a r l y f o r the poor. Growth produces a longer f i l t e r i n g chain and d i f f e r e n t degrees of improvement f o r the medium-to-high groups.  But the e f f e c t of growth i s also that  of blocking the f i l t e r i n g chain, thus l e a v i n g the lowest group unaffected by the eventual b e n e f i t s of the f i l t e r i n g process.  In a growth s i t u a t i o n ,  housing .additions provided by the p r i v a t e market should, thus, be combined with some type of housing p o l i c y d i r e c t l y addressed to the poor. D)  R e h a b i l i t a t i o n r e s u l t s i n maximum b e n e f i t s f o r a l l groups only when, additions to the housing stock are produced a t the same time.  Rehabilita-  t i o n without housing additions has a net benefit only when the cause of  65 f i l t e r i n g i s income increase.  In a growth s i t u a t i o n , . r e h a b i l i t a t i o n with  no housing additions produce housing q u a l i t y improvements but does not change the major problem of growth: crowding and displacement of the poor. R e h a b i l i t a t i o n r e s u l t s i n benefits f o r at l e a s t some groups i n a l l . c a s e s , but i t also r e s u l t s i n costs f o r some groups.  The most common case i s that  i n which a low-income newcomer encounters higher housing costs, after' r e - . h a b i l i t a t i o n takes place; another eventual l o s e r from r e h a b i l i t a t i o n i s the medium-income household (see case 3a, diagram 4-.16.). The e f f e c t of r e h a b i l i t a t i o n subsidy i s n i l unless the subsidy i s s i g n i f i cant i n terms of housing improvement. I f the s i t u a t i o n i s that of income deterioration,, maintenance  subsidies  f o r the lowest q u a l i t y housing may have an a d d i t i o n a l problem f o r the poor, since the.renovated homes would be more desirable f o r higher-income groups. Although the owner of the renewed house may eventually gain. in. the process, i n case of tenants the displacement problem becomes worse.  1.2  THE NEIGHBORHOOD .CHANGE PROCESS. The preceeding section was a discussion of r e s i d e n t i a l m o b i l i t y  from the housing q u a l i t y point of view.  The discussion suggested some of the  external f a c t o r s that may be r e l a t e d to the rate of housing turnover and i t s e f f e c t s on the housing options of d i f f e r e n t income groups.  One major assump-  t i o n i n the a n a l y s i s was that the choice of housing was based on housing c h a r a c t e r i s t i c s alone, that i s , no neighborhood or l o c a t i o n a t t r i b u t e s were associated with d i f f e r e n t types of housing. An a l t e r n a t i v e approach to r e s i d e n t i a l m o b i l i t y i s based on the l o cation components of housing choice.  Residential mobility within this  approach would be seen as the r e s u l t of changes i n the p h y s i c a l and s o c i a l components of d i f f e r e n t neighborhoods. The question would be, thus, how d i f ferent groups are a f f e c t e d by external change f a c t o r s , and how.these changes a f f e c t the location/patterns i n d i f f e r e n t areas of the c i t y . The dynamics of l o c a t i o n can be approached from two perspectives:. A)  The focus can be on each p a r t i c u l a r area of the c i t y ; the analysis i n t h i s case would center on the process of occupancy changes and changes i n the p h y s i c a l aspect of each neighborhood.  B)  The focus can be on each of the s o c i a l groups and how they move throughout the c i t y . These two approaches do not n e c e s s a r i l y r e f l e c t d i f f e r e n t t h e o r e t i c a l  p o s i t i o n s i n terms of r e s i d e n t i a l m o b i l i t y .  They both explain the same phe-  nomenon, only from a d i f f e r e n t point of view.  In f a c t , most of the research  on r e s i d e n t i a l location.dynamics take to some extent the two approaches, with d i f f e r e n t degrees of emphasis on one or the other. Since the main objective of t h i s research, though, i s the.study of t r a n s i t i o n areas, approach a) seems to be more appropriate i n t h i s case. Therefore, the emphasis here w i l l be on how the segregation process,, or the. dynamic components of i t , a f f e c t the p h y s i c a l and s o c i a l aspects of those  67 areas a f f e c t e d by change.  Some elements of perspective b) r e s i d e n t i a l m o b i l i -  t y , w i l l be included only to the extent that they help to support d i f f e r e n t theories r e l a t e d to the change process i n T r a n s i t i o n Areas. Again, a s t a r t i n g point f o r the discussion of neighborhood change has been provided by Burgess  1  theory of urban growth.  VJithin Burgess theory, 1  groups become segregated w i t h i n .the c i t y as a r e s u l t of_morphological changes produced by c i t y growth.  In.terms of neighborhood change, the i m p l i c a t i o n s of  Burgess' theory o f growth can be summarized as f o l l o w s : "Early i n i t s h i s t o r y , a neighborhood contained.a v a r i e t y of popul a t i o n groups, although higher status persons, native urban dwellers, and f a m i l i e s with c h i l d r e n would predominate. As the CBD expanded, the previously p e r i p h e r a l neighborhood would become des i r e d f o r other uses., s e t t i n g o f f a process of invasion and d r i v i n g out higher status persons, native Americans, and f a m i l i e s with c h i l d ren. Eventually, a complete process of succession would occur so that the neighborhood population would disproportionately consist of lower status residents, the f o r e i g n born ethnic population, and homeless men and women, or a t best, the s i n g l e and c h i l d l e s s population." (Guest, 1977, p. 281). Thus, external .causes of c e n t r a l c i t y i n s t a b i l i t y were seen as occasioned by growth - both of the commercial heart and of new immigrants to the city.  While these forces caused decay of neighborhoods, they, also created an  economic r a t i o n a l e f o r the continuing usage of o u t l y i n g areas. With the decline of immigration and.the decline of the CBD, the inner zones (the pro-, cessing places f o r new immigrants to the c i t y ) lose a portion .of t h e i r j u s t i f i c a t i o n f o r being. With need diminished, the ultimate fate of the worst structures i s abandonment... The Burgess theory l a i d the basic concepts f o r two main.approaches to.neighborhood change.in.transition areas: the 'neighborhood l i f e - c y c l e ' and the  'invasion-succession', theories.  These are complementary,, rather than  opposite views of the neighborhood chance process: while the f i r s t one exp l a i n s change i n terms.of.income segregation and focusses on the p h y s i c a l aspects of neighborhood change ( d e t e r i o r a t i o n , density changes), the second one. centers on s o c i a l aspects of neighborhood change and introduces segregation  68 by r a c e / e t h n i c i t y as a major v a r i a b l e .  L.2.1  THE NEIGHBORHOOD LIFE-CYCLE. Hoover and Vernon (Anatomy of a Metropolis, 1959) offered a f i v e -  stage model of neighborhood evolution i n t h e i r c l a s s i c study of the New.York Metropolitan Region; .these-five stages were hypothesized  as follows:..  Stage 1: R e s i d e n t i a l development:, transforms undeveloped r u r a l land t o . r e s i d e n t i a l use. Northeastern  The b u i l d i n g boom of the 1920's defined t h i s stage f o r many North American c i t i e s .  develop as s i n g l e - f a m i l y dwellings.  Most urban neighborhoods, a t t h i s stage . . There i s a high population growth, high  vacancies of short.duration because the construction rate may run ahead of pop u l a t i o n growth. Stage 2: T r a n s i t i o n stage.:  comprises a time of aprtment construction.  Many of  the undeveloped s i t e s are e i t h e r patches of open space bypassed i n the f i r s t . b u i l d i n g wave, or obtained through the demolition of the oldest s i n g l e - f a m i l y dwellings.  This stage i s most evident i n the inner rings of metropolitan  areas, and i s also characterized by both s u b s t a n t i a l construction and populat i o n growth. Sometimes the prospects of a neighborhood moving from i t s i n i t i a l , ( s i n g l e family) stage of development to the t r a n s i t i o n stage can be quite alrming f o r some.residents, who see this.change prospect as destructive to the e s s e n t i a l character of the .area.  Eventually the fears of the residents.can be  galvanized i n t o c o l l e c t i v e s o c i a l a c t i o n aimed a t p r o h i b i t i n g the; dncursion of m u l t i p l e dwellings. Stage 3: Downgrading:  can occur several years l a t e r .  In t h i s period the  neighborhood can lose a number of dwelling u n i t s through demolition, accident-, a l d e s t r u c t i o n , abandonment, or conversion to other uses.  Population and den-  s i t i e s increase through the crowding of e x i s t i n g structures by the newest immigrants to the region.  The group of young f a m i l i e s generates a d d i t i o n a l  69  s t r a i n s on an aging i n f r a s t r u c t u r e . This downgrading stage i s often associated with the 'slum invasions' by segregated ethnic and minority groups, since the p h y s i c a l conditions of the. dwellings become crowded or d i l a p i d a t e d .  Many slum  owners enjoy a f i n a n c i a l advantage f o r maintaining deteriorated housing through tax w r i t e - o f f s , low taxes on the deteriorated structures,, almost no improvement expenditures,  and high income return from the large number of renters i n the  crowded s t r u c t u r e s .  . . ...  Stage L: Thinning-out:  occurs a f t e r the immigrants have settled, down.  population density and .dwelling occupancy decline i n t h i s period.  Both  This i s  mainly a procesS;;of household s i z e shrinkage as c h i l d r e n and boarders .move.out. Higher m o r t a l i t y rate characterizes t h i s somewhat older population; and f o r merly subdivided dwellings .begin to merge as vacancy rates begin to. r i s e . B u i l d i n g abandonment spreads and dangerous structures are demolished. Stage 5: Renewal:  i s the f i n a l stage, i n . which the obsolete areas are replaced  by new m u l t i p l e - f a m i l y u n i t s .  Most often t h i s has been e i t h e r subsidized  moderate or low-income housing, or luxury apartments.  In almost every case,  t h i s stage i s i n i t i a t e d through p u b l i c intervention.. The neighborhood l i f e - c y c l e model suggests that density, dwellings, and the l o c a l population.of urban areas r e g u l a r l y change through time, as areas age and move from stage to stage..  Not a l l neighborhoods pass through a l l the  stages, and the rates of change vary considerably. suggests several f a c t o r s i n f l u e n c i n g the l i f e - c y c l e  Schwirian  (1977)  process:  Housing supply: pressures f o r neighborhood change i n urban areas, are a f f e c t e d by. the r e l a t i v e rate of growth of new houses (at the periphery) to population gain. Access to employment and mode of t r a n s p o r t a t i o n : areas gaining a c c e s s i b i l i t y w i l l tend to undergo more f i e r c e competition i n the urban housing land market. S o c i a l c h a r a c t e r i s t i c s of r e s i d e n t s , and t h e i r c a p a b i l i t y to mobilize res-  70 ponses i n order to maintain or.to order neighborhood change. The l i f e - c y c l e model was formulated i n 1959 and, as presented  here,  does not consider more recent trends to preserve and r e v i t a l i z e c e n t r a l neighborhoods.  Nevertheless, i t can be considered a u s e f u l s t a r t i n g point f o r the  study of the dynamics of neighborhood change.  4.2.2.  THE INVASION PROCESS. . The invasion-succession theory evolved from studies of r a c i a l d i s -  crimination i n USA.  Stemming from the general framework provided by Burgess •' 1  theory of growth, i t intended, i n i t s o r i g i n a l form, to describe .the patterns of l o c a t i o n of Negro population i n northern US c i t i e s .  More r e c e n t l y , i t has  been applied i n a more general way to describe a process of occupancy change i n neighborhoods. Duncan and Duncan define <• succession- as--follows:<••  "An area undergoes 'succession' when one type of land use replaces another. The term .'residential succession' means, more s p e c i f i c a l l y , the replacement of one population group in. an area by another. The i n i t i a l population and i t s successor may d i f f e r w i t h respect to economic f u n c t i o n , s o c i a l s t a t u s , ethnic or n a t i o n a l background, race, or other s o c i a l l y s i g n i f i c a n t c h a r a c t e r i s t i c s or a combination of characteristics." "Accompanying r e s i d e n t i a l succession may be changes i n the density of population, the composition of households, the ways i n which r e s i d e n t i a l structures are used, the character of l o c a l i n s t i t u t i o n s , etc. Such changes, however, are not considered to be i n v a r i a b l e concomitants of succession." (Duncan & Duncan," 1957, p. 108) In Duncan and Duncan's view, succession i s considered to have four main stages: penetration, i n v a s i o n , c o n s o l i d a t i o n and p i l i n g - u p , recognizing that there i s no sharp l i n e d i v i d i n g these stages and the sequence i s not n e c e s s a r i l y complete in. a l l cases: Penetration i s the i n i t i a l stage, i n which some Negroes enter an area occupied by whites. Invasion occurs when penetration i s followed by the movement i n t o an area of s u b s t a n t i a l numbers of Negroes.  71 Consolidation r e f e r s to the continued increase in.number and proportion of Negroes i n an area, a f t e r invasion has been accomplished. P i l i n g up i s the stage.when, a f t e r complete occupancy by.Negroes, Negroes continue to increase i n numbers.  P i l i n g up represents an increase i n Negro  population without a corresponding increase i n . l i v i n g space. The invasion-succession, process whereby Negro population.would occupy i n i t i a l l y white neighborhoods was i n i t i a l l y seen as a ' s e l f - f u l f i l l i n g prophecy' produced to a great, extent by the r a c i a l a t t i t u d e s of whites: . "When a few Negro f a m i l i e s do come i n t o a white neighborhood, some more white f a m i l i e s move away. Other Negroes hasten to take t h e i r places, because the. e x i s t i n g Negro neighborhoods are overcrowded due to segregation. This constant movement of Negroes i n t o white neighborhoods makes the bulk of the residents f e e l that t h e i r neigh-, borhood i s doomed to be predominantly Negro, and they move out with t h e i r a t t i t u d e s . a g a i n s t the Negroes r e i n f o r c e d . Yet i f there were no segregation,, t h i s wholesale invasion would not. have occurred. But because i t does occur.,, segregational a t t i t u d e s are increased, and the v i g i l a n t pressure to s t a l l the Negroes at the borderline i s kept up." (Taeuber & Taeuber, 1965»<p..'21- quoted fromrGlinnar. Myrdal, An American Dilemma, 194-4-) • ,  This view assumes that the invasion i s i r r e v e r s i b l e .  Irreversibility  i s i m p l i c i t In the widely accepted concept of a 'tip. p o i n t ' , defined as "the percentage Negro i n an area.which exceeds the l i m i t s of neighborhood tolerance for i n t e r r a c i a l l i v i n g " (Taeuber & Taeuber, 1965,"'p, 100-)'.. -Once- -the -percentage Negro passes the t i p point,,, i t i s assumed that whites w i l l leave the area a t an accelerated rate and be replaced by Negroes u n t i l the neighborhood becomes e n t i r e l y Negro. The p a r t i c u l a r c h a r a c t e r i s t i c s of the succession.proeess i n terms of r a c i a l a t t i t u d e s between white and black populations i n North American c i t i e s are not relevant here.  Nevertheless, some aspects of i t are worth.discussing,  since they can be a p p l i e d to, broader d e f i n i t i o n s of the succession process. For instance, Taeuber & Taeuber showed.that the magnitude and the rate of the process could be related, to factors, such.as population growth and housing construction. -  Their f i n d i n g s can be summarized as f o l l o w s :  The l a r g e s t succession areas tended to be i n those c i t i e s i n which the r e l -  72 a t i v e growth r a t e o f b l a c k population, (as. compared t o that, o f t h e white p o p u l a t i o n ) showed t h e h i g h e s t growth d i f f e r e n t i a l .  (For instance, a c i t y  'i w i t h a 3% b l a c k p o p u l a t i o n growth and a 1% white p o p u l a t i o n growth would have l a r g e r s u c c e s s i o n areas than another  c i t y where the growth r a t e s were  3% and 2% f o r the same groups..) The  areas where succession.proceeded, a t a f a s t e r r a t e were a l s o those  with  h i g h e r growth d i f f e r e n t i a l s . . -  T h i s p a t t e r n was a f f e c t e d by the a d d i t i o n o f newr.houses a t t h e p e r i p h e r y and t h e i r a v a i l a b i l i t y to,, b l a c k p o p u l a t i o n : "In t h e l a r g e N o r t h e r n . c i t i e s , white p o p u l a t i o n growth, .on n e t balance, tends t o be absorbed in. the suburbs,, w h i l e i n c r e a s e s - i n Negro popul a t i o n a r e absorbed.... i n . c e n t r a l c i t i e s . A h i g h r a t e o f Negro i n m i g r a t i o n ( w i t h ) . . . . . . r e s t r i c t i o n s .on a v a i l a b l e housing, o u t s i d e e x i s t i n g Negro areas w i l l . : n e c e s s a r i l y , r e s u l t i n the replacement.of white pop u l a t i o n by Negro p o p u l a t i o n i f . . . . these a r e a s . a r e a l r e a d y b u i l t - u p . ... I n t h e South.... due t o ,the l e s s e r volume-of. Negro immigration and the a l t e r n a t i v e o f f e r e d by new r e s i d e n t i a l , b u i l d i n g , t h e pressure, f o r Negroes t o occupy d w e l l i n g s f o r m e r l y occupied- by whites i s l e s s . . . " . "Much o f t h e s o c i o l o g i s t s ' . k n o w l e d g e o f t h e nature o f r a c i a l change i n urban neighborhoods has come from the study o f Northern c i t i e s d u r i n g decades o f extremely h i g h Negro i n - m i g r a t i o n coupled w i t h n e t l o s s e s i n white..population..... The. data, presented.... demonstrate t h a t t h e fortunes, o f r e s i d e n t i a l . n e i g h b o r h o o d s .in a c i t y a r e t o a l a r g e e x t e n t t i e d .to broader changes, o c c u r r i n g i n the m e t r o p o l i t a n a r e a and t h e economy as a whole. An important i m p l i c a t i o n . o f t h e f i n d i n g s here i s t h a t as t h e source o f Negro p o p u l a t i o n growth i n c i t i e s s h i f t s from a predominance o f ..migration t o a -predominance o f n a t u r a l increase,, and.as the-urban, growth c o n t e x t ' i s a l t e r e d , m o d i f i c a t i o n s o f t h e p a t t e r n s o f r a c i a l . change i n r e s i d e n t i a l neighborhoods may be expected." (Taeuber and Taeuber, 1965, p. 125).  4..2.3.  NEIGHBORHOOD CHANGE .AND .RESIDENTIAL MOBILITY. A b a s i c n o t i o n u n d e r l y i n g neighborhood change.theories  i s . t h a t , as  the c i t y grows and expands,, households tend t o move t o adapt t h e i r needs, t o the changing  environment.  S i n c e most-of t h e new housing, i s b u i l t in. p e r i p h e r -  a l a r e a s , i t i s assumed, t h a t a d a p t a t i o n t o housing needs tends to.produce outward flow o f some g r o u p s w h i l e housing  an  some o t h e r groups i n - m i g r a t e t o the o l d e r  i n central, areas. E m p i r i c a l r e s e a r c h on. r e s i d e n t i a l m o b i l i t y supports t h i s n o t i o n i n  d i f f e r e n t ways.  Some o f the f i n d i n g s o f those  s t u d i e s can be summarized as  follows: A) R e s i d e n t i a l mobility, i s r e l a t e d to housing needs.: the degree of housing turnover has been suggested to be highly r e l a t e d to the degree of s a t i s f a c t i o n w i t h housing.  For instance, an extensive study c a r r i e d out by  Abu-Lughod and Foley ("The consumer votes by Moving, I960), on r e s i d e n t i a l m o b i l i t y i n USA suggested, that d i s s a t i s f a c t i o n w i t h current housing underl i e s : ;the majority of the decisions to move; the major sources of discontent would be, according to. t h i s study: space w i t h i n the dwelling u n i t , the s o c i a l and p h y s i c a l c h a r a c t e r i s t i c s of the surrounding neighborhood and the cost of housing. D i s s a t i s f a c t i o n w i t h housing and neighborhood q u a l i t y would be the r e s u l t of changes i n housing needs as w e l l as changes i n the'[quality of the dwelling i t s e l f or i t s environment.. B) R e s i d e n t i a l m o b i l i t y i s r e l a t e d to family status: most of the d i s s a t i s f a c t i o n s w i t h housing and neighborhood c h a r a c t e r i s t i c s derive from changes i n family status.  Changes i n family s i z e , increase or decrease., i n .number  of c h i l d r e n , aging, were • reported by Abu-Lughod in...major changes r e s u l t i n g i n housing d i s s a t i s f a c t i o n . C) R e s i d e n t i a l m o b i l i t y i s - r e l a t e d to ethnic status: the same study suggested that, while white households tend to move mostly from the c i t y to the suburbs, w i t h a minority, of whites moving from suburbs to c e n t r a l c i t i e s , the non-white groups tend. ,to move p r i m a r i l y w i t h i n the c i t y proper.> D)  The m o b i l i t y pattern that.created the suburban - s h i f t i s not.a simple move, but a complex of d i f f e r e n t moves.  The phrase " f l i g h t to the. suburbs",  according to Abu-Lughod,.,.is- f a r from accurate: an important, part of thesuburban population has .been drawn, not from the c i t y i t s e l f , .but.from small towns and farms or., suburban areas i n other. regions, and represents an actual in-migration;.into the area.  Those who do move from c i t y to  suburbs r a r e l y do so i n one move: "The suburbs are not reached by one  7i f l y i n g leap, but by a series of short hops, each one a . . l i t t l e f a r t h e r out from the center of town". E)  (Abu-Lughod, I960, .'p. 190).  The r e l a t i o n s h i p between m o b i l i t y and income i s not c l e a r : on. one hand, as discussed i n page 4-0 income differences r e s u l t i n d i f f e r e n t , types of 1  c e n t r a l i z a t i o n - d e c e n t r a l i z a t i o n patterns, although changes in,time tend to lead to higher c e n t r a l i z a t i o n f o r low-income groups and d e c e n t r a l i z a t i o n f o r higher-income groups... ,0n the.other hand, Abu-Lughod suggests .that low-income groups tend to be more mobile than higher-income groups, although income increase expectations would tend to r e s u l t i n higher m o b i l i t y .  75 CHAPTER . FIVE: , THE ARBITRAGE MODEL The preceeding discussion consisted i n an overview.of. d i f f e r e n t aspects of l o c a t i o n dynamics.  From.the point of. view of housing quality,, the  a n a l y s i s suggested some variables a f f e c t i n g r e s i d e n t i a l , m o b i l i t y and the. e f f e c t s of t h i s m o b i l i t y on low-income housing options.  From the point,of  view of neighborhood dynamics, a general overview was presented-of ...some . v a r i a b l e s a f f e c t i n g the process of neighborhood .change.  In. general.,,, housing  turnover and neighborhood change was r e l a t e d to the following variables,-: A) Housing c h a r a c t e r i s t i c s and t h e i r r e l a t i o n with housing needs and .afforda b i l i t y f o r d i f f e r e n t groups. B) Neighborhood c h a r a c t e r i s t i c s , i n terms of physical and s o c i a l components of neighborhoods. C) E x t e r n a l f a c t o r s , such as population growth, changes i n income, additions to the.housing stock. D)  .. •  S o c i a l a t t i t u d e s , i n terms of segregation between d i f f e r e n t .groups. These-four sets of f a c t o r s were detected to.be i n t e r r e l a t e d : . i n a  dynamic s i t u a t i o n , housing and neighborhood c h a r a c t e r i s t i c s were .found t o be affected by external growth f a c t o r s ; the e f f e c t of external., factors, was found to be r e l a t e d to segregation a t t i t u d e s ; and the changes i n housing-;and neighborhood c h a r a c t e r i s t i c s would, i n turn, a f f e c t at l e a s t some.external f a c t o r s , such as housing additions and moves to d i f f e r e n t types of.housing. The f i r s t part of the discussion (the f i l t e r i n g process).centered on changes i n housing occupancy while holding neighborhood c h a r a c t e r i s t i c s constant.  The second part (neighborhood change) reviewed some approaches to  neighborhood change. The purpose of t h i s chapter i s to combine housing and..-neighborhood v a r i a b l e s and to.discuss how these v a r i a b l e s i n t e r a c t i n terms of low-income r e s i d e n t i a l l o c a t i o n i n . t r a n s i t i o n areas.. The t h e o r e t i c a l framework .chosen f o r t h i s a n a l y s i s i s the Arbitrage Model as presented by Leven et a l ,  76 ("Neighborhood Change: Lessons i n the Dynamics of Urban Decay", 1976).  This  chapter contains: 1.  A presentation of the main concepts of the Arbitrage. Model..-  2.  A discussion of some of the advantages and problems of this.model i n terms of the body of l o c a t i o n theory previously discussed.  3.  An a p p l i c a t i o n of the Arbitrage Model f o r the assessment, of the role, of T r a n s i t i o n Areas i n terms of low-income r e s i d e n t i a l l o c a t i o n .  5.1.  THE ARBITRAGE MODEL: MAIN CONCEPTS. The Arbitrage Model as developed by.Leven. et. a l represents .an,  attempt t o capture the complex set of v a r i a b l e s r e l a t e d to .neighborhood change. I t combines previous research on f i l t e r i n g and neighborhood change- theories i n one comprehensive formulation which includes a l l . the previously, mentioned v a r i a b l e s that intervene i n the process: housing q u a l i t y , neighborhood ..attributes, external f a c t o r s and s o c i a l a t t i t u d e s of segregation.  •. -. .  The model i s p a r t l y based on the concept of f i l t e r i n g ; down.and p a r t l y based on theories of market r a c i a l t r a n s i t i o n .  By•redefining the. con-  cept of f i l t e r i n g , and d e f i n i n g housing i n terms of 'housing bundle' .(that i s , a commodity which includes both the dwelling u n i t and the neighborhood.surrounding i t ) , Leven et a l extend previous- theories to a broader view of the housing decision-making process. As opposed to the c l a s s i c economic theory which approaches location, i n a s t a t i c s i t u a t i o n as the r e s u l t of an equilibrium, between supply, and ;  demand f a c t o r s , the Arbitrage Model i s a model of market disequilibrium,: and describes the type of forces that come i n t o play when mismatches between supply and' demand occur.  This mismatch i s produced by. external .changes, (such  as changes i n population and changes i n the housing stock) and,, by.producing s h i f t s i n the market, r e s u l t s i n changes i n the a l l o c a t i o n of housing to d i f f e r e n t groups.  A s t a r t i n g element f o r the formulation.of .the Arbitrage model was provided by Martin.J. B a i l e y (Bailey, 'Notes on the Economics o f , R e s i d e n t i a l Zoning and Urban Renewal', 1959).  B a i l e y described a market.model o f . r e s i - . .  d e n t i a l c l u s t e r i n g that r e s u l t e d from preferences f o r . l i v i n g i n •high-income, rather than low-income neighborhoods and f o r l i v i n g i n , neighborhoods, with're-la t i v e l y few blacks. . I f one group p r e f e r r e d to l i v e among others of the.same, group and l i v e d i n the boundary between groups only at a discount, and., i f . members of the other group paid a premium over. what, they would pay ..to live., i n housing surrounded by t h e i r own group, there i s a p r i c e incentive,, f o r .changing land use,from those groups paying the discount to those paying, the premium. This process of s h i f t i n g users continues u n t i l p r i c e s i n the. boundary:-area reach an equilibrium value; p r i c e s w i l l be highest where  the-high-Income  groups l i v e together and lowest where the lowest-income, groups are.clustered. Leven et a l extend t h i s basic reasoning and introduce to i t other parameters.. A)  Basic d e f i n i t i o n s of the model are:  ..  ...  "Housing" i s defined as a bundle of services extending, beyond, the dwelling unit.  The housing bundle includes.neighborhood a t t r i b u t e s and expected  future.status of those a t t r i b u t e s :  . . . . .  The amount a household i s w i l l i n g to pay f o r a p a r t i c u l a r dwelling, u n i t depends on multiple considerations: s t r u c t u r a l q u a l i t i e s such as s i z e and soundness; a c c e s s i b i l i t y ; , scope, and .quality of p u b l i c . s e r v i c e s , and the several c h a r a c t e r i s t i c s , that define neighborhood q u a l i t y . C o l l e c t i v e l y , we c a l l a l l these c h a r a c t e r i s t i c s of the property the housing bundle." "The estimated value depends not s o l e l y of the c h a r a c t e r i s t i c s assoc i a t e d w i t h the property today, but also, on the expected future status of those c h a r a c t e r i s t i c s . To the household, then, value i s the present value of the future, stream of services expected from the property." (Leven et a l , 1976, p. 35). B)  " F i l t e r i n g " i s defined i n a broad meaning that includes both changes i n . housing q u a l i t y and changes i n occupancy: " F i l t e r i n g takes place when a household,. without change in. i t s income or t a s t e s , experiences a change in.-its housing bundle to a d i f f e r e n t rank on i t s scale of preferences. " F i l t e r i n g up" - .or upranking occurs when the change i s to a more p r e f e r r e d bundle; ' f i l t e r i n g  78 down' - or downranking - when i t i s to a l e s s preferred bundle." "... F i l t e r i n g can occur even i f the household does not experience a l o c a t i o n a l change i n i t s dwelling u n i t . The d e f i n i t i o n e l i c i t s two s i g n i f i c a n t c o r o l l a r y d e f i n i t i o n s : for. a c t i v e and passive f i l t e r i n g . . Active f i l t e r i n g occurs when a household experiences a change i n the ranking of i t s housing bundle by moving to a d i f f e r e n t . u n i t . Passive f i l t e r i n g occurs when the household does not move but experiences a change i n the ranking of i t s housing nevertheless." (Leven et a l , 1976, p. 96) This d e f i n i t i o n of f i l t e r i n g i s s i m i l a r to what was p r e v i o u s l y d i s - . cussed as the welfare approach to f i l t e r i n g , but i t has a t the same time a s i g n i f i c a n t d i f f e r e n c e : by focussing on the change experienced by the.household rather than the change experienced by the dwelling u n i t , i t also contains the m o b i l i t y element; t h i s i s r e f l e c t e d i n the two c o r o l l a r y d e f i n i t i o n s of passive and a c t i v e f i l t e r i n g . C) Households are assumed to change residences v o l u n t a r i l y f o r two reasons: l ) when family circumstances change, such as a change i n s i z e , income., or place of employment, and 2) when the household perceives i t can obtain the desired quantity of services a t a more favorable p r i c e at another l o cation  This second f a c t o r i s associated w i t h the passive f i l t e r i n g down  of the neighborhood and constitutes the c e n t r a l element of the arbitrage process. D)  . ,  Arbitrage i s the change i n l o c a t i o n produced by mismatches i n supply and demand: "The Arbitrage process i s the mechanism whereby, supply s h i f t s from one submarket to another; sometimes t h i s occurs by households moving from one neighborhood to another, sometimes by a change i n the:;housing bundle so that the neighborhood can serve a new c l i entele." (Leven et a l , 1976, p. 37) The Arbitrage process describes.. "a moving boundary between high-and  low-income or status areas, where a protracted mismatch between.supply and demand makes:lt p r o f i t a b l e to convert from high-income to successively lowerincome occupancy.  In end stage i s reached when values have declined so f a r  that i t i s no longer p r o f i t a b l e to maintain, the u n i t s f o r occupancy. then abandoned, vandalized, and eventually demolished."  They are,  (Leven et a l , 1976, p. 38)  79 Eow does the arbitrage process come i n t o play? Figure L.2A depicts a simple s i t u a t i o n i n which only two groups are at play. -  These two groups are:  Group one, high-income households, defined as those households which can a f f o r d new housing.  -  Group two, low-income households, which are those who cannot a f f o r d new housing. These groups could also be defined i n other s o c i a l dimensions. For  instance, black groups i n USA, who do not have access to houses i n the suburbs, could be defined as group two as w e l l . The diagram depicts the i n i t i a l p o s i t i o n of these two groups.  This  i n i t i a l p o s i t i o n implies two major assumptions: -  The r i c h prefer to l i v e away from the poor. The poor p r e f e r to l i v e - close to the r i c h . These l o c a t i o n preferences introduce s o c i a l segregation a t t i t u d e s  i n t o the model and r e s u l t i n the f o l l o w i n g l o c a t i o n pattern:  A•  •  • • • • • •  !  rll<5H~IN'COMET AEEA  ~~ D I S C O U N T  DO o n o o DO o o PEEMHM  &OLMCAEY AEEA  • o.  THlSH-INCOME HOUSEHOLD L O W - INCOME .HOUSEHOLD  (SOOecE f ~ LEVEN ET AL.,.: I<370~, P 4o) i  lOU-INCOME AEEA  Diagram 5.1 Part of the highest-status groups locates i n an 'exclusively r i c h ' area. values.  This group has the most desirable l o c a t i o n and pays the highest housing At the other extreme i s the group who l i v e s i n an ' e x c l u s i v e l y poor'  area and pays the lowest rents.  In between, there i s a boundary area i n which  80 part of the residents are r i c h and part of- them are poor.  Those high-status  households w i l l locate i n the boundary area only at a discount p r i c e : the negative e f f e c t of l i v i n g close to the poor r e s u l t s i n lower housing values . At the same time, the low-income households are paying a premium f o r l i v i n g c l o s e r to the r i c h .  Thus, the p r i c e of housing i n the boundary area w i l l be  somewhere between the high-status and the low-status areas. As long as the supply remains a reasonable match to the demand of each of these submarkets, the market.may be said to be i n equilibrium, a cond i t i o n under which arbitrage remains inoperative.  This equilibrium, though,  can be disturbed i n a number of ways: On the demand side, population increases on the high-income s i d e . w i l l i n s p i r e new construction: new houses are added i n a new high-income area, and the r e s t of the neighborhoods remain unchanged. Population increases on the lower-income side, though,, w i l l bring about a d i f f e r e n t process: since there i s no resource to new construction, f a m i l i e s must double-up; increased demand pushes p r i c e s upward w i t h i n the lowincome neighborhood and the premium paid f o r boundary units increases..  This  widening gap i n boundary p r i c e s makes i t p r o f i t a b l e to s h i f t occupancy from high-income to low-income occupancy i n the boundary area, and at t h i s point arbitrage comes i n t o process. On the supply side, demolition of low-income housing (growth of CBD, const r u c t i o n of new highways) w i l l generate a shortage of housing f o r low-income families.  Again, i t would become p r o f i t a b l e to s h i f t housing from high-  income to low-income occupancy i n boundary areas. This movement, i n turn, would reduce the stock f o r high-income housing and r e s u l t i n pressures f o r new additions i n the new high-income neighborhood. On the other hand, the process can also be triggered by additions of houses at the periphery due to income increases, rather than population growth.  New houses w i l l i n i t i a t e a chain of moves i n which a high-income  81 household w i l l move to the new u n i t and leave a vacancy which i n . t u r n w i l l be occupied by a household moving out of the boundary area.  This new vacancy, i n  turn, gives an opportunity f o r a low income household to move i n t o the boundary area.  The net r e s u l t i n t h i s case i s the abandonment of a u n i t i n the ex-  c l u s i v e l y low-income sector.  The r o l e of expectation: the t i p p i n g point In the i n i t i a l s i t u a t i o n , the three described areas had a r e l a t i v e l y stable composition: two areas were e x c l u s i v e l y occupied by one income group, and the boundary area had an income mix i n which the s t a b i l i t y was due to the p r i c e - l o c a t i o n t r a d e - o f f i n which each of the two component groups made an 'equilibrium' type of d e c i s i o n . The a r b i t r a g e process a l t e r s t h i s e q u i l i b r i u m : although the two extreme areas continue to have only one type of residents,, the boundary area has a l t e r e d i t s r e l a t i v e proportion of low-to-high-income population. undergone a 'passive f i l t e r i n g down' i n the perception of the remaining dents of t h i s area.  I t has resi-  I t i s here where the 'expectation' f a c t o r comes i n t o play:  the increase i n low-income percentage has a l t e r e d the 'tipping, point', or the maximum percentage of low-income households that the higher group i s w i l l i n g to t o l e r a t e at the p r i c e they paid. 'going black'.  The area i s perceived as 'going poor' or  At t h i s p o i n t , lenders w i l l be l e s s w i l l i n g to finance housing  improvements and maintenance, and the remaining high-income households i n that area w i l l exert pressure to move out to the exclusive high-income group, with the r e s u l t i n g new additions to the high-income housing stock i n new highstatus neighborhoods. Expectation, then, behaves as a ' s e l f - f u l f i l l i n g prophecy', and r e s u l t s i n a continuing of the arbitrage process, even a f t e r the mismatch between supply and demand f o r low income groups ceased to e x i s t .  To the extent  that the pressure r e s u l t s indeed i n new housing a d d i t i o n s , low-income groups  82 w i l l continue to move i n t o boundary areas. The end stage of t h i s process, unless halted by p u b l i c a c t i o n , i s the abandonment of the i n i t i a l low-income area, the f i l t e r i n g of the boundary area to a low-class neighborhood, and the f i l t e r i n g of the i n i t i a l high-income area i n t o a boundary neighborhood.  In summary, the a r b i t r a g e model suggests that: Neither age of housing stock or r a c i a l (income) character of a neighborhood does, i n an by i t s e l f , have any causal r e l a t i o n s h i p with the succession process. The reranking of housing values i s a f u n c t i o n and a consequence of changes i n the neighborhood  socio-economic l e v e l s (socio-economic composition).  The movement i s most often a downgrading f o l l o w i n g a drop i n average income (by increasing the proportion of low-income households), but i t could be also an upgrading due to increase i n income. A neighborhood i n immediate proximity to one which i s experiencing or has experienced the downranking sequence w i l l , unless external constraints are imposed, experience the same succession sequence. "We see the housing stock as an i n e r t commodity, the values of which are determined by the housing preferences of the householders. These preferences express concern not s o l e l y with the p h y s i c a l char a c t e r i s t i c s of the housing (as i n the t r a d i t i o n a l approach), but with a whole c o n s t e l l a t i o n of a t t r i b u t e s (those c o l l e c t i v e l y designated 'neighborhood c h a r a c t e r i s t i c s ' ) that have greater impact i n s e t t i n g housing values than such p h y s i c a l t r a i t s as age or moderni t y , once regarded as decisive i n determining market values and i n i t i a t i n g the cycle of succession". (Leven, l&tf-'SU.. p,»/A8-JL9) Neighborhood change, then, as described i n the a r b i t r a g e model, i s i n i t i a l l y the r e s u l t of external forces (population growth, housing additions ...)  The i n i t i a l e f f e c t i s accelerated or continued by the s o c i a l perception  of the neighborhood  status.  P h y s i c a l d e t e r i o r a t i o n i s seen, a t best,, as a  concomitant element brought about by the perception of change (expectation), by lenders and i n v e s t o r s who are not w i l l i n g to spend i n maintenance because  83 of the 'unstable  5.2.  1  character of the  neighborhood.  THE ARBITRAGE MODEL: DISCUSSION. The model presented by Leven et a l . and o u t l i n e d i n the preceeding  section i s an attempt to capture the main v a r i a b l e s a f f e c t i n g the dynamics of neighborhood change.  The authors complement the presentation with e m p i r i c a l  evidence drawn from St. Louis; the succession process, as detected i n d i f f e r e n t St. Louis neighborhoods,  appears to support the main concepts of the a r b i t r a g e  model. Although there seems to'be some evidence on the r e l i a b i l i t y of the model i n other case s t u d i e s , (Meadows, AIP Journal V o l . 44 #3, J u l y 78) i t i s probably too e a r l y at t h i s point to assess i t s value i n terms of accuracy to describe a c t u a l phenomena.  Therefore, the d i s c u s s i o n here does not attempt to  compare the model with a c t u a l e m p i r i c a l evidence.  Rather, the .focus w i l l be  on the i n t e r n a l consistency of the model and i t s r e l a t i o n s h i p with the body of theory discussed i n previous chapters. In reviewing the advantages and problems of the model, an attempt w i l l be made to bring together the set of dynamic f a c t o r s a f f e c t i n g neighborhood change.  This, i n t u r n , w i l l be the s t a r t i n g point f o r the next section,  i n which the Arbitrage model w i l l be applied to assess the .role of t r a n s i t i o n areas i n terms of low-income r e s i d e n t i a l l o c a t i o n .  On the p o s i t i v e side 1).  The model s h i f t s the emphasis from a d e s c r i p t i v e approach that charact e r i z e s the neighborhood change theories reviewed before l i f e - c y c l e , invasion-succession) to an explanatory one.  (neighborhood I t i s i n fact  a theory of why people move. The causal r e l a t i o n s h i p s r e l a t e neighborhood change to two types of variables:  84 -  E x t e r n a l f a c t o r s , such as population growth, additions to the housing stock, a v a i l a b i l i t y of housing to d i f f e r e n t groups.  -  S o c i a l f a c t o r s or segregation a t t i t u d e s between groups. These two sets of independent f a c t o r s produce a combined e f f e c t which  i s defined as 'expectation' and behaves as an intervening v a r i a b l e i n the process. The e f f e c t i s twofold: household moves and p h y s i c a l d e t e r i o r a t i o n of housing, with abandonment as the f i n a l stage.  Diagram 5.2 shows the r e l a t i o n -  ship between these v a r i a b l e s .  POPULATION"  CHAW6E  HO0SIW6 STOCK CHAMSE  T\ /  /  Diagram 5.2. The important innovation introduced i s what i s shown as a loop i n the diagram: the m u l t i p l i e r e f f e c t produced by the 'expectation' v a r i a b l e , and the r e l a t i o n s h i p between t h i s 'expectation' e f f e c t and s o c i a l  (segregation)  attitudes. 2)  The reasoning can be extended a b i t f u r t h e r by introducing the concept of 'tipping point' and r e l a t i n g i t to the 'expectation' v a r i a b l e . I f 'tipping point' i s defined as the percentage of one group r e l a t i v e , to another i n an e q u i l i b r i u m s i t u a t i o n and a t a c e r t a i n housing p r i c e , i t  would be possible to measure the value of the 'expectation' e f f e c t as r e l a t e d to the two causal f a c t o r s (changes i n demand-supply and segregation attitudes): In cases i n which there i s a strong d i s c r i m i n a t i o n against a group, a small change i n the t i p p i n g point would be s u f f i c i e n t t o t r i g g e r the chain of moves.  Examples of t h i s case would be the white-to-black succession pro-  cesses i n some North-American c i t i e s .  I t could be s a i d i n t h i s case that  expectation i s very i n e l a s t i c to household moves.  o  Conversely, i f d i s c r i m i n a t i o n i s low, the expectation e f f e c t would not come i n t o play u n t i l the t i p p i n g point has changed s u b s t a n t i a l l y . I f there i s no d i s c r i m i n a t i o n a t a l l (which could be the case when the two groups belong to d i f f e r e n t f a m i l y s t a t u s ) , the expectation, element would not come i n t o play.  The f o l l o w i n g diagram depicts the r e l a t i o n s h i p  among the three v a r i a b l e s :  EXPECTATION EFFECT  FOPU'LAJIOM  CHANGE  (%) -  Diagram 5.3. I t should be pointed out that 'expectation' does'not n e c e s s a r i l y mean ' f l i g h t out'.  I f we assume that a c e r t a i n m o b i l i t y . r a t e i s normal i n any  community, the same expectation e f f e c t i s produced by a not-moving-in type of reaction. This set of v a r i a b l e s provides a t the same time one i n d i c a t o r of neighborhood s t a b i l i t y : i t can be expected that a 'stable' community w i l l have  no more moves than those produced by s t r i c t demand-supply changes, while an 'unstable' neighborhood would have a high compounded e f f e c t produced by the expectation v a r i a b l e . 3)  The model focusses on income and r a c i a l changes i n a neighborhood, but i t can have a more general a p p l i c a t i o n i f the 'expectation' v a r i a b l e i s approached as discussed above.  I f we s t a r t with the c l a s s i f i c a t i o n of  groups i n terms of s o c i a l rank, family status and r a c e - e t h n i c i t y , i t should be possible to i d e n t i f y the type or types of s o c i a l d i f f e r e n t i a t i o n at play f o r each p a r t i c u l a r succession case; an expectation value.could then be found f o r the aggregate e f f e c t of the r e l a t i v e d i s c r i m i n a t i o n - p r e d i c t able f o r each type.  For instance, succession by a d i f f e r e n t ethnic group  of s i m i l a r s o c i a l rank should produce a lower expectation.value than would be the case i f there i s also a s o c i a l rank difference between the two groups. 4)  The 'attitude' element discussed so f a r r e f e r s only to the degree of d i s crimination of the 'high' group towards the 'low' one, but the model also assumes that the lower groups want to l i v e close to the high.ones.  It  could be argued that t h i s a t t i t u d e i s not always true i n r e a l l i f e (a number of examples could be shown i n which ethnic or low-income m i n o r i t i e s do not want proximity to other groups). Nevertheless, within, the .logic of the a r b i t r a g e model, t h i s assumption i s not n e c e s s a r i l y the r e s u l t of a s o c i a l a t t i t u d e : since 'low groups' are defined, as those who cannot a f f o r d new housing, the assumption must n e c e s s a r i l y hold true by d e f i n i t i o n , since the e x i s t i n g 'high income' housing are the only housing a l t e r n a t i v e s (other than crowding) f o r i n c r e a s i n g demand i n the low income group.. This apparent redundancy of assumptions can prove to.have u s e f u l i m p l i c a t i o n s f o r p u b l i c p o l i c y , i n terms of p r o v i s i o n of new housing f o r the poor: To the extent that the assumption r e f l e c t s a true a t t i t u d e , l o c a t i o n of low  87 income housing must consider the e f f e c t of 'stigma' ('separation from the high income groups). -  On the other hand, a v a i l a b i l i t y of new housing f o r the poor through p u b l i c programs may indeed reduce the pressure f o r succession to take place, to the extent that the advantages of new housing overrides the perceived benef i t s of l i v i n g close to the r i c h .  On the negative side 1)  The model i s u n i d i r e c t i o n a l , because changes are seen as invasion of 'high' areas.by Mow' groups, but does not e x p l i c i t l y include the reverse ;  process, although t h i s p o s s i b i l i t y i s accepted i n the d e f i n i t i o n s of f i l tering.  The f a c t i s that, w i t h i n the model, high income groups w i l l  always move to new housing and new housing i s assumed to be i n p e r i p h e r a l areas.  The p o s s i b i l i t y that high groups prefer o l d houses (or. c e n t r a l  l o c a t i o n s ) could eventually be included, but the model does not provide any causal v a r i a b l e to explain how t h i s reverse process could, occur. 2)  The model i s also somewhat d e t e r m i n i s t i c , since i t considers abandonment as the only end s t a t e .  Although abandonment i s a very t o p i c a l , problem i n  USA, s i m i l a r cases i n Canadian c i t i e s are r e l a t i v e l y rare.. This i s not n e c e s s a r i l y a d i f f i c i e n c y of the model i t s e l f ; r a t h e r , the focus on abandonment derives from the p a r t i c u l a r s i t u a t i o n i n which the model was i n i t i a l l y used. In f a c t , by using the same l i n e of reasoning developed i n the model, i t may be p o s s i b l e to detect some explanations as to why US and Canadian c i t i e s are d i f f e r e n t i n t h i s respect: One p o s s i b l e explanation r e l a t e s to the exogenous v a r i a b l e s (demand and supply changes).  I t can be argued that, other things equal, abandonment  r e s u l t s only when additions to the housing stock exceed increases i n population.  I f Canada has indeed a lower r a t i o of new-constructions  to new-  88 households, i t would be reasonable to p r e d i c t a lower incidence of abandonment. -  The second explanation may be the d i f f e r e n c e i n r a c i a l . s e g r e g a t i o n : Canada does not have the black d i s c r i m i n a t i o n problem t y p i c a l of US  cities;  w i t h i n the model, t h i s would r e f l e c t i n lower 'expectation' values  and,  therefore, lower pressure f o r completing the succession process. In other words, abandonment i s not n e c e s s a r i l y the end stage of the process; i t s r e l a t i v e occurrence depends on the r e l a t i v e e f f e c t of the expectat i o n f a c t o r i n terms of compounding the process, which i n turn depends on the degree of d i s c r i m i n a t i o n .  To the extent that d i s c r i m i n a t i o n i s low and  housing additions more or l e s s match population increases, there w i l l ..always be a c l i e n t f o r the lowest income house. 3)  The model r e j e c t s the notion that housing q u a l i t y (age, soundness...) has an e f f e c t on the succession process.  Quality i s seen, at best, as a con-  comitant to succession, r e s u l t i n g from the causal v a r i a b l e s that determine succession.  A case could be made, though, f o r tfre.notion that q u a l i t y ,  even i f i t i s a r e s u l t of s o c i a l and demographic forces at play, does have a causal r e l a t i o n s h i p with i n t e n t i o n s to move.  In diagram 5.2.  (p.  84)  showing the r e l a t i o n s h i p among d i f f e r e n t v a r i a b l e s , d e t e r i o r a t i o n should be considered as an intervening v a r i a b l e , s i m i l a r to 'expectation'.  The  dotted l i n e i n the diagram would show the m u l t i p l i e r e f f e c t of d e t e r i o r a t i o n , which should be added to the 'expectation' e f f e c t . 4)  There i s no consideration to CBD expansion as a v a r i a b l e r e l a t e d to popul a t i o n growth.  This i s somewhat contradictory w i t h the more t r a d i t i o n a l  theories which explain succession as r e s u l t i n g primarily, from CBD  expansion.  One way of introducing CBD expansion i n the model may be the assumption that every increase i n population produces a d d i t i o n a l demand f o r CBD space.  The e f f e c t of population growth, then, would be twofold: increase  i n demand (new u n i t needed) and decrease i n supply (a u n i t changes from  89  r e s i d e n t i a l to non-residential.use).  This argument w i l l be developed i n  the next s e c t i o n dealing with i m p l i c a t i o n s of t h i s model f o r housing p o l i c y i n t r a n s i t i o n areas. 5)  Variables r e l a t e d to land a v a i l a b i l i t y are not included i n the model and they would be d i f f i c u l t to introduce.  I m p l i c i t i n the model are two  assumptions:. 1) there i s a f i x e d stock of housing i n each area, and 2) there i s u n l i m i t e d land to expand.  To the extent that, these assumptions  can be manipulated by p o l i c y ( i . e . upzoning to higher d e n s i t i e s , urban growth boundaries), the succession process would be d i f f e r e n t , and the r e s u l t of t h i s change i s not c l e a r . 6)  Although one of the major advantages, of t h i s model as compared to.other t h e o r e t i c a l formulations i s the i n t r o d u c t i o n of some s o c i a l v a r i a b l e s (segregation a t t i t u d e s ) , there are s t i l l a number of other s o c i a l forces at play which a f f e c t the process of neighborhood change.  For instance, the  l e v e l of cohesiveness and organization e x i s t i n g i n each neighborhood,  the  c a p a b i l i t y and i n t e r e s t to take a c t i v e p a r t i c i p a t i o n , e i t h e r to. encourage the process or to stop i t by impeding the penetration of other groups, are without any doubt important f a c t o r s to consider. These f a c t o r s are hardly measurable and i t i s almost impossible to generalize them i n a way that permits t h e i r i n c l u s i o n i n a model.  Perhaps a  more reasonable approach would be to consider them on t h e i r own merits i n each case, and leave to the good judgement of the researcher to assess t h e i r i n c i dence i n terms of the r e l i a b i l i t y of the model i n the l i g h t of those s p e c i f i c situations. 7)  In terms of geographic and geometric f a c t o r s of l o c a t i o n , the model explains the dynamics of the change process but does not consider the s p a t i a l d i s t r i b u t i o n of the two moving groups.  I t i s i m p l i c i t that the  movement occurs outward from CBD,  since new houses are i m p l i c i t l y assumed  to be added i n p e r i p h e r a l areas.  Nevertheless, while t r a d i t i o n a l theory  r e l a t e s t h i s outward movement t o income i n c r e a s e s , t h i s .mobility i s r e l a t e d i n the model t o t h e p a s s i v e f i l t e r i n g down o f houses and I t c o u l d be argued to  neighborhoods.  t h a t , t o t h e extent t o which the optimum d i s t a n c e  CBD i s indeed r e l a t e d t o income, t h i s outward move, without income i n c r e a s e s  may r e s u l t i n a new type o f n o n - e q u i l i b r i u m i n which the f i l t e r i n g down o f neighborhoods results  i n l o c a t i o n s f a r t h e r away from CBD than the optimum  d i s t a n c e f o r a g i v e n income. a  'come-back-to-the-city'  I f t h a t i s the case, a t some p o i n t o f the p r o c e s s  movement would be r e a s o n a b l e t o p r e d i c t .  .This f a c t o r ,  a g a i n , does n o t a l t e r the model, but makes i t n e c e s s a r y t o use i t i n conjunct i o n with other l o c a t i o n  \  t  factors.  ..u-int.'..,. -  In summary, the A r b i t r a g e model i s p r o b a b l y the most comprehensive approach t o date t o neighborhood  dynamics.  I t has c l e a r advantages over  approaches i n terms o f h i g h e r e x p l a n a t o r y v a l u e . of  former  Although t h e r e a r e a number  v a r i a b l e s n o t taken i n t o c o n s i d e r a t i o n , most o f them can b e . i n t r o d u c e d  without of  theoretical  changing  the b a s i c s t r u c t u r e o f the model.  l o c a t i o n dynamics n o t taken i n t o account  cannot  Still,  some other f a c t o r s  be e a s i l y i n t r o d u c e d ; per-  haps the way t o c o n s i d e r these remaining v a r i a b l e s , i s on a case-by-case  5.3.  basis.  THE ARBITRAGE MODEL AND TRANSITION AREAS. The d i s c u s s i o n i n t h e p r e c e e d i n g s e c t i o n s c e n t e r e d on how the A r b i t -  rage model p r o v i d e s a g e n e r a l framework t o understand borhood change; i n t h i s s e c t i o n , an attempt  will  the dynamics o f n e i g h -  be made t o a p p l y these  g e n e r a l concepts t o the s p e c i f i c change p r o c e s s which takes p l a c e i n areas around CBD, and the e f f e c t s o f t h i s p r o c e s s on low-income r e s i d e n t i a l The a n a l y s i s w i l l  i n c l u d e an assessment o f the e f f e c t s o f rehab programs i n  terms o f neighborhood groups.  location.  p r e s e r v a t i o n and housing improvement f o r low-income  91 A f i r s t assessment cof the r o l e of rehab programs was .presented i n Chapter At-  the f i l t e r i n g process; i n that chapter, rehab was approached i n  terms of housing q u a l i t y alone, with no consideration of neighborhood change i n the process.  The discussion that follows introduces neighborhood characteris-  t i c s , s o c i a l and l o c a t i o n v a r i a b l e s i n the a n a l y s i s , thus complementing the conclusions r e l a t e d to the e f f e c t s of rehab i n t r a n s i t i o n areas. At the same time, the f o l l o w i n g discussion i s intended to provide a framework f o r the analysis of the dynamics of the g e n t r i f i c a t i o n process that w i l l be presented i n Chapter 6.  These three dimensions of the r o l e of  rehab ( i n terms of housing turnover; i n terms of neighborhood change dynamics, and i n terms of dynamics of the g e n t r i f i c a t i o n process), are.summarized i n Chapter 7, P o l i c y Implications, and constitute the c e n t r a l part of the a n a l y s i s of the r o l e of rehab i n terms of r e s i d e n t i a l l o c a t i o n f o r low-income groups i n t r a n s i t i o n areas. In order to introduce some of the v a r i a b l e s discussed i n the previous section, which are not contained i n the i n i t i a l formulation of the model, some assumptions w i l l be added to the i n i t i a l s e t . S t a r t i n g with t h i s enlarged set of assumptions, the a n a l y s i s w i l l show how.some external factors, (.population changes, additions to the housing stock, rehab subsidies) a f f e c t the dynamics of neighborhood change. The basic assumptions of the analysis can be described as f o l l o w s : A)  Two groups of households are at play: high-income households, who can a f f o r d new housing, and low-income households, who cannot a f f o r d new housing.  B)  The high-income groups want to l i v e away from the poor, while the poor prefer to l i v e close to the r i c h .  C)  Low-income groups l i v e closer to CBD and high-income groups l i v e towards the periphery of the c i t y . sense' i n economic terms.  This s p a t i a l d i s t r i b u t i o n 'makes economic  D)  Each a d d i t i o n i n population has a twofold e f f e c t : Effect.on demand (a new u n i t i s needed) -  E f f e c t on supply (a u n i t changes from r e s i d e n t i a l to n o n - r e s i d e n t i a l use) (1)  E)  For s i m p l i c i t y , i t i s assumed that each area has i n i t i a l l y the same number of u n i t s .  F)  The p r i c e of the dwelling u n i t s increases with distance from 'the CBDr.. ; This ;  r e f l e c t s both segregation preferences and economic preferences i n terms of distance from the CBD. G)  There i s unlimited land to expand at the periphery of the c i t y . Diagram 5.4 below-depicts the i n i t i a l p o s i t i o n of the two groups i n  three d i f f e r e n t areas: Area '1;, the e x c l u s i v e l y poor area i s adjacent to CBD and has the lowest p r i c e s .  Area ,2. , the boundary area, has an 'equilibrium'  proportion of high-and low-income households.  Area  '3 , the e x c l u s i v e l y r i c h  area i s f a r t h e s t from CBD and has the highest values. (D L O U ) .  .1WCOME  • •  (CBD)  •  ©  BOOMDAEY  • . O  • O  . •  INCOME  Q_ Q_  o_  O _CL  o O  Diagram 5.4 The a n a l y s i s that follows introduces the same external factors a l ready discussed i n the f i l t e r i n g process; a s l i g h t l y d i f f e r e n t sequence has been chosen t h i s time in.order to explain the mechanics of the arbitrage process. ( l ) . . . . . . . This assumption r e f l e c t s the e f f e c t of population growth on CBD expansion. The a c t u a l rate of population/commercial growth i s not r e a l l y l / l ( i n Vancouver i t i s probably about 5/1 - the l / l rate has been chosen only f o r s i m p l i c i t y .  93 Case 1; Aging of the housing.stock (population and income are held constant) The Arbitrage model p o s i t s that aging of the housing stock alone does not have an e f f e c t on turnover. the neighborhoods  As long as the s o c i a l c h a r a c t e r i s t i c s of  don't change, each group w i l l remain, i n t h e i r l o c a t i o n s .  The  e f f e c t of aging of the housing stock i s suggested to be d i f f e r e n t degrees of maintenance (depending on the a f f o r d a b i l i t y of the d i f f e r e n t groups), but no . moves.  I t should be noted that, other things being equal, aging of the  housing stock a f f e c t s the lowest group more than the high ones: since those groups w i l l l i k e l y spend l e s s i n maintenance, aging w i l l r e s u l t i n increasing differences i n q u a l i t y between the d i f f e r e n t types of housing. On the other hand, to the extent that maintenance l e v e l i s r e l a t e d to income, i t can be argued that aging does have an e f f e c t on turnover as w e l l . The c r i t i c a l v a r i a b l e i n t h i s case i s the boundary area; i f the i n i t i a l households d i s t r i b u t i o n i n t h i s area r e f l e c t s s o c i a l segregation a t t i t u d e s , i t can be expected that, as low-income dwelling u n i t s deteriorate i n the boundary area-, t h i s p h y s i c a l d e t e r i o r a t i o n can be perceived by the, other groups i n the boundary area as a downgrading of the neighborhood.  These high-income house-  holds w i l l f i n d that i t i s not worthwhile to spend i n maintenance i n a decaying neighborhood and w i l l l i k e l y create pressure to move to the e x c l u s i v e l y r i c h neighborhood.  Diagram 5.5 The turnover i n t h i s case i s started i n the boundary area and r e s u l t s i n the a d d i t i o n of a new u n i t i n the periphery.  At the same time,  the u n i t l e f t vacant i n the boundary area creates an increase.in supply, the e f f e c t of which on p r i c e s i s l i k e l y to r e s u l t i n a household moving from the e x c l u s i v e l y poor to the boundary area.  Thus, the arbitrage process continues  as described i n the preceeding section.  Case 2: Population increase, high income (other factors held constant) As stated i n the i n i t i a l assumptions, the e f f e c t of population increase i s twofold: Demand e f f e c t , which w i l l r e s u l t i n one u n i t added at the periphery, with no arbitrage e f f e c t . Supply-effect, which w i l l create pressure to convert one u n i t i n the f r i n g e area to CBD uses.  This new pressure w i l l reduce the stock a v a i l a b l e f o r  the low-income groups; p r i c e s i n t h i s area w i l l increase, and i t may be worthwhile f o r some houses i n the boundary area to s h i f t from high to lowincome occupancy.  The succession .process i s , thus an a r b i t r a g e process, and  can be depicted as f o l l o w s :  Diagram 5.6 Thus, the high-income newcomer i s producing an upward move i n the chain and a change of expectation i n two areas: the boundary area i s perceived as 'going poor', and the low-income area i s perceived as 'going  commercial'.  The i n i t i a l move, before the expectation e f f e c t , produced a r e l a t i v e improvement of the homeowners who moved, since the demand f o r CBD space  95 allowed them to s e l l at a p r i c e such that they could a f f o r d a better q u a l i t y hous£.-  For tenants, the e f f e c t i s l i k e l y to be simply a higher rent and  eventual displacement  from the low-income area.  A f t e r the expectation e f f e c t , though, the s i t u a t i o n i s somewhat different: Expectation 1 (area going poor) i s l i k e l y to r e s u l t i n a drop i n p r i c e s i n the boundary area, so that homeowners who i n i t i a l l y ,didn^t move,; became :  worse-off.  The longer they stay i n the neighborhood, the higher the p r i c e  d i f f e r e n t i a l between t h e i r current l o c a t i o n and the next one a v a i l a b l e to them. Expectation 2'(area going commercial) pushes up p r i c e s i n the low-Income neighborhood; t h i s increase i s an increase i n land values and is. accompanied by a decreasing i n t e r e s t i n the dwelling u n i t s , since the expected use i s not r e s i d e n t i a l . Thus, the net r e s u l t i n both cases i s neighborhood d e t e r i o r a t i o n , produced by a change i n expectation which i s not matched by an. equivalent increase i n demand.  D e t e r i o r a t i o n w i l l increase the expectation e f f e c t and  behave as an a d d i t i o n a l m u l t i p l i e r i n the process.  Case 3: Population increase, low income (other f a c t o r s constant) Diagram 5.7 depicts the e f f e c t of an increase, i n the number of lowincome households.  As i n the preceeding case, there i s . a twofold e f f e c t :  reduction i n supply produced by CBD expansion, and increase i n demand produced by the d i r e c t housing needs of the newcomer. The e f f e c t i s s i m i l a r to case 2, but the new low-income housing needed r e s u l t s i n an a d d i t i o n a l succession chain.  ©  ©  • • • o • • • o - ->o• • r  >  ©  O  O O -*oO -€3- - o - - o  NEW  1 NQJ 1 HOUSEHOLD Ji - . -.  Diagram 5.7 Again, there are two types of expectation e f f e c t s : area ( l ) i s expected to go commercial and area (2) i s expected to go poor. More households and l e s s dwelling u n i t s a v a i l a b l e i n the low-income area produce a p r i c e increase i n that area.  Owners i n the intermediate area  may f i n d i t p r o f i t a b l e to s e l l t h e i r houses to low-income households and the arbitrage process, as described before, i s t r i g g e r e d by a double impact on demand increase and supply decrease i n the f r i n g e area. The low-income newcomer has to face a s i t u a t i o n of increased p r i c e s for h i s f i r s t dwelling u n i t , and has no previous equity gain to pay t h i s increased cost.  So i n t h i s case, the p r i c e of the process i s paid by the new,  low income population. S i m i l a r s i t u a t i o n s are encountered by tenants i n f r i n g e areas, who now have to pay higher rents due t o the increase i n p r i c e of t h e i r dwellings. In t h i s case, there i s an increase i n p r i c e f o r both the land .and the dwelling u n i t s i n the f r i n g e areas; the r e l a t i v e incidence of each factor, i n determining the f i n a l p r i c e depends on the r e l a t i v e i n t e r e s t (or bidding p r i c e ) offered by the two competing users. In t h i s case, again, and more so, there i s an improved s i t u a t i o n f o r the high-income households who move to the 'better' area,, and a deteriorated p r i c e f o r those who p r e f e r to stay i n t h e i r neighborhoods.  I t should be noted that households i n area 1 and 2 are making a choic< based on housing p r i c e alone, t h i s p r i c e assumed to be d e t e r i o r a t i n g due to the changes i n s o c i a l composition of each area.  To the extent that other  l o c a t i o n f a c t o r s are important f o r them ( i . e . '.character of each 1  neighborhood  i n terms of p h y s i c a l features, h i s t o r i c value, type of s o c i a l services, e t c . ) , every household i s indeed f a c i n g a d i f f e r e n t type of trade-off: I f they remain i n t h e i r areas, they lose by p r i c e d e t e r i o r a t i o n of t h e i r dwelling u n i t s . I f they move, they lose the eventual benefits of e x i s t i n g neighborhood  cha-  racteristics.  Case 4: Income increases (other f a c t o r s constant) Increases i n income may have several a l t e r n a t i v e e f f e c t s , depending on which group receives the .income increase and how important are the segrega:  t i o n factors of l o c a t i o n as compared to the income/distance to CBD r e l a t i o n s h i p . To the extent that l o c a t i o n i s p r i m a r i l y determined by segregation a t t i t u d e s , income increases are l i k e l y t o have l i t t l e e f f e c t in,terms of a r bitrage.  O v e r a l l income improvements can be expected t o . r e s u l t i n higher  maintenance and upgrading of a l l the neighborhoods, w i t h a n e g l i g i b l e e f f e c t on turnover.  Income increases f o r the bottom group may produce a chain, of moves  as described i n the discussion on the f i l t e r i n g process (see ^Chapter 4) since the moves are accompanied by income increases, they do not a f f e c t the perceived character of the a f f e c t e d neighborhoods and therefore, there i s no expectation e f f e c t .  Income increases f o r the r i c h group, on the other hand,  may induce some households i n the boundary area to move to the e x c l u s i v e l y . r i c h neighborhood and t r i g g e r an arbitrage process as described before. To the extent that l o c a t i o n i s r e l a t e d to the r e l a t i o n s h i p between income and distance to CBD, income increases w i l l . t e n d to produce an.outwards flow of those groups 'receiving the income improvement.  Again, t h i s move w i l l  98  have l i t t l e expectation e f f e c t i f the i n i t i a l move i s produced by an improvement f o r the bottom group households, but may r e s u l t i n an .arbitrage started at the boundary area i f the high-income groups are the ones who receive the increased income.  In t h i s case, the l i k e l y r e s u l t would be. a r e l a t i v e l y higher  d e t e r i o r a t i o n of the boundary area, since the p o t e n t i a l c l i e n t s f o r the vacated dwellings would move only at a l o s s i n terms of a c c e s s i b i l i t y , and they would t r y to compensate t h i s l o s s only by paying a discount p r i c e f o r the new location. In f a c t , these two types of e f f e c t s suggest a more general considerat i o n that should be introduced i n t o the a n a l y s i s .  I f the s t a r t i n g p o s i t i o n of  the two groups represents an e q u i l i b r i u m i n two dimensions, (distance to the:CBD..and proximity to desired s o c i a l groups) each moving d e c i s i o n w i l l be a trade-off between gains i n one of these dimensions and losses i n the other one. For instance, a move of a low-income group produced by population growth may be worthwhile i n terms of s o c i a l gains, but at the same time represents a l o s s i n terms of a c c e s s i b i l i t y ito ;the :GBB.-,..-This*-l®ss:-:m^  may  r e s u l t i n j u s t a higher a f f o r d a b i l i t y problem f o r that group.. Thus, i t can be argued t h a t , to the extent that each l o c a t i o n represents an e q u i l i b r i u m between d i f f e r e n t dimensions of the l o c a t i o n d e c i s i o n , the household moves produced by external f a c t o r s a l t e r t h i s e q u i l i b r i u m .in d i f f e r ent ways and produce d i f f e r e n t types of mismatches between demand and supply. The a n a l y s i s t o o l s provided by the a r b i t r a g e model are not s u f f i c i e n t to assess these e f f e c t s , and c a l l s f o r some a d d i t i o n a l t h e o r e t i c a l framework to be introduced. This l i n e of argument w i l l be pursued i n Chapter 6, i n which some elements of a multidimensional model w i l l be suggested.  The remaining part of  t h i s chapter w i l l center on some p o s s i b l e e f f e c t s of rehab p o l i c i e s on the neighborhood change process.  1  99 The r o l e of housing improvement.subsidies . ( r e h a b i l i t a t i o n ) As discussed i n Chapter 4 (see page 56 ), housing r e h a b i l i t a t i o n p o l i c i e s have two main o b j e c t i v e s : neighborhood preservation and low-income housing improvement.  These two objectives are expected to be met by subsidies  i n housing maintenance and neighborhood improvement.projects. , From the a n a l y s i s above, i t seems reasonable to expect the f o l l o w i n g e f f e c t s of r e h a b i l i t a t i o n : 1)  Housing improvement subsidies f o r low-income groups are l i k e l y to produce . net benefits when aging i s the major reason f o r housing turnover and arbitrage.  The subsidies would i n t h i s case compensate the differences i n  maintenance  c a p a b i l i t y between groups; by improving the p h y s i c a l appearance,  they would reduce the number of moves produced by the perceived p h y s i c a l d e t e r i o r a t i o n of the low-income households. 2)  In a l l cases, housing improvement subsidies improve the housing s i t u a t i o n of those groups who decide not to move, since better maintenance can be expected to counteract at l e a s t to some extent the drop i n p r i c e s produced by the succession process as described, p a r t i c u l a r l y i n the boundary areas.  3)  By s u b s i d i z i n g housing and neighborhood improvement, the d i r e c t e f f e c t of the programs i s to counteract the p h y s i c a l d e t e r i o r a t i o n e f f e c t accompanying succession.  4)  However, the preceeding analysis has shown that p h y s i c a l q u a l i t y of housing and neighborhoods are only a concomitant f a c t o r i n the process, the real, causal f a c t o r s being external f a c t o r s such as population increase, additions to the housing stock, segregation a t t i t u d e s .  Thus, the e f f e c t s of rehabi-.  l i t a t i o n i n terms of neighborhood preservation w i l l be at best weak, since they are aiming at the e f f e c t s rather than the causes of neighborhood change. 5)  In terms of low-income housing, housing r e p a i r subsidies improve the s i t u a t i o n of those groups that don't move. However, the group that i s .paying the highest cost i n the process i s the new, low-income household; another  100 l o s e r i s the low-income tenant.  Tenants of subsidized . r e h a b i l i t a t i o n u n i t s  may be considered protected to the extent that subsidies are t i e d to rent c e i l i n g clauses, but the e f f e c t of growth a f f e c t s tenants of other u n i t s as well.  For these tenants, and f o r the newcomers, the e f f e c t of r e h a b i l i t a -  t i o n can be considered negative, since r e h a b i l i t a t i o n increases the probab i l i t y of o v e r a l l p r i c e increases i n r e h a b i l i t a t i o n areas. In terms of low-income households e l i g i b l e f o r r e h a b i l i t a t i o n , there i s a p o s i t i v e e f f e c t i n the a f f o r d a b i l i t y aspect of the problem; to the extent that low income groups cannot a f f o r d new housing, i t can be expected that, t h e i r c a p a b i l i t y to i n v e s t i n adequate maintenance w i l l also be l i m i t e d ; i n t h i s sense, r e h a b i l i t a t i o n represents an a c t u a l improvement, and behaves very much l i k e any other type of income subsidy. At present, one of the conditions to gain r e h a b i l i t a t i o n subsidy under RRAP program i s the requirement;:to stay i n the r e h a b i l i t a t i o n dwelling f o r . a period of f i v e years. some comments.  The l i k e l y e f f e c t of t h i s p a r t i c u l a r clause i s worth  Looking again at one of the 'arbitrage' diagrams ( f o r  example, population increase, low-income, diagram 5.7, two l i k e l y e f f e c t s appear reasonable to expect: a)  The housing options f o r each low-income newcomer i s r e l a t e d to.the m o b i l i t y rate of the low-income households.  For the newcomer, the net  e f f e c t of the permanence clause i s s i m i l a r to that of reducing supply: each r e h a b i l i t a t i o n u n i t i n the low-income area i s , i n f a c t , moving out of the market u n t i l the permanence time expires.  So again, the b e n e f i t  of the subsidy i s paid i n terms of higher pressure over the remaining u n i t s , increased p r i c e s and  crowding,  b) . In terms of the CBD expansion, each houseowner e l i g i b l e f o r r e h a b i l i t a t i o n faces a choice: e i t h e r they s e l l to a commercial bidder, or they, gain the r e h a b i l i t a t i o n subsidy.  Their i n t e r e s t i n r e h a b i l i t a t i o n w i l l  depend, therefore, on the b e n e f i t d i f f e r e n t i a l between these two  options.  In other words, the amount of.the subsidy must be s u b s t a n t i a l  indeed to compensate f o r the a c t u a l or expected, gains derived from  CBD  expansion. 8)  I t would be worth comparing r e h a b i l i t a t i o n with at l e a s t one a l t e r n a t i v e oriented to act upon some ' t r i g g e r i n g f a c t o r s ' : additions to the lowincome housing stock i n c e n t r a l areas.  The e f f e c t of t h i s type of p o l i c y  can be depicted as follows:  ©  • •  C&D  ®  •  O O O O  "  o • o • o on o o 1  1  MEU  1  1  UNITS  .HOUSE.HC2L.D.I I  ~  1  :  |  Diagram  5.8  D i r e c t increase i n the low-income housing supply makes new a v a i l a b l e f o r low-income groups.  housing  The mismatch i n supply and demand needs not,,  i n t h i s case, resolve by f i l t e r i n g s but i t i s solved by the new stock. succession process does not take place at a l l .  The  The low-income groups (both  e x i s t i n g and newcomers) have an improved housing, s i t u a t i o n , since the increase, i n supply, and t h e i r e f f e c t on p r i c e , improves t h e i r housing a f f o r d a b i l i t y . Neighborhood s o c i a l balance i s also preserved by maintaining the 'tipping point' unchanged. This type of s o l u t i o n can be achieved i n a number of ways, f o r instance: -  By extending the use of r e h a b i l i t a t i o n f o r conversions of o l d housing i n t o two or more dwellings. By encouraging i n f i l l and innovative housing proj ects i n c e n t r a l areas i n which higher d e n s i t i e s can be achieved without s i g n i f i c a n t l y changing the character of the area.  102 CHAPTER SIX:.THE'GENTRIFICATION.PROCESS In preceeding chapters, a general overview was presented of some of the current approaches to . r e s i d e n t i a l l o c a t i o n .  The review has included eco-  nomic and s o c i o - e c o l o g i c a l theories of l o c a t i o n ; from both the economic and the s o c i a l point o f view, the a n a l y s i s has s h i f t e d from s t a t i c (equilibrium) l o c a - . t i o n models to theories of l o c a t i o n dynamics.  The analysis of d i f f e r e n t bodies  of theory has been used to define t r a n s i t i o n areas, to explain the role, of these areas i n terms of r e s i d e n t i a l l o c a t i o n f o r the poor, and to derive some i m p l i c a t i o n s r e l a t e d to the e f f e c t s of rehab subsidies on low-income l o c a t i o n options. Throughout the a n a l y s i s of d i f f e r e n t variables a f f e c t i n g r e s i d e n t i a l l o c a t i o n i n t r a n s i t i o n areas, a c e r t a i n type of l o c a t i o n preferences has been more or l e s s i m p l i c i t l y assumed which r e s u l t e d i n peripheral l o c a t i o n s f o r the high-income groups.  These preferences r e l a t e , among other variables,, to  the assumptions that new housing i s b u i l t i n peripheral areas and preferred by the r i c h , and that income increases c o r r e l a t e to l a r g e r q u a n t i t i e s of land and increasing distance to the .CBD. On the other hand, the evidence presented i n the. f i r s t chapter suggested that a new type of l o c a t i o n pattern i s emerging i n some North American cities.  This new phenomenon, which has been c a l l e d g e n t r i f i c a t i o n , middle-  c l a s s resettlement or p r i v a t e rehab, i s characterized by a change.in l o c a t i o n preferences whereby middle-to-high status groups which t r a d i t i o n a l l y locate i n suburban d i s t r i c t s would now prefer o l d c e n t r a l neighborhoods. The purpose of t h i s chapter i s to apply the main concepts contained i n the review of l o c a t i o n theory f o r the a n a l y s i s of the g e n t r i f i c a t i o n process.  The analysis should provide elements that could be u s e f u l f o r the  f o l l o w i n g objectives: I d e n t i f i c a t i o n of those variables that can be used to p r e d i c t the nature and extent of the g e n t r i f i c a t i o n process i n d i f f e r e n t areas.  I d e n t i f i c a t i o n of some e f f e c t s o f . g e n t r i f i c a t i o n on low-income l o c a t i o n options, and the f a c t o r s r e l a t e d to those e f f e c t s . I d e n t i f i c a t i o n of some e f f e c t s of rehab programs i n g e n t r i f y i n g areas, i n terms of low-income l o c a t i o n  options.  In other words, the analysis should provide some tools that a p o l i c y maker could use to improve low-income housing programs i n g e n t r i f y i n g neighborhoods. The f i r s t part of the chapter i s a synthesis of the main l o c a t i o n f a c t o r s derived from the body of r e s i d e n t i a l l o c a t i o n theory.. The synthesis i s presented i n the form of a multidimensional l o c a t i o n model.which contains both the equilibrium and the dynamic v a r i a b l e s r e l a t e d to r e s i d e n t i a l location. The second part of the chapter applies t h i s multidimensional model f o r the assessment of possible causes and e f f e c t s of the g e n t r i f i c a t i o n process, as derived from the l o c a t i o n f a c t o r s suggested i n the model.  6.1  FROM ALONSO TO ARBITRAGE: A MULTIDIMENSIONAL LOCATION MODEL. The analysis s t a r t s with Alonso's view of the c i t y .  The v a r i a b l e s  considered i n the Central Place Theory are consistent with, the f o l l o w i n g set of assumptions, as described i n Chapter 2,.(p. 18:? The  c i t y i s a featureless p l a i n  Man i s an economic man -  There i s no e x i s t i n g housing stock There i s a f i x e d population  -  There i s one (central) CBD  -  There i s unlimited land to expand Given these assumptions, the l o c a t i o n game r e l a t e s an economic  dimension of i n d i v i d u a l s (income) to a geometric dimension of the c i t y (distance to CBD, s i z e of the l o t ) . The r e s u l t of t h i s two-dimensional r e l a -  104. t i o n s h i p i s a l o c a t i o n f o r each i n d i v i d u a l and a price, f o r each piece of land. Let us f i r s t review the main elements of t h i s two-dimensional r e l a tionship.  Then, by r e l e a s i n g each of the i n i t i a l assumptions, we w i l l examine  how the new dimensions introduced a f f e c t the l o c a t i o n game.  In a two-dimensional.game, l o c a t i o n results.from the equilibrium between a u t i l i t y curve and a budget l i n e .  Both curves depict the assumptions that:,  each i n d i v i d u a l wants to l i v e close to CBD, and each i n d i v i d u a l , wants large q u a n t i t i e s of land.  The trade-offs between a c c e s s i b i l i t y and quantity,of land  r e s u l t i n a r a d i a l d i s t r i b u t i o n around the CBD i n which the g r a d i e n t . i s a function of income.  The slope of the income gradient i s determined, by, the  r e l a t i v e steepness of the b i d - p r i c e curves f o r each income group,.which i n turn i s determined by o v e r a l l preferences f o r q u a n t i t i e s of land as compared to a c c e s s i b i l i t y . From the discussion i n Chapter 1 (see pages 29 to 37) i t . s h o u l d be remembered that the income gradient does not n e c e s s a r i l y y i g l d . i n c r e a s i n g income with distance to the CBD.  This i s the case when overall,preferences  are f o r large q u a n t i t i e s of land rather than a c c e s s i b i l i t y .  In eases of high  t r a n s p o r t a t i o n costs, generally low incomes (as i n some South-American c i t i e s ) or, more generally, stronger desire f o r a c c e s s i b i l i t y over land quantity, a c c e s s i b i l i t y i s considered  a scarcer commodity and high-income groups w i l l  tend to have steeper b i d - p r i c e curves; the lowest-income groups.in those cases w i l l outbid only a t more d i s t a n t l o c a t i o n s .  Two important notions are impor-  tant to remember from the previous discussion: -  The income gradient i s a f u n c t i o n of the r e l a t i v e value of a c c e s s i b i l i t y to the CBD as compared to other l o c a t i o n f a c t o r s (such as quantity of land). The l o c a t i o n of low-income groups i s a function of the.high-income group's, u t i l i t y curve.  Low-income groups w i l l tend to l o c a t e where the f a c t o r s  l e a s t preferred by the high-income groups are optimized.  105 F i r s t as sumption, relaxed: the c i t y , i s not ...featureless. assumption, the dimension added i s c i t y geography.  By r e l a x i n g the f i r s t  For s i m p l i c i t y , two types  of features w i l l be considered as part of the same dimension or geography: n a t u r a l features (topography, shorelines, sun exposure...),  and man-made  features (cemeteries, t r a n s p o r t a t i o n c o r r i d o r s . . . ) . The same reasoning behind the c e n t r a l place theory can be applied to t h i s dimension.  I f we assume that i n d i v i d u a l s want to l o c a t e close to c e r t a i n  features and f a r away from others, l o c a t i o n can be expressed again i n terms of accessibility.. -  I n d i v i d u a l s now face a trade-off game i n two dimensions:  A c c e s s i b i l i t y to the CBD vs. quantity of land. A c c e s s i b i l i t y to p o s i t i v e features vs. distance from negative ones. Two sets of u t i l i t y curves could be derived, one f o r each o f these  two dimensions.  The r e s u l t i n g u t i l i t y f u n c t i o n would, again, have t o meet a  budget constraint.. Thus, an optimum l o c a t i o n could be found f o r each income group.  The income gradient around the CBD becomes a more complex income  shape i n which the high-income groups are l i k e l y to outbid i n those areas with p o s i t i v e geographic features, and the low-income groups are l i k e l y to l o c a t e i n those areas where the negative features are found. I f t r a n s p o r t a t i o n c o r r i d o r s are considered negative features o f the c i t y , f o r instance, the emerging pattern a t t h i s point s t a r t s to .resemble Hoyt's wedge.-shaped income d i s t r i b u t i o n : low-income groups w i l l locate c l o s e s t to the t r a n s p o r t a t i o n c o r r i d o r s and each sector w i l l have a- p a r t i c u l a r income-gradient, depending on the geographical c h a r a c t e r i s t i c s of each of them.  Second assumption relaxed: Man i s not only an economic man. From the c o n t r i butions of S o c i a l Area Analysis i t was shown that s o c i a l typology can be.des-. cribed by the three categories of s o c i a l rank, f a m i l i e s and e t h n i c i t y .  These  categories can be i n t e r p r e t e d as three dimensions of each i n d i v i d u a l .  The  standing of each i n d i v i d u a l i n each of these three dimensions w i l l r e l a t e to the i n d i v i d u a l l o c a t i o n preferences, both i n terms of the c i t y dimensions (geometry and geography) and the corresponding at play.  dimensions of the other.groups  In other words, segregation a t t i t u d e s can be defined.as a s o c i a l  dimension of a c c e s s i b i l i t y ; preference to l i v e close or f a r away from c e r t a i n s o c i a l groups adds new terms of trade-off to the l o c a t i o n game. What emerges at t h i s point i s an a c c e s s i b i l i t y matrix, i n which.individuals w i l l t r y to balance-off a l l the dimensions of t h e i r a c c e s s i b i l i t y preferences... Diagram 6.1 depicts one of the p o s s i b l e ways i n which t h i s a c c e s s i b i l i t y matrix can be v i s u a l i z e d .  Some of the t r a d e - o f f s involved i n terms of  s o c i a l segregation are summarized below. A)  A c c e s s i b i l i t y to the c i t y (geometry and geography).  In terms of c i t y d i -  mensions, i t was suggested i n Chapter 3 that d i f f e r e n t s o c i a l types have d i f f e r e n t a c c e s s i b i l i t y requirements.  For instance, the s o c i a l rank d i -  mension behaves more or l e s s l i k e the economic man described above: the trade-offs i n terms of s o c i a l rank r e l a t e to both distance to. CBD and geographic features.  The l o c a t i o n pattern by s o c i a l rank w i l l thus .be s i m i l a r  to the s e c t o r - r a d i a l gradient combination already described.. Family status, as suggested-by numerous e m p i r i c a l research studies (see pages 36-5.8) tends to have a c l e a r r a d i a l gradient: family size increases w i t h distance from  rfehe-  CBD.-  -It CQ,uld, thus.,-be.. concluded- tha.-t-, family; status :i  r e l a t e s mostly to.the geometry of the c i t y .  I f family s i z e i s substituted f o r  income i n Alonso's u t i l i t y curves, a family-status l o c a t i o n function.could be derived. In terms of e t h n i c i t y , the a c c e s s i b i l i t y t r a d e - o f f s would appear to be mostly r e l a t e d to the geographic dimension of the c i t y (remember the example of Norwegians i n New York, p. t h e i r native l a n d ) .  who look f o r features resembling those of.  The e t h n i c i t y dimension, on the other hand, i s a changing  107 one: as the groups become integrated i n t o the.new s o c i t y , the e t h n i c i t y dimension tends to become l e s s important and other f a c t o r s tend to p r e v a i l i n the l o c a t i o n decision. B)  A c c e s s i b i l i t y to other s o c i a l groups i s one way of describing what was previously defined as segregation a t t i t u d e s .  Although t h i s aspect.of l o c a -  t i o n i s probably the one i n which l e a s t i s d e f i n i t e l y known, there seems to be at l e a s t some evidence to suggest that: In terms of s o c i a l status, high-income groups would prefer to l i v e f a r away from low-status ones, but the preferences of the low-status persons towards the high-status ones are not c l e a r . Familism seems to be n e u t r a l i n terms of segregation.  There i s , h a r d l y  any evidence suggesting e i t h e r a t t r a c t i o n or r e j e c t i o n a t t i t u d e s between groups having d i f f e r e n t family status only. -  E t h n i c i t y would appear to r e s u l t i n the desire of at l e a s t some groups to l i v e close to t h e i r own group, mostly i n the i n i t i a l period of settlement.. Long-time residents would have d i f f e r e n t types of closeness-distance  preferences to new immigrants, depending on the p a r t i c u l a r e t h n i c / r a c i a l o r i g i n of the immigrants and the ethnic composition of the o l d residents.. Thus, the positive/negative components of the e t h n i c i t y dimension of t h e , a c c e s s i b i l i t y matrix cannot be generalized and should be derived from the s p e c i f i c analysis of the groups at play ..in each case. The.location f a c t o r s summarized up to t h i s point suggest at l e a s t f i v e dimensions f o r the a c c e s s i b i l i t y matrix.  Two of them r e f e r to the c i t y  (geometry and geography), and three of them, r e f e r to the i n d i v i d u a l s ( s o c i a l rank, family status and e t h n i c i t y ) .  Each of these f i v e .dimensions would y i e l d  a s p e c i f i c type of a c c e s s i b i l i t y requirements and trade-offs f o r each of the three dimensions of the s o c i a l groups a t play. i n t e r a c t i o n s i s depicted i n Diagram  6.1.  This multi-dimensional set of  1.08, The diagram shows the r e l a t i o n s h i p s suggested f o r the a c c e s s i b i l i t y matrix which appear to be consistent with the evidence presented i n Chapters 2 and 3 (Economic and Socio-Ecologic Factors o f Location). I t should be noted t h a t , although these values are reasonably consistent with the preceeding evidence, they represent only a f i r s t and very general approximation which should be developed by future research Into a more accurate and precise formulation.  \  .LOCATION  XpiMENSlONS  ciTY  GEOfAETKY SOCIAL.  <  \  HI6H  < LOU)  £  u.  >-  WITH CHILDREN  WITHOUT :CHILDECN . .NATIVE  y-  0  2  FOKEKSW  tr  BOE.M  6EO&KAPHY  DISTANCE  LOT  POSITIVE  TO  SIZE  FEATURES  tBD  SOCIAL  D I M E N S I O N S  NEGATIVE  -o  + + o  4-  2  LOU  ?  2 a  :  FPvNULlSIA  ETHMICITY  WITH  WITHOUT  NAT WE  CHILHtEM  CHILDREN  BOKM  "  Foeeidw  '  -2  q o o o  *  •  +  HUSH  +  o +- + + O + o +• + o  SOCIAL RfkNK.  +H  —  + H ;+H  +H+  — .Positive c o r r e l a t i o n  -• .Negative c o r r e l a t i o n  2 No c l e a r evidence  Q No c o r r e l a t i o n  Note: Symbols represent r e l a t i v e rather than absolute preferences. For example, the 0 value i n Children/CBD box i n d i c a t e s that households with c h i l d r e n are l e s s i n t e r e s t e d i n CBD a c c e s s i b i l i t y than c h i l d l e s s households.  Diagram 6.1  (-)  1C'9J :  At t h i s p o i n t , the i n i t i a l l y r a d i a l income gradient has been modified by the whole set of trade-offs i d e n t i f i e d .in.the a c c e s s i b i l i t y .matrix. .The emerging l o c a t i o n pattern i s l i k e l y to be very s i m i l a r to the 'club sandwich' described by Schwirian (see quote on page 4-2), i n which each of.the s o c i a l d i mensions adds a d i f f e r e n t l a y e r to the o v e r a l l r e s i d e n t i a l c o n f i g u r a t i o n .  The r o l e of income:  In terms of s o c i a l class segregation, income was considered  as an i n d i c a t o r of s o c i a l rank; income:.in t h i s respect would be regarded as one of the parameters of the a c c e s s i b i l i t y matrix and, as such, i t "'Is one of .the v a r i a b l e s r e l a t e d to the u t i l i t y f u n c t i o n .  In other words, the r o l e of income  would be described i n t h i s respect as one of the dimensions of the preferences of each i n d i v i d u a l . At the.same time, income has an a d d i t i o n a l e f f e c t .  I f we apply again  the basic notion of economic theory, i . e . that the l o c a t i o n f u n c t i o n represents the e q u i l i b r i u m between a u t i l i t y f u n c t i o n and a budget c o n s t r a i n t , the new r o l e of income can be explained i n terms of aff o r d a b i l i t y : ... •. In the. multidimensional model, the l o c a t i o n d e c i s i o n . i s i n f a c t described as the choice of optimum amounts of a l a r g e r set of consumption goods. To the i n i t i a l . c o n s u m p t i o n of land and distance to CBD (geometric.choice), four other 'consumption goods' have been added: .distance to•geographic features and distance to the three s o c i a l dimensions of the d i f f e r e n t groups.. The optimum amount of a given set of consumption goods an i n d i v i d u a l . w i l l purchase i s that i n which the preferences of each i n d i v i d u a l are.at. equi-  l i b r i u m with the q u a n t i t i e s he can purchase with h i s income w i t h i n a .given set of p r i c e s .  Thus, to the extent that these added dimensions of location.have.  indeed an e f f e c t on p r i c e s , l o c a t i o n i n t h i s multidimensional model w i l l be. again a f u n c t i o n of income; optimum l o c a t i o n w i l l be the l o c a t i o n .in which each i n d i v i d u a l can purchase the optimum q u a n t i t i e s of these multidimensional l o c a t i o n f a c t o r s given a c e r t a i n set of preferences and a budget c o n s t r a i n t .  '  119  Again, i t would be reasonable to p r e d i c t that higher income groups are l i k e l y to outbid i n those areas where the amount of .the most desirable l o cation f a c t o r s i s maximized (better geographical features, higher-status  neigh-  borhoods and so on) and lower income groups w i l l tend to locate where the l e a s t preferred or i n f e r i o r goods are maximized.  Thus,. l o c a t i o n . o f the high income  groups i s p r i m a r i l y r e l a t e d to t h e i r own preferences i n terms of family, ethnic and s o c i a l c h a r a c t e r i s t i c s while l o c a t i o n of the lower income groups i s , again, r e l a t e d p r i m a r i l y to the preferences of the higher groups.  Third assumption relaxed; housing stock i s added.  The next step of the analysis  i s the i n t r o d u c t i o n of housing q u a l i t y as an a d d i t i o n a l dimension. . Let us assume that, given a f i x e d population, an optimum l o c a t i o n was found f o r .each i n d i v i d u a l i n terms of the a c c e s s i b i l i t y matrix previously described.  The s i -  t u a t i o n at t h i s point i s not u n l i k e that of a group of s e t t l e r s having., d i f f e r e n t s o c i a l status, family and ethnic c h a r a c t e r i s t i c s , who a production/commercial centre i n a new land.  s t a r t a new. town.around  A f t e r some.deliberations, the  group can be expected to d i s t r i b u t e s p a t i a l l y around t h i s centre and .occupy a c e r t a i n amount of land.  Each household w i l l acquire a piece of land and b u i l d  a dwelling u n i t appropriate  to t h e i r rank, family and ethnic preferences; neigh-  borhood services can be also expected to be b u i l t at this.point.. Thus, the housing bundle i s suggested to be i n i t i a l l y . t h e r e s u l t of the ' f i r s t round' of the l o c a t i o n game. Location and housing q u a l i t y are at equilibrium: each household has b u i l t the best possible.house" at'the best possible location.  Housing q u a l i t y w i t h i n t h i s framework i s not an independent  v a r i a b l e , but the r e s u l t (or concomittant f a c t o r ) of the f i r s t f i v e dimensions of l o c a t i o n .  Fourth assumption relaxed; population, grows.  The i n t r o d u c t i o n of  population  growth has the e f f e c t of a l t e r i n g the i n i t i a l equilibrium of l o c a t i o n f a c t o r s .  Ill E i t h e r n a t u r a l growth or immigration w i l l bring.new households to the hypothet i c a l e q u i l i b r i u m town.  These new households w i l l have .varying c h a r a c t e r i s t i c s  i n terms of s o c i a l , family and ethnic status.  I t can be expected that new-  comers w i l l have s i m i l a r preferences to those of the groups already l i v i n g i n the c i t y .  At- -the same time, since the o l d residents have already, occupied the :  land around the centre, the only place where housing can be added i s a t the periphery of•the c i t y . At t h i s p o i n t , housing q u a l i t y i s more than, the r e s u l t of t h e . i n i t i a l l o c a t i o n round and behaves as an a d d i t i o n a l dimension of the l o c a t i o n game.  To  the extent,that newcomers have housing preferences similar, to those of .the o l d residents, t h e i r l o c a t i o n d e c i s i o n w i l l be influenced by the housing q u a l i t y component. A)  Several points are worth noting here:  Population growth i s r e l a t e d to CBD expansion.  The immigrant comes  a t t r a c t e d by the growth i n the c i t y ' s economic base, and the a r r i v a l , i n turn, r e s u l t s i n a d d i t i o n a l demand f o r commercial and other s e r v i c e s . Whatever the e f f e c t of t h i s economic m u l t i p l i e r , the s p a t i a l counterpart of i t i s the change i n use of some u n i t s to n o n - r e s i d e n t i a l use.. ;.So the newcomer brings both an a d d i t i o n a l demand and a reduced supply of the housing B)  stock.  The supply-reduction e f f e c t has been described i n Chapter.5 i n terms of succession process i n which residents of the i n n e r . r i n g move to successive-, l y o u t l y i n g areas.  This i n i t i a l move produces an expectation ..effect which  behaves as a m u l t i p l i e r and accelerates the succession process. C)  In a d d i t i o n to the supply-reduction e f f e c t , there i s the demand e f f e c t . produced by the housing needs of the newcomer. To.the extent that the l o c a t i o n needs of the newcomer matches the distance/land quantity p o s i t i o n , i n p e r i p h e r a l areas, population growth proceeds w i t h o u t . a l t e r i n g the i n i t i a l e q u i l i b r i u m i n t h i s respect.  I f , on.the contrary,, the newcomers  have d i f f e r e n t types of needs, a d i f f e r e n t process would occur.  This pro-  112 cess was described i n the arbitrage model i n terms of . succession by two d i f f e r e n t income groups i n one l i n e a r d i r e c t i o n , s t a r t i n g from CBD  and  y i e l d i n g a new.house i n the periphery. D)  To the extent that l o c a t i o n follows the multi-dimensional matrix, though, the succession process i s not n e c e s s a r i l y l i n e a l .  For instance, low-  income groups and. c h i l d l e s s households may p r e f e r c e n t r a l l o c a t i o n s ; . people of p a r t i c u l a r ethnic groups w i l l want to l i v e close to.those.of.the same ethnic o r i g i n : high-income f a m i l i e s may want to avoid lowlands .event-, u a l l y located i n the periphery, and so on.  So the- l o c a t i o n f i n a l l y , .chosen  by the newcomer w i l l t r i g g e r a multidimensional chain of moves, i n which each affected.household w i l l re-assess the e q u i l i b r i u m f a c t o r s . o f the i n i t i a l p o s i t i o n against the cost-benefits of several a l t e r n a t i v e next locations. At t h i s p o i n t , the .'housing market i s no longer i n e q u i l i b r i u m : the i n i t i a l mismatch i n supply and demand has' produced several m u l t i p l i e r s which accelerate and a l t e r the succession process i n a number of ways... Some.-.of these d i s e q u i l i b r i u m f a c t o r s have already been described i n . Chapter 5 .•(i.e..: .CBD. . expectation effect,, 'area going poor' expectation e f f e c t ) . s t i l l worth p o i n t i n g out:  Some b.thers are  •  People move but the housing bundle i s f i x e d .  This housing, bundle.includes  not only a housing q u a l i t y component; i t also represents- an,optimum a c c e s s i b i l i t y / l a n d quantity p o s i t i o n .  The next p o s i t i o n may represent an Improve-  ment over the 'going poor' neighborhood, but i s at the same time a. d e t e r i o r a t i o n of the. a c c e s s i b i l i t y optimum.-  ..  ... ...  The number of u n i t s added at the periphery i s a f u n c t i o n of population, growth.  I f the growth rate i s s i g n i f i c a n t l y high, the total.amount  of  houses needed at each stage may be such that exceeds the land a v a i l a b l e . a t any given distance f o r the e q u i l i b r i u m l o t / s i z e - a c c e s s i b i l i t y . combination. Whoever moves to the new u n i t s w i l l be gaining i n terms of housing q u a l i t y ,  113 but the geometry of the new l o c a t i o n w i l l . b e f a r t h e r away from the optimum. In short, the r e s u l t of population growth., i s to transform an i n i t i a l equilibrium s i t u a t i o n i n one of continuum disequilibrium:, s o c i a l a t t i t u d e s w i l l accelerate the process beyond-the a c t u a l demand-supply .needs. . Each new p o s i t i o n w i l l r e s u l t i n an.improvement f o r one of the elements.of. t h e i a e c e s s i - , b i l i t y matrix, but a d e t e r i o r a t i o n of other elements.. This, continuum of,.dise-,.. q u i l i b r i u m p o s i t i o n s r e l a t e s . t o the number of variables i n the accessibility... matrix: the more dimensions we consider, the more succession e f f e c t s we .can reasonably.predict.  F i f t h assumption: there i s one c e n t r a l CBD.  The assumption of one central, em-  ployment centre w i l l not be relaxed i n . t h i s a n a l y s i s .  The purpose of the. whole  exercise has been to h i g h l i g h t some v a r i a b l e s a f f e c t i n g the r o l e of t r a n s i t i o n areas around.the CBD.  For t h i s purpose, the i n t r o d u c t i o n .of  a.multi-nuclei  type of model of urban structure would only serve to. add complexity without s i g n i f i c a n t l y a l t e r i n g the major concepts h i g h l i g h t e d i n the a n a l y s i s .  S i x t h assumption:, there i s unlimited land to expand.  This l a s t assumption i s  i n f a c t part of the geometric dimension of the c i t y ; i n this-:sense,, i t s relaxat i o n would not introduce a new dimension to the l o c a t i o n game;, rather,.-it would a l t e r the distance-to-CBD/quantity-of-land r e l a t i o n s h i p i n the u t i l i t y , f u n c t i o n . R e s t r i c t i o n s to.land expansion reduce the t o t a l amount of land- for, urban development.  Land being generally more scarce, o v e r a l l prices and.densities .can be  expected to increase; thus, each i n d i v i d u a l can purchase l e s s land ..at; a higher p r i c e at any given distance than would be the case i f no r e s t r i c t i o n s to land a v a i l a b i l i t y are present. Two types of r e s t r i c t i o n s t o land a v a i l a b i l i t y can be v i s u a l i z e d : 1) n a t u r a l b a r r i e r s to, expansion., (such as lakes,, mountains, f l o o d p l a i n s ) and . man-made b a r r i e r s , such as urban growth boundaries or freeze of. . a g r i c u l t u r a l J-  '.Inland.  One.aspect, of l a n d . r e s t r i c t i o n s , worth p o i n t i n g out i s the r e l a t i o n bet-  ween land a v a i l a b i l i t y and the c e n t r a l l o c a t i o n , ofthe-.GBDv..-:.;,lf.v i  I  f o r instance, do not allow a p e r f e c t l y r a d i a l expansion but l i m i t growth" to only some sectors around.the CBD, 6.2,  as shown i n the two cases-depicted i n Diagram  the e f f e c t i s o v e r a l l larger-commuting distances f o r .any .given .population:••  the l a c k of land i n some, sectors must be compensated;by.additional expansion, of the remaining  sectors where there i s land a v a i l a b l e . To the extent that,  commuting distances have a threshold determined by e a c h . i n d i v i d u a l s income. 1  and time a v a i l a b l e f o r commuting, t h i s threshold i s reached at an- e a r l i e r stage of growth i n c i t i e s with n a t u r a l b a r r i e r s to r a d i a l expansion.  (A)_ U n r e s t r i c t e d expansion  Diagram  (B)  Restricted^expansion  6.2  In summary,, the multidimensional model o u t l i n e d above, i s suggested as a t h e o r e t i c a l framework, that encompasses.the most .important, location, f a c t o r s .re- viewed in.the preceeding  chapters.  Social, groups are defined i n , three dimen-..  sions: s o c i a l rank, familism and e t h n i c i t y ; i n each of these ..dimensions, they as assumed to make a choice r e l a t e d to f i v e dimensions of the c i t y : geometry, geography and the three dimensions of the other groups, a t play.  The.interre- •  l a t i o n s h i p s between these v a r i a b l e s are.synthesized,in an a c c e s s i b i l i t y / m a t r i x . One output of t h e - a c c e s s i b i l i t y matrix i s an .aggregate set.of u t i l i t y functions which .represent the preferences of each individual.,for; the, five'.dimensions.  The optimum l o c a t i o n f o r each i n d i v i d u a l i s suggested to be that i n  , 11-5 which t h i s aggregate u t i l i t y function.meets a budget constraint.  For the  higher-income groups, the actual l o c a t i o n i s suggested to be a function .of t h i s group's preferences i n terms of family status, s o c i a l rank and e t h n i c i t y , while for the lowest-income groups l o c a t i o n i t i s suggested to be p r i m a r i l y a funct i o n of the high-income groups' preferences. Housing and neighborhood q u a l i t y are suggested to behave as i n t e r vening v a r i a b l e s i n the a c c e s s i b i l i t y matrix: an i n i t i a l (equilibrium) l o c a t i o n y i e l d s a c e r t a i n housing and neighborhood q u a l i t y pattern.  This pattern would  a f f e c t successive l o c a t i o n decisions and l o c a t i o n changes derived- from populat i o n growth.  The changes would, i n turn, a f f e c t the e x i s t i n g pattern and con-  tinue the process.  6.2  THE NATURE OF THE GENTRIFICATION PROCESS The body of theory o u t l i n e d i n preceeding chapters has attempted to  explain some of the c h a r a c t e r i s t i c s of the r e s i d e n t i a l components of T r a n s i t i o n Areas, as.they appear i n most North American c i t i e s .  These c h a r a c t e r i s t i c s can  be summarized as f o l l o w s : In terms of population composition, T r a n s i t i o n Areas tend.to contain disproportionate amounts of low-income and lower status persons, f i r s t generation ethnic and r a c i a l groups, and small households without c h i l d r e n .  A.relati-  vely s i g n i f i c a n t proportion of t h i s population i s transient i n nature. In terms of p h y s i c a l c h a r a c t e r i s t i c s , T.A. tend to be composed mostly of old,  deteriorated dwelling u n i t s and d e c l i n i n g neighborhoods.  There i s a  r e l a t i v e l y higher proportion of r e n t a l accomodations over owner-occupied dwellings. In terms of neighborhood change process, T.A. show a process of change from r e s i d e n t i a l to CBD type of uses.  This change, and the expectations derived  from i t , tend to accelerate the decline process and extend t h i s process to adjacent neighborhoods.  116 The  t h e o r e t i c a l framework provided some i n s i g h t as to the major r e s i -  d e n t i a l l o c a t i o n factors r e l a t e d to these c h a r a c t e r i s t i c s of T.A. However, as shown i n the introductory  part of t h i s chapter, a new  trend appears to be emerging i n some North American c i t i e s : t r a d i t i o n a l l y , old and deteriorated  housing i n c e n t r a l areas seem to be a t t r a c t i v e f o r some,  middle-to-high income groups; t h i s trend would r e s u l t i n changes i n population composition, physical c h a r a c t e r i s t i c s and change process i n T r a n s i t i o n Areas. The purpose of t h i s chapter i s to provide some t h e o r e t i c a l background that can be h e l p f u l i n explaining the causes, c h a r a c t e r i s t i c s and e f f e c t s of t h i s new l o c a t i o n trend, p a r t i c u l a r l y i n terms of low-income groups. By b r i e f l y reviewing the l o c a t i o n f a c t o r s derived from the body of theory, an attempt w i l l be made to i d e n t i f y those factors that may be r e l a t e d to t h i s change i n trend and the e f f e c t s of i t on the overall, l o c a t i o n game. This section contains a discussion of the following issues: 1) def i n i t i o n of g e n t r i f i c a t i o n , 2) causes of g e n t r i f i c a t i o n , 3) e f f e c t s of g e n t r i f i c a t i o n and 4) e f f e c t s of rehab subsidies.  The f i r s t part i s based on d e f i -  n i t i o n s of r e l a t e d concepts, such as f i l t e r i n g .  The second part i s based on  the a c c e s s i b i l i t y matrix described i n the preceeding section.  The t h i r d and  fourth parts apply the Arbitrage model of neighborhood change.  6.2.1  DEFINITION OF GENTRIFICATION The  evidence presented i n the introductory  chapter describes a  change i n l o c a t i o n trends which has been defined as 'gentrification.', 'private r e h a b i l i t a t i o n ' or 'resettlement' by d i f f e r e n t researchers. phenomenon i s characterized  This  by both a change i n l o c a t i o n preferences of some  s o c i a l groups and a change i n housing q u a l i t y i n some c e n t r a l areas; these areas t y p i c a l l y undergo, a process of p r i v a t e l y financed r e s t o r a t i o n of o l d b u i l d i n g s , which are then occupied by some middle-to-high-income .households. A d e f i n i t i o n of t h i s process could be approached from two points of view:  A)  The focus can be on the household; g e n t r i f i c a t i o n i n t h i s case would be defined as a change of l o c a t i o n preferences.  B)  The focus can be on the dwelling u n i t , i n which case g e n t r i f i c a t i o n would be defined as a change i n housing q u a l i t y or occupancy p a t t e r n . The two approaches r e f e r to the same process, only w i t h . d i f f e r e n t  points of view; f o r the purpose of t h i s research, the f i r s t approach appears to have at l e a s t two advantages: -  A d e f i n i t i o n based on housing q u a l i t y changes would be d i f f i c u l t to. d i f f e r entiate from the concept of f i l t e r i n g , , which i s characterized by housing, q u a l i t y changes as w e l l .  Furthermore, a d e f i n i t i o n based on preference  changes makes i t possible to derive the causes -of the process from the l o cation preferences described i n terms of the a c c e s s i b i l i t y matrix. On the other hand, the process :of resettlement described by the evidence presented before appears to be suggesting two d i s t i n c t types of phenomena: i n some cases, resettlement occurs around w e l l defined areas, while i n . others, the trend r e f l e c t s a more general change i n the population composit i o n i n c e n t r a l areas w i t h no c l e a r l o c a t i o n focus. Although the f i r s t case i s -more apparent i n terms of perceived phys i c a l changes in-the affected areas, the second one i s probably more frequent. Furthermore, the f i r s t case i s l i k e l y to be strongly r e l a t e d to s p e c i f i c char a c t e r i s t i c s of c e r t a i n areas (such as c u l t u r a l or geographic t r a i t s ) , while the  second case i s l i k e l y to be more c l e a r l y r e l a t e d to more general l o c a t i o n  trends. Given.these considerations, i t would be reasonable to define the g e n t r i f i c a t i o n . process as a change i n the socio-economic composition of some c e n t r a l neighborhoods,, from a predominance of low-income households to a higher proportion of r e l a t i v e l y higher-income residents; - t h i s l o c a t i o n trend  i s l i k e l y to r e s u l t i n the upgrading of the p h y s i c a l q u a l i t y of the a f f e c t e d neighborhoods.  6.2.2  CAUSES OF GENTRIFICATION From the theory research, i t was suggested that l o c a t i o n i s a process  whereby s o c i a l groups i n t e r a c t w i t h the c i t y .  The i n t e r a c t i o n was suggested  to take place i n several dimensions: the s o c i a l groups were categorized .in- . terms of. s o c i a l rank, familism and e t h n i c i t y .  In each of these dimensions,  groups would make a choice r e l a t e d to f i v e dimensions of the c i t y : geometry,, . geography, and the three dimensions of the other s o c i a l groups at play. Housing and neighborhood q u a l i t y was suggested to be an intervening variable:, an i n i t i a l (equilibrium) s i t u a t i o n would r e s u l t i n a c e r t a i n housing quality, d i s t r i b u t i o n ; t h i s d i s t r i b u t i o n would a f f e c t successive l o c a t i o n changes derived from population growth.  The changes would, in. turn, a f f e c t  housing and neighborhood q u a l i t y and continue the change process.. On the other hand, g e n t r i f i c a t i o n has been defined as a change i n • l o c a t i o n preferences of a c e r t a i n s o c i a l group.  The t y p i c a l component of t h i s  group was described as a young, c h i l d l e s s household w i t h high education and medium-to-high  income; most of the r e s e t t l e r s are white,, but other components  of the e t h n i c i t y dimension are not c l e a r from the existing- evidence.  This  s o c i a l group i s t y p i c a l of the f i r s t stage of the g e n t r i f i c a t i o n process; as resettlement consolidates over time, the s o c i a l composition.appears to show a higher proportion of f a m i l i e s with c h i l d r e n and lower education/income status. Our task, then, consists i n the i d e n t i f i c a t i o n of the attitudes, of t h i s group i n at l e a s t two dimensions (familism, s o c i a l rank) as they r e l a t e to the f i v e dimensions of l o c a t i o n i n the a c c e s s i b i l i t y matrix.  In each of  ,119 these dimensions, the analysis.should show some p o s s i b l e f a c t o r s that may lead to,the observed change i n a t t i t u d e .  The dimension of housing q u a l i t y should  be treated as an intervening v a r i a b l e r e l a t e d to both the causes and the e f f e c t s of the g e n t r i f i c a t i o n process. The a n a l y s i s s t a r t s with the two-dimensional game which r e l a t e s the economic dimension of the s o c i a l groups with the geometry of the c i t y , and continues with the successive i n t r o d u c t i o n of the remaining dimensions.  G e n t r i f i c a t i o n and c i t y geometry.  Assuming that l o c a t i o n r e l a t e s to i n d i v i - .  duals preferences i n terms of l o t size and distance to the GBD, the f i r s t part of the a n a l y s i s should detect those changes with which high-income groups' preference f o r c e n t r a l ' l o c a t i o n s would make economic sense. Within.Alonso's  model, the users of land with steeper b i d - p r i c e  curves l o c a t e nearer the center of the c i t y .  The wealthy w i l l l o c a t e i n the  periphery as long as the steepness of the b i d - p r i c e curves tend to decrease w i t h income increases.  Decreasing  steepness w i t h income occurs, when land i s  generally valued more than a c c e s s i b i l i t y .  In economic terms, t h i s i s the ,  same as saying that a strong appetite f o r land y i e l d s higher rates, of s u b s t i t u t i o n f o r land ( p o s i t i v e rate) than the (negative) s u b s t i t u t i o n rate f o r distance.  This has been summarized by Alonso as f o l l o w s :  "Given a strong appetite f o r land, so that the holdings of land vary g r e a t l y with income, the wealthier.are a f f e c t e d r e l a t i v e l y l e s s by the costs of commuting because they spread those costs over l a r g e r . s i t e s . Consequently, the r i c h are p r i c e - o r i e n t e d whereas the poor are l o c a t i o n - o r i e n t e d . Less a c c e s s i b i l i t y bought w i t h i n c r e a s i n g income, a c c e s s i b i l i t y behaves as an i n f e r i o r good.-" (Alonso,. 1964, p. 109) Thus,, the change i n steepness of the b i d - p r i c e curves.with income increase i s a f u n c t i o n of the r e l a t i v e u t i l i t y of land as compared with the  120 disutility  of t r a n s p o r t a t i o n .  I t can.be argued, then,, that a reverse s i t u a t i o n  may occur (that i s , steeper slopes with increasing income) i n cases when the extra u t i l i t y of land i s generally considered l e s s valuable than the extra disutility  of distance. In Alonso's words, again:  "The American, case, where the p e r i p h e r a l , suburban l o c a t i o n s are occupied by the well-to-do, corresponds to the case of a slowly decreasing, marginal rate of s u b s t i t u t i o n . In the p r e - i n d u s t r i a l town, where there was s l i g h t d i f f e r e n t i a t i o n i n the s i z e of the l o t s , 'the leading tradesmen l i v e i n the centre of town, the common, people i n the p e r i phery* . S i m i l a r conditions obtain i n other c i t i e s of the world today i n countries such as India and those of L a t i n America." (Alonso, 1964 p. 108-109. Quote from G. Paulson, The Study of Gities,. 1959). At the same time, i t was submitted i n Chapter 2 that l o c a t i o n of lowincome groups would tend to be i n places such that they consume l e s s of the good considered  'superior' and more of the good considered i n f e r i o r , because  t h e i r - a f f o r d a b i l i t y c e i l i n g would not l e t them outbid the r i c h i n other l o c a tions. Given these considerations, some cases in.which a. reverse income/ . steepness s i t u a t i o n (steeper curves with increasing incomes) would occur may A)  be:  R e l a t i v e l y low appetite f o r land: i n cases where large parcels are not.  g r e a t l y desired, i t can be.expected that the s i z e of the parcels would not change g r e a t l y with distance. . The marginal u t i l i t y of land would be l e s s than the marginal d i s u t i l i t y  of distance; therefore, high income groups, would  tend to show steeper b i d - p r i c e curves.  This case w i l l , be examined l a t e r on,  when population growth f a c t o r s are introduced. B)  Higher t r a n s p o r t a t i o n cost: t h i s would produce generally steeper land/  p r i c e gradients; p r i c e s w i l l be extremely high i n c e n t r a l l o c a t i o n s and close to 0'value at r e l a t i v e l y short distances.  reach  The e f f e c t of t h i s .in changing  the income gradient can be shown In two ways: I f the p r i c e of land i n . c e n t r a l l o c a t i o n becomes so high that the lowincome group cannot buy even a minimum p a r c e l , then these groups . w i l l have to choose those.places where land p r i c e approaches 0 value.  By s a c r i f i c i n g  121 distance (paying the high commuting costs) they can get a r e l a t i v e l y cheap piece of land.. . Transportation being a scarce commodity, the marginal d i s u t i l i t y of transp o r t a t i o n w i l l tend to be higher than the marginal u t i l i t y of land.  As  income increases, i t . c a n be expected that the optimum l o c a t i o n would tend • to give more economies i n t r a n s p o r t a t i o n (shorther distances). Thus, to the extent that f u e l becomes expensive and scarce, it..can be expected that people w i l l t r y to maximize transportation savings.over i n land.  savings  In terms of a market equilibrium model, t h i s y i e l d s more c e n t r a l  l o c a t i o n f o r high income groups. C)  Population Growth:, sheer population growth may a l t e r the' a'cc'eilsibili*:  ty/land quantity r e l a t i o n s h i p . The pattern of increasing income with distance assumes that land i s generally preferred over a c c e s s i b i l i t y ; however, a c i t y expanding r a d i a l l y with no r e s t r i c t i o n s to land supply y i e l d s increasing quant i t i e s of land with i n c r e a s i n g distances.  Even i n an i n i t i a l case where land  i s considered more d e s i r a b l e , i t i s reasonable to expect that,, i f population grows beyond a c e r t a i n threshold (which may be defined, f o r instance, as a maximum commuting time w i t h i n a given t r a n s p o r t a t i o n technology), the r e l a t i v e d e s i r a b i l i t y of more c e n t r a l l o c a t i o n would become more important than the desired f o r land quantity. D) " Zoning: j _ general, i t can be argued that zoning increases the d e s i r a b i l i t y n  of land, to the extent to which i t r e s t r i c t s the o v e r a l l supply; i f land i s generally scarcer, the b i d - p r i c e curves would tend to be gentler; i n t h i s sense, zoning would lead to p e r i p h e r a l l o c a t i o n of t h e . r i c h . However, the e f f e c t of zoning depends on the a c t u a l regulations i n each case.  For instance,  i f c e n t r a l areas are zoned f o r very low d e n s i t i e s , purchasers would be forced to buy more land than they would under free market conditions; i f that i s the case, site, p r i c e s i n c e n t r a l areas can be expected to become higher than what the lowest-income groups can a f f o r d .  This e f f e c t can be increased i f , at the  122, same time, l o t sizes i n p e r i p h e r a l areas are smaller than the optimum landquantity/ distance-to-CBD r e l a t i o n s h i p . Thus, the e f f e c t s of zoning cannot be generalized.  I t would be rea-  sonable to expect that, i f minimum l o t s i z e s i n peripheral areas are s u f f i c i e n t l y small and l o t sizes i n c e n t r a l areas are r e l a t i v e l y high, the r i c h would tend to outbid i n c e n t r a l l o c a t i o n s , where they would obtain both land quantity and a c c e s s i b i l i t y to 'E) Urban.Growth boundaries:  CBD.  The e f f e c t of urban growth boundaries must be consi-  dered i n conjunction with population growth.  To the extent that the already  developed area of a c i t y i s close to s a t u r a t i o n under current zoning regulat i o n s , increases i n population must r e s u l t i n additions of new housing i n p e r i p h e r a l areas.  Under free market conditions, the urban area w i l l expand  u n t i l a l l the new households achieve the optimum l o t - s i z e and distance combination. I f a l i m i t i s f i x e d to expansion, however, the s i z e of the new  sites  has to be such that the t o t a l number of s i t e s matches the number of new households w i t h i n the boundary.  In r a p i d l y growing areas, t h i s may r e s u l t i n s i t e  sizes smaller than the optimum.  I f such i s the case, high income groups w i l l  be w i l l i n g to pay a premium f o r more c e n t r a l l o c a t i o n s . This e f f e c t may be compounded over the years.  I f we v i s u a l i z e urban  growth as successive rings added to the periphery of the c i t y , each new r i n g w i l l have a l o t s i z e optimum f o r the population, income l e v e l and a v a i l a b l e land at the corresponding time of; growth.  To the extent that population  growth rate increases, and r e s t r i c t i o n s to urban expansion also increase over the years, t h i s may w e l l r e s u l t i n l o t sizes decreasing with distance.  Lots  being a c t u a l l y smaller i n p e r i p h e r a l areas, the trade-off i s no longer d i s tance versus quantity: c e n t r a l l y located l o t s may represent a net gain i n both quantity and distance. Thus, population growth i s l i k e l y to produce, again, a change i n  123 l o c a t i o n trends at some point.  I f population.grows without r e s t r i c t i o n s to  expansion, the threshold would be determined by a maximum commuting time a f t e r which a c c e s s i b i l i t y becomes a more d e s i r a b l e good than land, quantity.  I f , on  the other hand, r e s t r i c t i o n s to expansion are present, the threshold i s reached when l o t sizes become l e s s than optimum i n p e r i p h e r a l areas. The e f f e c t of population growth may be m u l t i p l i e d i f ..growth boundaries (such as mountains, water bodies or other n a t u r a l b a r r i e r s ) obstruct a p e r f e c t r a d i a l expansion around CBD.  I f growth can occur only towards some d i r e c t i o n s ,  expansion must be constrained i n smaller a v a i l a b l e land at any given distance; or higher commuting time f o r any given amount of land.  Thus, both the distance  and the quantity of land thresholds are reached at an e a r l i e r stage of growth. F)Income r e s t r i c t i o n s :  D e t e r i o r a t i o n of o v e r a l l purchasing power due to i n f l a -  t i o n or other reasons are l i k e l y to produce a preference f o r generally l i v i n g c l o s e r to the c i t y centre.  This i s consistent with the i n i t i a l assumption  that the steepness of the b i d - p r i c e curves decreases as income increases. e f f e c t of decreasing purchasing power i s depicted i n diagram  The  6.3.  Diagram 6.3 In t h i s case, the o v e r a l l preference f o r more c e n t r a l l o c a t i o n would push down the land p r i c e s i n p e r i p h e r a l areas, which would s t a r t to show the low-maintenance, d e t e r i o r a t i o n e f f e c t c h a r a c t e r i s t i c of t r a n s i t i o n areas. Again, t h i s f a c t o r points at c e n t r a l l o c a t i o n s f o r high-income groups and pe-  124 r i p h e r a l l o c a t i o n s f o r the poor.  G e n t r i f i c a t i o n and c i t y geography.  Changes i n p h y s i c a l c h a r a c t e r i s t i c s of a  c i t y may r e s u l t i n changes i n l o c a t i o n preferences.  I f we include w i t h i n geo-  graphic features both n a t u r a l and man-made p h y s i c a l c h a r a c t e r i s t i c s , the question i s : does a general suburbanization process produce p h y s i c a l changes such that l o c a t i o n preferences may be altered?  . .  The causes, c h a r a c t e r i s t i c s and e f f e c t s of the suburbanization process belong to a f i e l d of l o c a t i o n theory which has not been explored i n t h i s research.  However, at l e a s t one f a c t o r i s worth some speculations:  T r a d i t i o n a l l y , c e n t r a l areas are considered to be both commercial and employment centers.  As such, they have a l o c a t i o n 'plus' (savings i n trans-  p o r t a t i o n c o s t s ) , but a l s o what could be described as a 'geographic minus', i . e . the negative e x t e r n a l i t i e s u s u a l l y associated with commercial and i n d u s t r i a l uses (noise, t r a f f i c congestion, e t c . ) . To the extent that suburbanization r e s u l t s i n a reduction of both commercial and i n d u s t r i a l a c t i v i t i e s i n c e n t r a l areas, i t can be argued that at l e a s t somei of these negative e x t e r n a l i t i e s are also reduced.  At the same time,  the savings i n t r a n s p o r t a t i o n tend to occur towards p e r i p h e r a l l o c a t i o n s , at l e a s t f o r some groups, such as i n d u s t r i a l workers.  I t could be expected, then,  that the a c c e s s i b i l i t y f u n c t i o n i n both i t s geometric and geographic  dimensions  would tend to show a reverse pattern: p e r i p h e r a l l o c a t i o n s f o r the groups which value a c c e s s i b i l i t y to i n d u s t r i a l employment, and c e n t r a l l o c a t i o n s f o r groups who are l e s s r e l a t e d to i n d u s t r i a l or commercial jobs and l e s s a f f e c t e d by the remaining e x t e r n a l i t i e s of c e n t r a l l o c a t i o n s .  S o c i a l dimensions o f . g e n t r i f i c a t i o n .  S o c i a l groups were described i n terms of  three dimensions: s o c i a l rank, familism and e t h n i c i t y .  In each of them, each  group would have l o c a t i o n preferences with respect to geometry and geography  1-2 5' of the c i t y , and the three dimensions of the remaining groups.  We have ex-  plored some possible f a c t o r s . r e l a t e d to the income/geometry and geography d i mensions.  The remaining task i s , therefore, the a n a l y s i s of at l e a s t one  a d d i t i o n a l dimension (familism) with respect to both the p h y s i c a l and s o c i a l dimensions of l o c a t i o n , and income with respect of the s o c i a l dimensions.  Familism and p h y s i c a l t r a i t s .  As discussed previously, family status i s .  strongly r e l a t e d to distance from the CBD.:' central. l o c a t i o n s are. t r a d i t i o n a l l y preferred by s i n g l e s and c h i l d l e s s couples, while p e r i p h e r a l l o c a t i o n s are generally preferred by f a m i l i e s with c h i l d r e n . From t h i s perspective, then, i  the g e n t r i f i c a t i o n trend does not represent, at l e a s t i n i t s i n i t i a l stage, a change i n l o c a t i o n preferences; rather, i t would be just, the e f f e c t of a higher proportion of young, c h i l d l e s s households.  I f familism i s considered  alone, the l o g i c a l i m p l i c a t i o n would be that the g e n t r i f i c a t i o n trend would tend to dissapear as the baby boom generation gets older and other groups become dominant. Familism and income. though.  This p r e d i c t i o n should be s c r u t i n i z e d more c a r e f u l l y ,  To the extent that the new groups have both an income and a familism  dimension, a preference o r i g i n a l l y derived from family status may have an income e f f e c t : i n c r e a s i n g proportions of high status persons change the s o c i a l character of a neighborhood.  I f i t i s true that high status households tend  to l o c a t e close to one. another, and there i s no segregation between .different family status groups, i t could be argued that the new high status groups may produce an expectation e f f e c t and p u l l other high status groups to the upgraded c e n t r a l neighborhoods.  This expectation e f f e c t seems to be supported  by the stage theory of g e n t r i f i c a t i o n discussed i n Chapter 1: i t would appear, from the e x i s t i n g evidence, that the young, high income households are followed, as the g e n t r i f i c a t i o n process consolidates over time, by other groups t r a d i -  t i o n a l l y associated with suburban l o c a t i o n s .  Segregation.attitudes.  I t has been argued that, although the primary reason  f o r l o c a t i o n of the poor may be non-personalistic f a c t o r s (affordable housing, a c c e s s i b i l i t y to employment), an area perceived as 'going poor' drives out other, higher status groups, thus f a c i l i t a t i n g theMmove-in of a d d i t i o n a l lowincome groups. Some s i g n i f i c a n t changes with respect to t h i s t r a d i t i o n a l view have occurred i n more recent  years:  Urbanization brings about increasing d i v e r s i t y of s o c i a l types.  In terms of  family status, f o r instance, the unmarried, c h i l d l e s s status of young households has evolved from a t r a n s i e n t stage i n the l i f e - c y c l e to a more permanent choice of l i f e s t y l e f o r l a r g e r sectors of the population.  This i n -  creasing d i v e r s i t y brings increasing v a r i e t y of housing and l o c a t i o n needs. -  Related to increasing d i v e r s i t y i s a change i n a t t i t u d e s among d i f f e r e n t groups: as a wider range of types appear, the differences between groups become l e s s apparent, and i n t e r a c t i o n increases.  I t i s significant,., f o r  instance, that those households surveyed by the N.U.C. who had moved to r e h a b i l i t a t e d housing generally perceived s o c i a l mix as a p o s i t i v e f a c t o r , and many of them c i t e d exposure to a v a r i e t y of l i f e s t y l e s as one of the reasons f o r t h e i r l o c a t i o n choice.  The irony of t h i s s i t u a t i o n i s that,  according to the same survey, p r i v a t e rehab r e s u l t e d i n d i s l o c a t i o n of previous residents who could not a f f o r d the higher p r i c e s , maintenance r e quirements and assessment values produced by large-scale rehab.  Thus, the  rehab process at the end defeated one of the very purposes that started i t .  Housing q u a l i t y .  One of the main explanations of the d e c e n t r a l i z a t i o n of some  groups i s r e l a t e d to housing needs and preferences.  The assumption i s that  a) young f a m i l i e s with c h i l d r e n prefer l a r g e , new housing, b) high-income  127. groups can a f f o r d and p r e f e r new housing, c) new housing i s mostly provided i n p e r i p h e r a l areas, d) therefore, f a m i l i e s with c h i l d r e n and high status persons tend to l o c a t e i n a decentralized pattern.  Thus, d e c e n t r a l i z a t i o n would  r e l a t e to the extent to which high income groups prefer and can a f f o r d new housing. On the other hand,, e x i s t i n g evidence on p r i v a t e rehab i n c e n t r a l areas suggests that; a) the income status of r e s e t t l e r s i s higher, but not always s i g n i f i c a n t l y higher, than that of o l d r e s i d e n t s ; b) r e s e t t l e r s mention the a r c h i t e c t u r a l / h i s t o r i c character of o l d houses as a p o s i t i v e f a c t o r , c) resettlement, often r e l a t e s to h i s t o r i c designation of buildings and neighborhoods, d) high cost of suburban housing i s often mentioned as a reason f o r p r i v a t e rehab i n c e n t r a l areas. Thus, there seems to be a change i n both a f f o r d a b i l i t y and p r e f e r ences a t t r i b u t e d to some .income groups.  These two changes are probably i n t e r -  r e l a t e d , and i t i s hard to say which one i s more important.  I t could be ex-  pected, however, that i n areas where suburban housing p r i c e s are e s c a l a t i n g and/ or there i s evidence of i n t e r e s t i n the h i s t o r i c preservation of buildings and neighborhoods, some degree of p r i v a t e r e h a b i l i t a t i o n i s also l i k e l y to be present. The problem i s , again, the e f f e c t of t h i s trend on housing p r i c e s . To the extent that middle-to-high groups i n i t i a t i n g the resettlement  process  produce an increase i n housing p r i c e s i n the target neighborhoods, the lowincome groups are out-bid by other middle-incomes, thus continuing the process and d i s p l a c i n g the older residents.  6.2.3.  EFFECTS OF GENTRIFICATION The l o c a t i o n f a c t o r s that have been suggested as p o s s i b l e causes of  the g e n t r i f i c a t i o n process appear to have d i f f e r e n t long term e f f e c t s on lowincome l o c a t i o n options.  Causes such as income r e s t r i c t i o n s , increase i n  128 t r a n s p o r t a t i o n costs would produce a r e v e r s a l of the income gradient, with the r i c h l o c a t i n g i n c e n t r a l areas and the poor i n the periphery.  The geographic  dimension of suburbanization would contribute to the c e n t r a l l o c a t i o n of the r i c h w i t h the poor l o c a t i n g close to the i n d u s t r i a l areas' i n the suburbs. The long term e f f e c t s of s o c i a l f a c t o r s of g e n t r i f i c a t i o n are not very c l e a r .  To the extent that g e n t r i f i c a t i o n i s merely the r e s u l t of an i n -  'crease i n the number of small, c h i l d l e s s households, i t can be argued that the phenomenon would become l e s s s i g n i f i c a n t as t h i s group moves to the next stage i n the family l i f e cycle.  On the other hand, the neighborhood upgrading pro-  duced i n the process may be s u f f i c i e n t l y s i g n i f i c a n t to a t t r a c t other middle-, to high-income groups; the expectation e f f e c t would, thus, continue the upgrading process.  In e i t h e r case, at l e a s t some displacement of the poor can be  expected but the l o c a t i o n options f o r t h i s group are not c l e a r . F i n a l l y , causal f a c t o r s such as zoning and urban growth r e s t r i c t i o n s may produce varying e f f e c t s on low-income l o c a t i o n , depending on the a c t u a l shape of the growth boundaries and the l o t - s i z e / a c c e s s i b i l i t y r e l a t i o n s h i p r e s u l t i n g i n each case.  Thus, the long term e f f e c t s of t h i s type of causal  f a c t o r s are hard to generalize and should be assessed on a case-by-case b a s i s . In terms of the short-term e f f e c t s of the process, the a n a l y s i s of causal f a c t o r s has not given s u f f i c i e n t i n s i g h t as to the manner i n which the. process develops over time.  Even i f p e r i p h e r a l location, of the poor i s to be  expected i n the long term, t h i s eventual pattern may e i t h e r be reached  in.one  s i n g l e move or develop gradually by successive moves to o u t l y i n g areas. The a n a l y s i s that f o l l o w s attempts to provide some i n s i g h t on the dynamics of the g e n t r i f i c a t i o n process as r e l a t e d to the causal f a c t o r s prev i o u s l y discussed.  This a n a l y s i s should be u s e f u l to i d e n t i f y the groups  a f f e c t e d during the process and t h e i r short-term options i n terms of r e s i d e n i a l location. The t h e o r e t i c a l framework f o r t h i s a n a l y s i s i s the Arbitrage Model  12.9^ as presented i n Chapter 5 and applied to discuss the dynamics of change i n T r a n s i t i o n Areas.  To the set of . assumptions used as a s t a r t i n g point i n the  a n a l y s i s of T r a n s i t i o n areas (see,p. .9-10 »> -"the f o l l o w i n g v a r i a b l e s are i n t r o duced: A)  A new dimension i n the s o c i a l groups i n which high-income households have two types of family status: f a m i l i e s with c h i l d r e n and c h i l d l e s s households.  B)  Location preferences f o r the new groups are: Families prefer p e r i p h e r a l areas, while c h i l d l e s s households prefer central locations. -  No s p e c i a l preferences of d i f f e r e n t family status households to l i v e e i t h e r close or f a r away from one another. The a n a l y s i s of the dynamics of t r a n s i t i o n areas contained the  assumption that the CBD. .expands ^wi-t-h-every increase in-population. .This assumption w i l l not be maintained here, since i t would complicate the a n a l y s i s and does not bring a d d i t i o n a l i n s i g h t to the e f f e c t s of CBD expansion previously d i s cussed. This set of assumptions, plus the general assumptions of the Arbitrage model, describe the s t a r t i n g p o s i t i o n of the d i f f e r e n t groups. T,bothis i n i t i a l p o s i t i o n , the l a s t assumption introduced i s that a l l the new households are small, c h i l d l e s s households w i t h middle- to high-income. Diagram 6.4 depicts the i n i t i a l p o s i t i o n .  An e x c l u s i v e l y r i c h neigh-  borhood composed of f a m i l i e s w i t h c h i l d r e n i s located i n the periphery: a boundary area contains an equilibrium mix of high and low-income households. Close to the-.CBD,jare -located, .the,;low-income- households,? -plus'-one high-income, small-family household.  130-  O •  HISH- I N C O M E CHILDLESS HOUSEHOLD HIGH-IWCOMe CHILDREN  UirH  (SD)  LOW-INCOME . HOUSEHOLD  • • • •  ©  ©  • O •  o  o  O  •  o o o  O  Diagram 6.; I f a new household of high-income and small family status i s added to the scheme, t h i s a d d i t i o n w i l l s t a r t a chain of moves i n which the new household locates, close to CBD. The stages of t h i s sequency of moves i s dep i c t e d below.  The f i r s t move, depicted i n diagram.6.5, i s the d i r e c t l o c a t i o n of the new household.  A low-income, household has/ineentlvectd  option i n the boundary area.  move^ to the next possible  A household i n t h i s area moves to the e x c l u s i v e l y  r i c h neighborhood i n which, i n turn, a household r e s u l t s located i n a new dwelling u n i t i n more p e r i p h e r a l l o c a t i o n s .  ®  • • (CBD)  o  •  D-fO • • O  1  o o  x> o o  NELU HOUSEHOLD  Diagram 6.5 This f i r s t move has r e s u l t e d i n better housing f o r a l l the households w i t h i n the chain of moves; the p r i c e paid by the newcomer f o r h i s dwelling has permitted a low-income household to a f f o r d a u n i t i n a better  i3r'  area; t h i s i n turn allowed a high-income household to finance'a new dwelling unit.  The arbitrage has, "thus favored these households. I t should be noted that t h i s ' f i r s t round' e f f e c t i s not u n l i k e the  e f f e c t produced by the a d d i t i o n of a low-income household to the e x i s t i n g pop u l a t i o n : the newcomer i s i n f a c t financing the upgrading of a l l the households moving up the f i l t e r i n g chain (see diagram 6.6 below).  The.only l o s e r i n t h i s  f i r s t round i s the eventual newcomer, of low income, which would be encountering  a more a f f l u e n t competitor f o r the c e n t r a l unit and therefore, a higher  bidding p r i c e ; the low-income newcomer has indeed, i n t h i s case, h i s housing option closed by the high-income household's preference f o r old,  central  housing.  LOUJ  EC! :HCOSEHOLDS  HIGH  o  MEU3" OUIT  -O  Diagram 6.6 From the neighborhood point of view, though, the e f f e c t i s somewhat different.  The central.area i s upgrading, but the boundary area i s downgrading,  while the high-income area remains unchanged.  The low-income households r e -  maining i n the c e n t r a l area now have a 'better' neighborhood surrounding them, but t h i s q u a l i t y improvement may also bring higher pressures f o r better maintenance standards, higher taxes and s i m i l a r a f f o r d a b i l i t y problems.  The house-  holds remaining i n the boundary area, on the other hand, experience a net det e r i o r a t i o n of housing p r i c e s , since t h i s area i s s t a r t i n g to be perceived as 'going poor'. As shown i n the diagram, t h i s f i r s t round e f f e c t may t r i g g e r a cont i n u a t i o n of the arbitrage process: the upgrading of the central, neighborhood may a t t r a c t a d d i t i o n a l households of high-income status.  132 The second move, depicted i n Diagram 6.7, shows the e f f e c t of t h i s type of expectation: i n t h i s case, a household i n the e x c l u s i v e l y r i c h area has chosen to move to the upgraded c e n t r a l neighborhood.  O  IPBD  MEU UMlf  Diagram 6.7 This move brings about, again, improvement f o r those who p a r t i c i p a t e i n the chain of movesi  The p r i c e f o r t h e i r housing improvement has been paid  t h i s time by the high-income household i s l i k e l y w i l l i n g to pay a previum f o r the house he purchases. At the same time, the neighborhood change process s t a r t e d by the new household (upgrading of the c e n t r a l area, downgrading of the boundary area) i s continued by t h i s second round of moves.  The t h i r d move, depicted i n diagram 6.8, shows a l i k e l y move started i n the boundary area.  The high-income household remaining i n t h i s area has experi-  enced a passive f i l t e r i n g down of h i s neighborhood below the q.uanlity he expected a t the p r i c e he i n i t i a l l y paid f o r h i s l o c a t i o n .  This household i s ,  thus, l i k e l y to s e l l a t a discount and t r y to move to the e x c l u s i v e l y r i c h area. Depending on the preferences of the high-income households, two types of moves can occur i n the e x c l u s i v e l y r i c h area: e i t h e r a household builds a new u n i t i n peripheral areas, or a household decides to move back to the upgraded c e n t r a l neighborhood:  133,-  -O  •  (So)  • • • •  O  o o o o  •<>-K>-  "*UMIT  6.  • • •  1  • • • •  6 Q O O  o  -O  Diagram 6.8 Households of low income s t i l l remaining i n the c e n t r a l area, on the other hand, are experiencing several changes: t h e i r neighborhood i s becoming more expensive, which may r e s u l t i n higher property taxes, higher pressure to improve maintenance standards. cAt the same time, the adjacent neighborhood i s downgrading to a point i n which they can expect to purchase a dwelling u n i t at a lower p r i c e .  Depending on the impact of the a f f o r d a b i l i t y problem, they may  f i n d i t worthwhile to move to the downgraded neighborhood.  This pressure to  move out w i l l be higher i f the upgrading of the c e n t r a l neighborhood i s a t t r a c t i n g families' previously l i v i n g i n p e r i p h e r a l areas. At t h i s p o i n t , the decision to move f o r the low-income household i s no longer produced by house improvement i n c e n t i v e s , but by p r i c e and affordab i l i t y incentives.  Thus, the e f f e c t of the g e n t r i f i c a t i o n process at t h i s  stage can be considered a displacement e f f e c t .  Low-income households are  moving to cheaper, more deteriorated areas i n which they lose not-only i n terms of neighborhood q u a l i t y , but also i n terms of a c c e s s i b i l i t y to the.CBD. The preferences of the high-income households have also another type of e f f e c t : to the extent that these households s t i l l prefer .new houses i n p e r i p h e r a l areas, the process continues more or l e s s as i n the t r a d i t i o n a l Arbitrage model discussed i n Chapter 5 (see, f o r instance, case 3), and houses i n c e n t r a l areas are e i t h e r abandoned or purchased at a low p r i c e by new, low-  income households.  On the other hand, i f the upgrading expectations i n the  g e n t r i f y i n g areas are s i g n i f i c a n t enough to a t t r a c t other high-income households, there i s no f u r t h e r additions to the housing stock. Diagram 6.9 shows these two a l t e r n a t i v e s . 1 *•  D  • • •  'ABANDON  • • • •  6 O o o o  6 • 6  p o AJEUJ . _UMIT : _  • O •  . . . __  -o• o • o p 0  "O-  D I  t  _ __  B  -  •  Diagram 6.'9 In a s i t u a t i o n of r e l a t i v e l y f i x e d population, t h i s e f f e c t can be viewed as a more e f f i c i e n t u t i l i z a t i o n of e x i s t i n g resources, since o l d houses are recycled and land i s saved i n p e r i p h e r a l areas.  In a case of r e l a t i v e l y  high population growth, though, the p r i c e of the g e n t r i f i c a t i o n process i s paid, again, by the new, low-income household, who encounters a reduced housing stock and a s t i f f e r competition f o r an eventual l o c a t i o n i n c e n t r a l areas.  Summary of short-term e f f e c t s .  The a n a l y s i s has suggested, an eventual sequence  of moves triggered by the a d d i t i o n of one high-income household to a predominantly low-income area.  To the extent that the g e n t r i f i c a t i o n process more or.  l e s s follows the described pattern, i t s e f f e c t can be summarized as f o l l o w s : l)  Two types of e f f e c t s can be expected: -  The d i r e c t e f f e c t produced by the a l l o c a t i o n of the high-income household ( ' f i r s t round' i n the sequence).  This f i r s t move improves i n the  short term the housing q u a l i t y of the households that move up the chain, and r e s u l t s i n some degree of s o c i a l changes i n each of the a f f e c t e d neighborhoods.  135  -  The i n d i r e c t or longer term e f f e c t produced by the change expectation, as the c e n t r a l area i s expected to 'go r i c h ' and the adjacent areas are expected to 'go poor'.  In the boundary area, t h i s e f f e c t i s s i m i l a r to  that produced by the t r a d i t i o n a l a r b i t r a g e process: the i n i t i a l downgrading t r i g g e r s a d d i t i o n a l moves and continues the process. In the g e n t r i f y i n g area, the upgrading expectation may t r i g g e r addit i o n a l moves of other high-income households. change process i n the adjacent 2)  This, i n turn, accelerates the  neighborhoods.  Throughout the process, those households that move f i r s t have a t l e a s t some i n i t i a l housing improvement; i n l a t e r stages, t h i s improvement d e t e r i o r a t e s as the downgrading of the boundary area consolidates over time. . At the end, the low-income households l o c a t e i n a predominantly low-income area and lose i n terms of a c c e s s i b i l i t y to the >CBD.  3)  The households that p r e f e r to stay i n t h e i r neighborhoods neighborhood  experience the  d e t e r i o r a t i o n and i t s e f f e c t on p r i c e s ; when they move, they  do so at a discount f o r the dwellings they s e l l and a premium f o r those they purchase i n order to obtain the desired neighborhood  quality.  L) The low-income newcomers s u f f e r the e f f e c t of increased prices.and l e s s housing options as the t r a d i t i o n a l l y low-income c e n t r a l areas change i n character;' these newcomers are probably paying the highest p r i c e of the process. 5)  For the o l d residents of low-income, t h e i r l o s s i s that of a f f o r d a b i l i t y , as pressures f o r better maintenance-or grading, neighborhoods.  taxesv.pu-shes .them out,.of the up---• -  ^If -they., sell-;'-'they--trade-off a better. aff o r d a b i l i t y v  for..a d e t e r i o r a t i o n of t h e i r l o c a t i o n .  Factors r e l a t e d to the occurrence of these .effects may be:. A)  Size of the c h i l d l e s s , high-income household: To the extent that these households are not s i g n i f i c a n t . i n numbers, t h e i r l o c a t i o n preferences are  1-36 not l i k e l y to produce any s p e c i a l expectation e f f e c t and the process would proceed with no d i f f e r e n c e from the t r a d i t i o n a l arbitrage process.  I f this  population i s s i g n i f i c a n t , on the other hand, t h e i r l o c a t i o n i s l i k e l y t o t r i g g e r a d d i t i o n a l moves and accelerate the process. B)  Preferences  of the high-income groups: These groups are choosing between  the t r a d i t i o n a l large sites/low a c c e s s i b i l i t y of peripheral areas and an eventual s t a t u s / a c c e s s i b i l i t y gain i n c e n t r a l l o c a t i o n s .  To the extent  that the perceived assets of the c e n t r a l neighborhoods are not important f o r them, the expectation e f f e c t i n c e n t r a l neighborhoods i s not l i k e l y to occur. C)  Population growth r a t e : The housing improvement e f f e c t s eventually produced i n the process are higher f o r the low-income groups i n a s i t u a t i o n o f . f i x e d population.  A high population growth s i t u a t i o n diminishes, the low-income  improvement options.  The extreme case occurs when, population, growth i s  mostly low-income, since the new low-income groups are the most negatively a f f e c t e d i n the process.  6.2.4.  EFFECTS OF REHABILITATION In the discussion of the Arbitrage model i t was argued that p h y s i c a l  q u a l i t y of housing and neighborhoods should be viewed- as an intervening v a r i a ble i n the l o c a t i o n game; as such, a c e r t a i n q u a l i t y would r e s u l t from an i n i t i a l l o c a t i o n d e c i s i o n determined by the m u l t i p l e dimensions of the aceessi-. b i l i t y matrix.  This i n i t i a l q u a l i t y would, i n turn, add another.factor to the  l o c a t i o n d e c i s i o n as new groups enter the game and households change l o c a t i o n throughout the c i t y . The occurence of g e n t r i f i c a t i o n , on the other hand, was suggested t o . be r e l a t e d p r i m a r i l y to external f a c t o r s that would change the l o c a t i o n v a r i a bles described i n the a c c e s s i b i l i t y matrix (such as changes i n .transportation costs, income, a v a i l a b i l i t y of land, e t c ) .  Given a t l e a s t some of these ex-  137 t e r n a l causes, the g e n t r i f i c a t i o n process would affect. both the p h y s i c a l qual i t y and the s o c i a l configuration of the affected. neighborhoods. Within t h i s scope, the e f f e c t of r e h a b i l i t a t i o n subsidies f o r housing and neighborhood improvement would be that of changing part of the e f f e c t s of the g e n t r i f i c a t i o n process. The impact of r e h a b i l i t a t i o n would, depend on the r e l a t i v e importance of the s o c i a l f a c t o r s of neighborhood change as compared to t h e i r counterpart i n terms of p h y s i c a l q u a l i t y of housing and neighborhoods. . In other words: to the extent that the physical.appearance of a neighborhood i s perceived as an important element of the 'quality' or 'status' of a neighborhood,, p o l i c i e s oriented to improve t h i s p h y s i c a l appearance would a f f e c t the., decisions to move and, therefore, the neighborhood change, process. I f , on the other hand, the decisions to move are p r i m a r i l y based on t h e . s o c i a l configuration of the neighborhoods (who l i v e s where), the moving decisions would not be s i g n i f i c a n t l y affected by r e h a b i l i t a t i o n subsidies. The e f f e c t s of r e h a b i l i t a t i o n suggested .below assume, that both phys i c a l q u a l i t y and s o c i a l f a c t o r s play a r o l e i n the decisions to move.. Thus, r e h a b i l i t a t i o n subsidies would have at l e a s t some'effects on the. dynamics of neighborhood change triggered by g e n t r i f i c a t i o n .  These e f f e c t s depend on which  areas are selected for:.'improvement: as was previously discussed,., two neighborhoods are a f f e c t e d throughout the process: the c e n t r a l , g e n t r i f y i n g area (or e x c l u s i v e l y poor area) and the adjacent neighborhoods (or boundary,areas). In the boundary area, g e n t r i f i c a t i o n would have an e f f e c t .similar to that.of the t r a d i t i o n a l succession process: d e t e r i o r a t i o n and increasing .proportions of low-income, households.  In the c e n t r a l areas, on the other hand.,, the effect, i s  that of p h y s i c a l q u a l i t y improvement and higher proportions of high status groups.  Both e f f e c t s produce a change i n expectations, which contribute to  accelerate'the process.  138,  R e h a b i l i t a t i o n subsidies i n . c e n t r a l areas:  In the e x c l u s i v e l y poor areas, the  eff.ects of g e n t r i f i c a t i o n were suggested-to.. r e l a t e to the. occurrence of the expectation e f f e c t : to the extent that these areas are perceived to be 'going r i c h ' , they would a t t r a c t other high-income households, previously l o c a t i n g i n p e r i p h e r a l areas. To the extent that p h y s i c a l q u a l i t y of neighborhoods a f f e c t the  process., i t can be expected that the upgrading produced by these a d d i t i o n a l  moves would.be accelerated by r e h a b i l i t a t i o n and neighborhood improvement subsidies.  . In terms of low-income housing options, i t was suggested that low-  income residents in. g e n t r i f y i n g areas encounter p r i m a r i l y an a f f o r d a b i l i t y problem derived from taxation and eventual pressure to improve maintenance . standards.  R e h a b i l i t a t i o n subsidies would act upon one aspect of t h i s problem  by financing higher maintenance, but does not a f f e c t the taxation effect.. . Thus, households e l i g i b l e f o r r e h a b i l i t a t i o n programs would face a.more complex choice: e i t h e r they use the program and have part of.the..affordability problem reduced, or they get the f i n a n c i a l benefit of s e l l i n g and moving to.the. adjacent area.  Their decision w i l l probably depend on the relative.'pressure f o r  s e l l i n g as compared to the advantages of not-moving, and t h i s i n turn would depend on the magnitude of the a f f o r d a b i l i t y problem. For  those households not e l i g i b l e f o r the program (say, those j u s t  above the maximum income e l i g i b i l i t y c e i l i n g ) , the s i t u a t i o n i s somewhat, d i f f e r e n t : to the extent 'that r e h a b i l i t a t i o n subsidies are successful throughout t h e i r neighborhoods, t h e i r a f f o r d a b i l i t y problem would increase, since both the  r e h a b i l i t a t i o n of surrounding houses and t h e i r e f f e c t i n a t t r a c t i n g new.  high-income households would add up to increasing pressure to move out. F i n a l l y , low-income newcomers who would eventually locate, i n the det e r i o r a t e d , low-income neighborhoods would encounter, a f t e r r e h a b i l i t a t i o n , an. a d d i t i o n a l f a c t o r against t h e i r l o c a t i o n options in. those areas. Their l o s s has two causes: the increased demand f o r c e n t r a l housing, and the decreased  139 rate of new housing construction o r i g i n a t e d by the change i n preferences of the high-income households.  R e h a b i l i t a t i o n subsidies i n adjacent areas.  The e f f e c t of g e n t r i f i c a t i o n , as  the t r a d i t i o n a l succession process, i s that of changing the boundary area from •a mixed to an ' e x c l u s i v e l y poor' status; t h i s i s accompanied by a p h y s i c a l det e r i o r a t i o n produced by the income l i m i t a t i o n s of the in-moving groups.  Deterio-  r a t i o n , both i n p h y s i c a l and s o c i a l terms, would accelerate the succession process. The e f f e c t of r e h a b i l i t a t i o n subsidies i n t h i s area would, therefore, be s i m i l a r to those suggested p r e v i o u s l y (Chapter 5) as general e f f e c t s of r e h a b i l i t a t i o n on t r a n s i t i o n areas: some degree of slowing down of the succession process, better a f f o r d a b i l i t y f o r the low-income groups.  Again, t h i s  effect,; though generally p o s i t i v e , i s r e l a t i v e l y weak, since i t acts upon an intervening v a r i a b l e , rather than on the actual causal f a c t o r s of neighborhood change.  As i n the previous analysis of r e h a b i l i t a t i o n i n t r a n s i t i o n areas, the  same e f f e c t , with a d d i t i o n a l advantages f o r a l l groups, would be achieved by d i r e c t housing construction i n e i t h e r the c e n t r a l or the boundary area: the increase i n low-income housing supply represents f o r the poor an opportunity to remain i n areas more d e s i r a b l e i n terms of a c c e s s i b i l i t y and neighborhood q u a l i t y , at the same time preserving the s o c i a l composition of both the c e n t r a l and the boundary areas.  CHAPTER SEVEN:.. POLICY IMPLICATIONS The preceeding research i s an overview of l o c a t i o n factors, a f f e c t i n g the l o c a t i o n options f o r low-income groups i n t r a n s i t i o n areas around the Central Business D i s t r i c t .  The general overview of l o c a t i o n factors has been  used f o r the analysis of..one p a r t i c u l a r type of neighborhood change process: g e n t r i f i c a t i o n or middle-income resettlement i n c e n t r a l neighborhoods.  The  research has.been, undertaken with the f o l l o w i n g purposes:. To i d e n t i f y the r o l e of t r a n s i t i o n areas i n terms of low-income r e s i d e n t i a l location. To i d e n t i f y those variables that can explain the g e n t r i f i c a t i o n process i n c e n t r a l neighborhoods. -  To i d e n t i f y the e f f e c t s of the g e n t r i f i c a t i o n process, p a r t i c u l a r l y i n terms of low-income r e s i d e n t i a l l o c a t i o n . To a.ssess the e f f e c t s of housing and neighborhood improvement subsidies on low-income l o c a t i o n options i n g e n t r i f y i n g areas. The research started with a review of d i f f e r e n t bodies.of l o c a t i o n  theory which provided some i n s i g h t as to the major economic, social, and p h y s i c a l forces a f f e c t i n g urban r e s i d e n t i a l l o c a t i o n , both from a s t a t i c and .a.dynamic point of view.  From the general overview, a multidimensional location.rmodel  was derived, which attempts to synthesize the major variables a t play ,and the way they i n t e r a c t in. the l o c a t i o n game. The model, has an 'equilibrium'  component (summarized'in .an a c c e s s i b i -  l i t y matrix) and a 'dynamic' component (summarized i n the.Arbitrage model). The a c c e s s i b i l i t y matrix was used to derive some causal f a c t o r s that. can. explain the ..occurrence, of the g e n t r i f i c a t i o n process and. l i k e l y long-term e f f e c t s on low-income location.options.  The Arbitrage model was used to assess,  the dynamics of low-income l o c a t i o n i n t r a n s i t i o n areas, the e f f e c t s of g e n t r i f i c a t i o n in..this process, and some l i k e l y e f f e c t s of r e h a b i l i t a t i o n and neighborhood improvement p o l i c i e s on low-income r e s i d e n t i a l l o c a t i o n options.  1418 This chapter contains: l ) a summary.of the main, f i n d i n g s derived from the t h e o r e t i c a l a n a l y s i s i n terms of ..the .four main objectives l i s t e d above, 2) a discussion of some p o l i c y i m p l i c a t i o n s derived, from..these f i n d i n g s and 3) a b r i e f discussion of how the suggested l o c a t i o n model could be used f o r public policy.  7.1  SUMMARY OF FINDINGS  7.1.1. TRANSITION AREAS AND LOW-INCOME LOCATION The l o c a t i o n model presented i n Chapter 6 suggested that, l o c a t i o n , preferences.of each i n d i v i d u a l could be synthesized i n an a c c e s s i b i l i t y matrix i n 5 dimensions.  Two of these dimensions (geometry and. geography) would define  the c i t y , while the remaining three (social, rank,, familism, e t h n i c i t y ) .would. . define the s o c i a l groups a t play.  An a d d i t i o n a l dimension (housing and neigh-  borhood q u a l i t y ) would r e s u l t from the i n t e r a c t i o n between .the s o c i a l groups and the c i t y and.behave as.an intervening v a r i a b l e i n the. process. In an equilibrium s i t u a t i o n , the a c c e s s i b i l i t y matrix ..defines the preferences of each i n d i v i d u a l .  The actual l o c a t i o n choice .would..be-at the  point where, the aggregate preferences meet a budget constraint. .. Thus.,, whatever the preferences of each group i n each of i t s s o c i a l dimensions,., the ..actual l o c a t i o n i s always r e l a t e d to income.  Location of.high-income groups was suggested  to coincide., with those areas i n which the most desirable l o c a t i o n .factors ..are optimized, while l o c a t i o n of the lowest-income groups would.be a t those points where the l e a s t preferred l o c a t i o n f a c t o r s p r e v a i l . .  . .  T r a n s i t i o n .areas, on the other hand, were defined.in Chapter 2.as those areas i n which.a change in. land use i s underway.  This change i s i n most  cases from r e s i d e n t i a l to CBD type of uses i n areas surrounding the employment,. centre, but i t can. also be. a change from one r e s i d e n t i a l use to.another, a change from commercial to r e s i d e n t i a l use, etc. :  '  14*2).  The r o l e of t r a n s i t i o n areas on low-income r e s i d e n t i a l l o c a t i o n i s r e l a t e d to three major types of l o c a t i o n f a c t o r s : A)  In an equilibrium s i t u a t i o n , low-income l o c a t i o n i n t r a n s i t i o n areas r e l a t e s to the geometric dimension of l o c a t i o n : low-income groups would tend to concentrate around 'the - CBD  lojig as^a^ r  desired (or more affordable), than large land holdings. B)  In a growth s i t u a t i o n , low-income l o c a t i o n i n those areas i s r e l a t e d to CBD expansion: low-income groups would tend to concentrate i n those areas where growth expectation r e s u l t s i n low maintenance  standards.  In t h i s sense.,  the s t a b i l i t y of low-income neighborhoods i n c e n t r a l areas i s r e l a t e d to f a c t o r s such as population growth, income changes and other f a c t o r s a f f e c t i n g the rate.of CBD expansion. C)  In both the equilibrium and the growth s i t u a t i o n s , low-income l o c a t i o n i n c e n t r a l areas r e l a t e s to s o c i a l dimensions of l o c a t i o n : an i n i t i a l l o c a t i o n of the poor i n c e n t r a l areas may drive away other, higher status groups, thus increasing the c e n t r a l i z a t i o n of the poor; t h i s e f f e c t may be stronger i f ethnic m i n o r i t i e s and other seggregated groups also locate i n c e n t r a l areas.  Thus, ^segregation a t t i t u d e s and existence of minority groups are  f a c t o r s a f f e c t i n g low-income l o c a t i o n i n t r a n s i t i o n areas. In terms of neighborhood change dynamics, t r a n s i t i o n has been defined as a process of change over time from one highest and best use to another.  In  t h i s sense, what defines t r a n s i t i o n areas.around CBD i s not the actual change, but the change expectation. A f t e r the change of use has taken place, the area consolidates with the new use and a new t r a n s i t i o n area appears i n the next outer r i n g .  Thus, the change process can be described as a continuous sequence  of moves to successively outer areas.  7.1.2  CAUSES OF GENTRIFICATION G e n t r i f i c a t i o n has been defined as a change i n l o c a t i o n preferences  ;  whereby some medium to high-income households, which during the 1950's and 60's, preferred new dwelling u n i t s i n peripheral areas, tend to locate i n o l d , det e r i o r a t e d housing i n c e n t r a l areas.  This process of p r i v a t e r e h a b i l i t a t i o n  r e s u l t s in. the upgrading of the p h y s i c a l and s o c i a l status of the affected neighborhoods. The possible causal f a c t o r s that could explain the occurrence of the g e n t r i f i c a t i o n trend have been derived from the f i v e dimensions of the l o c a t i o n preferences synthesized i n the a c c e s s i b i l i t y matrix, and can be summarized as follows: 1)  In terms of c i t y geometry, g e n t r i f i c a t i o n would be r e l a t e d t o f a c t o r s that may a f f e c t o v e r a l l preferrences f o r land as compared to a c c e s s i b i l i t y to CBD.  In general, t h i s type of f a c t o r s would tend to reverse the income  gradient and y i e l d , i n the long term, c e n t r a l l o c a t i o n f o r high-income, groups and p e r i p h e r a l l o c a t i o n s f o r the poor.  Some f a c t o r s r e l a t e d to the  a c c e s s i b i l i t y / q u a n t i t y of land r e l a t i o n s h i p are: Higher transportation costs and/or r e s t r i c t i o n s i n f u e l consuption.. -  Zoning regulations r e s u l t i n g i n r e l a t i v e l y large l o t s i n c e n t r a l areas and r e l a t i v e l y small l o t s i n p e r i p h e r a l areas.  -  Urban growth boundaries, e i t h e r f i x e d by p o l i c y or r e s u l t i n g from geographic b a r r i e r s . Population growth.and c i t y expansion beyond a c e r t a i n  'threshold'  commuting time. Income r e s t r i c t i o n s . 2)  I n terms of c i t y geography, g e n t r i f i c a t i o n may be r e l a t e d to changes i n the r e l a t i v e attractiveness of both c e n t r a l and p e r i p h e r a l areas r e s u l t i n g from suburbanization. associated  By reducing the negative e x t e r n a l i t i e s t r a d i t i o n a l l y  to c e n t r a l areas, suburbanization of i n d u s t r i a l areas may  increase the attractiveness of c e n t r a l neighborhoods f o r r e s i d e n t i a l uses. 3)  I n terms of s o c i a l dimensions of l o c a t i o n , g e n t r i f i c a t i o n would be r e l a t e d  to those f a c t o r s that a f f e c t the choices of i n d i v i d u a l s i n t h e i r family and e t h n i c i t y dimensions as r e l a t e d to the p h y s i c a l components of the c i t y , and f a c t o r s modifying the preferences of d i f f e r e n t groups to l i v e close or apart from one another.  The long-term e f f e c t s of these changes on low-  income l o c a t i o n options are not c l e a r and tend to vary depending on the causal f a c t o r i n each case.  Some changes a f f e c t i n g the s o c i a l dimensions  of l o c a t i o n may:be: Higher proportion of c h i l d l e s s households which are l e s s i n t e r e s t e d i n large s i t e s and more i n t e r e s t e d i n the a c c e s s i b i l i t y to employment and amenities associated to c e n t r a l l o c a t i o n s . Increasing d i v e r s i t y of s o c i a l groups and t h e i r housing and l o c a t i o n needs.  As new types of s o c i a l groups develop (such as the change of  the c h i l d l e s s status from a transient to a more permanent choice of l i f e s t y l e ) , at l e a s t some of these new groups can be expected to have l i f e s t y l e s associated with c e n t r a l c i t y rather than suburban l i v i n g . . Changes i n "segregation a t t i t u d e s between d i f f e r e n t groups r e s u l t i n g i n higher i n t e r a c t i o n and increasing attractiveness  of areas presenting a  d i v e r s i t y of groups and l i f e s t y l e s . The i n i t i a l stage of the g e n t r i f i c a t i o n process i t s e l f , which, by a l t e r ing the s o c i a l status expectations of c e n t r a l neighborhoods, may tend to a t t r a c t other groups t r a d i t i o n a l l y l i v i n g i n high-status p e r i p h e r a l areas. L)  I n terms of housing q u a l i t y and neighborhood c h a r a c t e r i s t i c s , g e n t r i f i c a t i o n may be r e l a t e d to the increasing costs of housing in. peripheral areas and changes i n preferences from new to o l d houses with h i s t o r i c or a r c h i t e c t u r a l value.  Since housing q u a l i t y i s suggested to be an intervening  v a r i a b l e i n the l o c a t i o n game, i t can also be expected that the housing q u a l i t y improvement produced by p r i v a t e r e h a b i l i t a t i o n would behave as an a d d i t i o n a l a t t r a c t i o n f o r high-income groups i n c e n t r a l areas.  7.1.3  EFFECTS OF GENTRIFICATION The dynamics of neighborhood change t r i g g e r e d by an i n i t i a l l o c a t i o n  of some high-income groups i n c e n t r a l areas produce a number of changes i n terms of low-income l o c a t i o n options.  The l o c a t i o n of the high-income house-  hold s t a r t s a chain of moves i n which other high-income groups, at the other end of the chain, s t a r t a new u n i t .  To the extent to which the. dynamics, of  change can be accurately described by the Arbitrage model, four major types of e f f e c t s can be expected: l)  E f f e c t s on r e h a b i l i t a t i o n neighborhoods.  The new s e t t l e r s are l i k e l y to.  produce an improvement of the p h y s i c a l appearance of the a f f e c t e d neighborhoods and a corresponding increase i n housing p r i c e s .  Some of the e f f e c t s  of the process, as described i n Chapter 6, can be summarized as f o l l o w s : P r i c e increases may force out tenants, who are l i k e l y to be the f i r s t ones displaced. Homeowners may be b e t t e r - o f f i f they get the benefit of the increased p r i c e by s e l l i n g at the r i g h t time and obtain a better dwelling u n i t i n a more desired l o c a t i o n .  However, low-income owners who do not want to  move face two problems: a f f o r d a b i l i t y of housing, when tax increases and eventual.pressure. f o r better maintenance.standards, result, from p r i v a t e r e h a b i l i t a t i o n : changing character of the neighborhood; involuntary moves due to the a f f o r d a b i l i t y problem. The housing stock may be reduced e i t h e r i n absolute o r . i n r e l a t i v e terms the  change from r e n t a l to owner-occupied homes reduces the number of  r e n t a l u n i t s i n the market; the  . . .  r e h a b i l i t a t i o n of o l d , converted rooming housing to s i n g l e - f a m i l y  use may produce an absolute reduction of the housing stock. On the other hand, private, r e h a b i l i t a t i o n i n some North American c i t i e s has r e s u l t e d i n the recovery of old,.abandoned housing and the r e v i t a -  l i z a t i o n of whole areas.  Thus, the e f f e c t s of r e h a b i l i t a t i o n i n reducing  housing stock cannot be generalized.  the  However, some f a c t o r s are worth consider-  ing when p r i v a t e resettlement appears to be taking place: A)  Type of housing occupancy: since the f i r s t and most l i k e l y to be displaced are tenants, a high proportion of r e n t a l accomodations would c a l l f o r s p e c i f i c actions i n t h i s respect.  B)  A v a i l a b i l i t y of equivalent housing i n surrounding  areas.  C)  R e l a t i v e income l e v e l s of in-coming and out-coming groups.  The lower the.  income l e v e l of o l d residents, and the higher that of r e s e t t l e r s , the.most l i k e l y an a f f o r d a b i l i t y problem due to increase i n housing p r i c e s on the neighborhood. D)  Segregation a t t i t u d e s , r e l a t e d to income, family status or ethnic differences between the two groups.  Although d i v e r s i t y of l i f e s t y l e s i s often a t t r a c t -  ive f o r the new s e t t l e r s , t h i s a t t i t u d e may not be shared by the o l d r e s i dents, and tensions may occur.  For instance, i f the o l d neighborhood has .a  high proportion of ethnic m i n o r i t i e s , resettlement may be. perceived.in a r a c i a l - e t h n i c dimension.  Tensions may be even higher i n the opposite case:  low-income, m a j o r i t i e s displaced by high-income m i n o r i t i e s . E)  E x i s t i n g s o c i a l f a b r i c and community services i n the neighborhood: r e s e t t l e ment may be h i g h l y d i s r u p t i v e i n areas with a high degree of cohesiveness and personal i n t e r a c t i o n of p a r t i c u l a r groups.  For instance,, senior c i t i -  zens may be very s e n s i t i v e to privacy, quietness; new s e t t l e r s with higher m o b i l i t y , presence of youth or c h i l d r e n , may a f f e c t t h e i r neighborhood i n a negative way.. friends.  I f displaced, they may lose access to s p e c i a l services or  In the case of some ethnic groups, c l u s t e r i n g may be desired as  a way to preserve t h e i r language and c u l t u r a l t r a i t s , 2)  E f f e c t s i n surrounding  areas.  Displacement r e s u l t i n g from p r i v a t e rehabi-  l i t a t i o n produces an increased demand f o r low-income housing i n areas.  surrounding  The process, as discussed i n Chapter 6 using the Arbitrage model,  i s not u n l i k e the chain of moves produced i n other cases of invasionsuccession: neighboring areas f i l t e r down, middle-income groups.move out, suburban housing i s b u i l t i n p e r i p h e r a l areas.  This process i s also com-  parable with the e f f e c t s of urban renewal: "Thus, the urban renewal projects i n the c i t y caused large numbers of poor and black f a m i l i e s to f i n d new housing somewhere. The Arbitrage model f a i r l y w e l l describes how t h i s was accomplished. These renewal p r o j e c t s , which were meant to bring industry and„,middle-income famil i e s back to the c i t y , may have caused more middle-income f a m i l i e s to leave through the mechanism of Arbitrage than were accomodated i n the subsidized middle-income housing a c t u a l l y r e b u i l t w i t h i n the renewed areas, even when such housing was a c t u a l l y b u i l t . " (Leven et a l , l 9 7 7 , p. 168-169) Some e f f e c t s are worth pointing out: Newcomers from c e n t r a l areas encounter higher p r i c e s . a net l o s s i n terms of a f f o r d a b i l i t y ,  For tenants, t h i s i s  For homeowners, the cost/benefit  depends ( i n terms of housing q u a l i t y alone) upon the p r i c e d i f f e r e n t i a l between the o l d property and the newly purchased one.  Since the primary  reason f o r the low-income homeowner to move to adjacent areas was assumed to be a f f o r d a b i l i t y , i t can be expected that a) he would purchase the lowest q u a l i t y (cheapest) house i n the new neighborhood, b) he would undertake minimum, i f any, r e p a i r work. The neighborhood f i l t e r s down as low income population increases.. Although the  i n i t i a l increase i n demand may push the p r i c e s up, as the area i s . per-  ceived to be 'going poor', decreased i n t e r e s t from other middle-income households may.result i n a long-term p r i c e decrease. Homeowner residents face two choices: a) s e l l the property at an e a r l y stage, thus b e n e f i t i n g from increasing demand, and move to a more suburban l o c a t i o n . Or b) remain i n the neighborhood f o r a longer period, thus having, i n the end, a net.loss i n housing p r i c e .  The choice w i l l depend on the d e s i r a b i -  l i t y of suburban l o c a t i o n s , the degree of attachment to the neighborhood, and the household's perception of the change i n the neighborhood. Tenants would face a s t i f f e r competition and also a d e t e r i o r a t i o n of t h e i r  housing q u a l i t y since landlords may choose to save i n maintenance and rent the 3)  u n i t s to the increasing low-income population.  E f f e c t s on o v e r a l l housing supply.  We have seen that p r i v a t e r e h a b i l i t a -  t i o n may produce a reduction of low-income housing stock i n the r e h a b i l i t a ted ^tx-o'n neighborhoods.  In a d d i t i o n to t h i s , some o v e r a l l e f f e c t s should be  noted: Decrease i n housing options f o r new, low-income households. New, lowincome population that would normally l o c a t e , e i t h e r temporarily or more or l e s s permanently i n rundown c e n t r a l housing encounter t h i s choice closed by the middle-income r e s e t t l e r . E f f e c t on turnover r a t e : change from r e n t a l to owner-occupied accomodat i o n generally r e l a t e s to longer permanence.  On the other hand, c e n t r a l  areas are t r a d i t i o n a l l y preferred by some t r a n s i e n t groups who need the services and opportunities of c e n t r a l l o c a t i o n s .  These groups w i l l  increase the bulk of r e n t a l accomodations i n adjacent areas; thus,, these groups lose i n terms of a c c e s s i b i l i t y to CBD.  This e f f e c t cannot be .ge-  n e r a l i z e d , since i t depends on the s p e c i f i c l o c a t i o n of r e h a b i l i t a t i o n areas, which, may not a f f e c t those c e n t r a l l o c a t i o n s at a l l ; but i t points out the need to assess the r e l a t i v e importance, of a c c e s s i b i l i t y f to CBD for/those groups e i t h e r displaced or not allowed to move i n a f t e r / p r i v a t e r e h a b i l i t a t i o n takes place. On the other hand, i t was suggested that p r i v a t e r e h a b i l i t a t i o n , and the  chain of moves t r i g g e r e d by i t , i s assumed to produce an outwards move  process whereby the l a s t household i n the chain w i l l s t a r t a new u n i t .  I f this,  i s the case, a t l e a s t some of the stock reduction produced by p r i v a t e rehabil i t a t i o n may, be balanced by normal market mechanisms. I t should be noted that i f the new, middle-income household.had chosen a new house rather than an o l d one i n c e n t r a l areas, the chain.of moves would have not taken place.  Thus, p r i v a t e r e h a b i l i t a t i o n , to the extent that  1*93  i t produces new u n i t s through the arbitrage process, has a p o s i t i v e e f f e c t on housing improvement through f i l t e r i n g f o r some groups. Some q u a l i f i c a t i o n s to t h i s conclusion should be pointed out, however: A)  The occurrence and volume of new housing construction i s p o s i t i v e l y r e l a t e d to the segregation a t t i t u d e s between d i f f e r e n t groups: to the extent that changing neighborhoods are perceived as 'bad' by some groups, the succession process proceeds and new u n i t s w i l l be produced by market demand.  B)  The occurrence and volume of new construction i s p o s i t i v e l y r e l a t e d to the d e s i r a b i l i t y of suburban l i v i n g and w i l l proceed as long as the highincome groups prefer new housing over o l d u n i t s i n c e n t r a l areas.  As the  expectation e f f e c t produced by the i n i t i a l upgrading of gentrifying.areas. increase, other high-income groups would move to these areas, thus reducing the pressure f o r new housing construction. C)  The occurrence and volume of new construction i s negatively correlated to the degree of attachment of i n d i v i d u a l s to t h e i r neighborhoods.  I f house-  holds prefer to maintain t h e i r l o c a t i o n s , because of neighborhood attachrment or lack of i n t e r e s t f o r suburban l i v i n g , the pressure f o r new cons'  t r u c t i o n w i l l be reduced; o v e r a l l p r i c e structure i n developed areas w i l l r i s e , and bottom groups w i l l have increased crowding.. The r e l a t i o n s h i p between new additions and preferences, f o r suburban .  type of housing i s p a r t i c u l a r l y important.  So f a r , most of the conclusions are  based on the assumption that at l e a s t some households (high-income,, large f a m i l i e s ) tend to move to p e r i p h e r a l areas.  However, t h i s assumption i s not  very c l e a r l y supported by the e x i s t i n g evidence on p r i v a t e r e h a b i l i t a t i o n ; on the contrary, i t would appear that, as the resettlement process consolidates over time, i t a t t r a c t s i n c r e a s i n g l y l a r g e r proportions of medium-income families: "Early i n the r e v i t a l i z a t i o n of a neighborhood, come the pioneers:...  150 7 a r t i s t s , writers... s p e c i a l f e e l f o r the comes... the doctor with big bucks from  gays, i n t e r r a c i a l couples. Also, persons with a neglected p o t e n t i a l of a grand home... "Later and lawyer crowd. And then the suburban crowd the sale of t h e i r homes." (Hoti-sing;^June''1980,, p.l°)  "... S l i g h t l y over 10% of the neighborhoods which indicated the presence of f a m i l i e s with children indicated that t h e i r numbers had increased a f t e r r e h a b i l i t a t i o n . In many cases, the r e h a b i l i t a t e d areas were composed of a mixture of s i n g l e s . c h i l d l e s s couples and families with children." "Neighborhoods a t t r a c t i n g f a m i l i e s with children include St. Louis' Lafayette Square, Indianapolis' Lockerbie Square... Philadelphis Cedar Park..." (NUC report,. -1978V p. 7) I)  E f f e c t s on o v e r a l l l o c a t i o n trends (long-term effects).. The e f f e c t s of g e n t r i f i c a t i o n pointed out so f a r are those produced by a p a r t i c u l a r action ( l o c a t i o n i n c e n t r a l areas) undertaken by a p a r t i c u l a r s o c i a l group (small, middle-income households), on low-income r e s i d e n t i a l l o c a t i o n . however, may  This action  be j u s t a f i r s t i n d i c a t i o n of a more profound change i n l o c a -  t i o n trends; i f that i s the case, some more s t r u c t u r a l , long-term e f f e c t s can also be expected. An assessment of the long-term e f f e c t s of the process must be based on a more clear knowledge of the r e a l forces at play which are producing t h i s change i n preferences.  I f p r i v a t e resettlement i s caused p r i m a r i l y by more or  l e s s temporary f a c t o r s , such as preferences of some groups f o r older housing, stage i n the l i f e - c y c l e of the baby-boom generation, etc., the long-term e f f e c t w i l l be r e l a t i v e l y l e s s s i g n i f i c a n t as t h i s generation moves to the next stage in life-cycle. However, there i s some evidence of more s t r u c t u r a l f a c t o r s at play, a was  discussed i n Chapter 6.  In terms of low-income r e s i d e n t i a l l o c a t i o n , the  e f f e c t s w i l l depend on which are the dominant underlying forces. A)  G e n t r i f i c a t i o n due to economic forces  For  instance:  (transportation r e s t r i c t i o n s , income  r e s t r i c t i o n s , e t c ) : t h i s set of l o c a t i o n factors would tend to.produce a r e v e r s a l of the income gradient, to a future equilibrium s i t u a t i o n with the highest income groups i n c e n t r a l areas and the poor towards the p e r i phery.  .1513 B)  Morphological changes i n the c i t y (suburbanization of i n d u s t r i a l areas, l i m i t s to urban expansion, l o t s i z e c o n f i g u r a t i o n by area...): the e f f e c t s of these f a c t o r s w i l l vary, depending on the p a r t i c u l a r c h a r a c t e r i s t i c s i n each case.  C)  S o c i a l changes (less segregation between groups, more d i v e r s i t y of s o c i a l types, decreasing a t t r a c t i v e n e s s of suburban , : l i f e-styl.e;; etc.').,. may ', r e s u l t i n e i t h e r a change of the shape of the income gradient (such as cent r a l i z a t i o n of low-income groups i n intermediate areas, with 'urban' high status groups i n c e n t r a l areas and 'suburban' high status groups i n p e r i pheral areas), or d i f f e r e n t degrees of i n t e g r a t i o n between d i f f e r e n t groups at each l o c a t i o n . Most l i k e l y , the g e n t r i f i c a t i o n trend i s being caused by a combina-  t i o n of temporary and s t r u c t u r a l changes occurring i n urban areas.  This m u l t i -  p l i c i t y of f a c t o r s at play creates a s i t u a t i o n of uncertainty w i t h respect to future l o c a t i o n options f o r low-income groups; as the process, develops  over  time, these groups are l i k e l y to be pushed out from successive l o c a t i o n s and encounter i n c r e a s i n g d i f f i c u l t i e s to enter the l o c a t i o n market altogether. This s i t u a t i o n i s a c o n s t r a i n t f o r planning s t r a t e g i e s a v a i l a b l e because of t h i s long-term u n c e r t a i n l y i n terms of optimum l o c a t i o n f o r lowincome groups.  In.cases where a g e n t r i f i c a t i o n process appears to be present,  planning s t r a t e g i e s should be s u f f i c i e n t l y f l e x i b l e to adapt to changing c i r cumstances and include a continuous process of monitoring i n order to detect those i n d i c a t o r s that eventually suggest new changes.  7.1.4  EFFECTS OF SUBSIDIES TO HOUSING AND NEIGHBORHOOD IMPROVEMENT The occurrence of g e n t r i f i c a t i o n was suggested to be r e l a t e d p r i m a r i -  l y to external f a c t o r s that would change the l o c a t i o n v a r i a b l e s as described i n the a c c e s s i b i l i t y matrix.  Housing and neighborhood q u a l i t y changes would  r e s u l t from these i n i t i a l changes i n l o c a t i o n trends and, i n turn, contribute  a new f a c t o r i n the o v e r a l l l o c a t i o n game. In t h i s scope, the e f f e c t that can be expected from subsidies to housing and neighborhood improvement would be that of a l t e r i n g some of the e f f e c t s of the g e n t r i f i c a t i o n process; at the same time, although.housing improvement per se i s not a d i r e c t causal f a c t o r , at l e a s t some modification, i n the dynamics of the process could be expected i n terms of modifying part of the expectation e f f e c t s associated with the process.  This e f f e c t on expectation  would be r e l a t e d toi the r e l a t i v e importance given to housing q u a l i t y as compared with s o c i a l c o n f i g u r a t i o n as determinant components of a neighborhood's character.  R e h a b i l i t a t i o n subsidies i n g e n t r i f y i n g areas.can be expected to contribute to the upgrading'of these areas o r i g i n a t e d by the g e n t r i f i c a t i o n process.  In t h i s  sense, r e h a b i l i t a t i o n would increase the upgrading expectation of these areas, thus c o n t r i b u t i n g to a c c e l e r a t e the process. R e h a b i l i t a t i o n subsidies, at the same time, would improve at l e a s t , p a r t i a l l y the a f f o r d a b i l i t y problem encountered by the low-income r e s i d e n t s . However, f o r those low-income households not e l i g i b l e f o r the program, the e f f e c t would be j u s t the opposite: by producing an o v e r a l l upgrading, the r e s u l t i n g p r i c e increases and t a x a t i o n , along with the higher maintenance pressures, would worsen the a f f o r d a b i l i t y problem f o r those groups.  For eventual  newcomers of low-income, r e h a b i l i t a t i o n subsidies on e x i s t i n g neighborhoods would also have the negative e f f e c t of higher p r i c e s arid higher demand from other groups in. the areas where these low-income newcomers would l o c a t e .  R e h a b i l i t a t i o n subsidies i n adjacent areas, on the other hand, can be expected to counteract to.at l e a s t some extent the downgrading of these  neighborhoods.  This p h y s i c a l improvement should slow down to some extent the succession process produced by the 'going poor' expectation.  153) However, t h i s e f f e c t can be considered weak, since i t does not touch the major determinants of the succession process: increased demand f o r lowincome housing i n intermediate areas, p r o v i s i o n of new houses i n p e r i p h e r a l areas only, and s o c i a l ..segregation a t t i t u d e between the in-coming and the out-coming groups. Households e l i g i b l e f o r r e h a b i l i t a t i o n , on the other hand, have a net gain from r e h a b i l i t a t i o n subsidies i n terms of a f f o r d a b i l i t y ; i n t h i s sense, r e h a b i l i t a t i o n subsidies are s i m i l a r to any other income subsidy f o r low-income groups.  A l t e r n a t i v e p o l i c i e s may meet the main objectives of r e h a b i l i t a t i o n programs (better low-income housing, neighborhood preservation) i n a more e f f i c i e n t way. For instance, a p o l i c y of higher d e n s i t i e s and d i r e c t construction of low-, income housing i n c e n t r a l areas both increases the housing options f o r the poor (either old.residents or newcomers) and, by reducing the displacement e f f e c t produced by g e n t r i f i c a t i o n , contribute to a better preservation of adjacent neighborhoods. To the extent that g e n t r i f i c a t i o n i s caused by the desire to l i v e close to a d i v e r s i t y of groups, t h i s type of higher density/new low-income housing a.lso contributes to achieve t h i s d i v e r s i t y goal.  Programs such as i n -  centives to i n - f i l l housing, innovative housing design, may represent indeed.an optimum balance between the need of new housing and the preservation of both p h y s i c a l and s o c i a l components of neighborhood character.  7.2  7.2.1  POLICY IMPLICATIONS  GENERAL IMPLICATIONS The preceeding analysis has attempted to i d e n t i f y some e f f e c t s of the  g e n t r i f i c a t i o n process and r e h a b i l i t a t i o n subsidies i n g e n t r i f y i n g areas on  154 l o c a t i o n options f o r d i f f e r e n t r e s i d e n t s , p a r t i c u l a r l y low-income groups.  In  terms of p u b l i c p o l i c y , the a n a l y s i s suggests a planning s i t u a t i o n defined by two major c h a r a c t e r i s t i c s : A)  G e n t r i f i c a t i o n i s characterized by a s i t u a t i o n of long-term u n c e r t a i n l y . Although the process appears to be i n i t i a l l y t r i g g e r e d by the s p e c i f i c preferences of a r e l a t i v e l y t r a n s i e n t group (a c e r t a i n stage i n l i f e - c y c l e of the baby-boom generation), there i s some evidence at the same time of more profound changes i n l o c a t i o n trends.  To the extent that those trends  are i n f a c t appearing, the long-term e f f e c t on low-income l o c a t i o n options i s not c l e a r , and w i l l vary depending on which are the major forces underl y i n g the process.  Some f a c t o r s point at p e r i p h e r a l l o c a t i o n of the poor,  some others point a t low-income l o c a t i o n i n intermediate areas (between two peaks of high-income groups i n both c e n t r a l and p e r i p h e r a l areas), and some f a c t o r s suggest a continuous succession of moves and i n c r e a s i n g d i f f i c u l t i e s to enter the l o c a t i o n market altogether. B)  G e n t r i f i c a t i o n i s characterized by a s i t u a t i o n of c o n f l i c t i n g goals.  Both  the process i t s e l f and eventual r e h a b i l i t a t i o n subsidy.programs i n g e n t r i f y i n g areas tend to achieve some planning goals to the detriment of others. For instance,, the f o l l o w i n g c o n f l i c t s appear to be present: 1)  G e n t r i f i c a t i o n brings improvement of the p h y s i c a l appearance of neighborhoods.  This i s consistent with objectives r e l a t e d to h i s t o r i c pre-  servation and the l i k e .  However, i f displacement occurs, the improve-  ment of some areas w i l l b r i n g about the d e t e r i o r a t i o n of other, adjacent areas. From t h i s point of view, r e h a b i l i t a t i o n subsidies i n both resettlement and adjacent areas would a m e l l i o r a t e the problem; subsidies would be probably more e f f i c i e n t i n non-gentrifying neighborhoods. 2)  Middle-class resettlement i s consistent with o v e r a l l objectives of s o c i a l mix.  However, i t s e f f e c t s on housing p r i c e s and maintenance  155 pressures may defeat this.purpose by producing a f f o r d a b i l i t y problems and eventual.displacement  of some low-income groups.  R e h a b i l i t a t i o n subsidies f o r homeowners have a l i m i t e d effect, here: maintenance may be subsidized, but the very improvement i t produces, m u l t i p l i e s , the p r i c e - i n c r e a s e type of a f f o r d a b i l i t y problem ( i . e . . increase i n taxes).. This type of c o n f l i c t c a l l s f o r r e h a b i l i t a t i o n subsidies t i e d with p o l i c i e s oriented to increase the housing 3)  Resettlement  stock.  reduces housing options f o r -in-coming' low-income groups, i n  g e n t r i f y i n g areas.  R e h a b i l i t a t i o n subsidies, on the other hand,, while  protecting the r e s t of the r e s i d e n t s , f u r t h e r reduces the a v a i l a b i l i t y of housing f o r new, low-income households.  Thus, r e h a b i l i t a t i o n .subsidies  should be t i e d to new housing construction i n c e n t r a l areas. 4)  G e n t r i f i c a t i o n may be r e f l e c t i n g profound changes i n l o c a t i o n trends; i n the long term, there i s uncertainty with respect to a) which l o c a t i o n s w i l l be open to low-income groups, b) how these l o c a t i o n s w i l l meet l o c a t i o n and housing needs f o r low-income groups. R e h a b i l i t a t i o n programs, on the other, hand, aim.to immediate r e l i e f .  Furthermore, two clauses often t i e d to r e h a b i l i t a t i o n (permanence.in the housing f o r a period i n order to gain forgiveness, and r e s t r i c t i o n of subsidies to pre-defined areas),, may c o n f l i c t with long-term options or needs.,; This .. uncertainty c a l l s f o r f l e x i b l e p o l i c i e s , which can adapt to changing .needs and options. 5) P r i v a t e r e h a b i l i t a t i o n i s consistent w i t h goals of preservation of resources, by making use of previous  investment.  However, middle-income resettlement, unless i t t r i g g e r s new const r u c t i o n through f i l t e r i n g and a r b i t r a g e , reduces the t o t a l supply of housing. Thus the advantages i n terms of resource preservation.are more apparent than  r e a l , since the need f o r new construction, i s not reduced., and i n some cases i t may be increased.  7.2.2  FACTORS AFFECTING THE EFFECTS OF GENTRIFICATION'AND' REHABILITATION The i m p l i c a t i o n s suggested above r e f e r to general e f f e c t s that  g e n t r i f i c a t i o n and r e h a b i l i t a t i o n subsidies may produce.in gentrifying.areas. The incidence of these e f f e c t s w i l l vary i n each p a r t i c u l a r case,, depending the nature of the long-term forces producing the g e n t r i f i c a t i o n trend.  on  At the  same time, l o c a l circumstances may suggest s p e c i f i c i m p l i c a t i o n s f o r policy,depending on the f a c t o r s present i n each, area undergoing g e n t r i f i c a t i o n * . Some f a c t o r s that may a f f e c t the choice of p o l i c y i n g e n t r i f y i n g areas are suggested below: A)  At the neighborhood  level:  Occupancy l e v e l (vacancy rates.): p r i v a t e r e h a b i l i t a t i o n targeted, to abandoned b u i l d i n g s w i l l maximize e f f i c i e n t u t i l i z a t i o n of .resources and produce a minimum displacement e f f e c t .  Even i f r e h a b i l i t a t i o n ,  goes to other u n i t s , a high vacancy rate would i n d i c a t e that the d i s placement problem i s l i k e l y to be l e s s s i g n i f i c a n t , as long as:vacant u n i t s have r e l a t i v e l y s i m i l a r p r i c e s as the r e s t of the units.. . Type of housing occupancy: a high percentage of tenants would c a l l f o r some controls over r e h a b i l i t a t i o n of multiple-dwelling, f o r s i n g l e -  • ;•  family use.. Since tenants are l i k e l y to be the f i r s t ones displaced., r e h a b i l i t a t i o n subsidies should, include tenant p r o t e c t i o n clauses,, e i t h e r rent c e i l i n g s or d i r e c t subsidy f o r tenants, and tenant p a r t i :  c i p a t i o n i n the r e h a b i l i t a t i o n d e c i s i o n .  -  A f f o r d a b i l i t y l e v e l of residents: residents who can a f f o r d tax increases produced by o v e r a l l neighborhood upgrading are i n f a c t getting a benefit i n terms of appreciation of t h e i r housing value.  Homeowners below t h i s  a f f o r d a b i l i t y l e v e l may be pushed out (forced to s e l l ) and would need a s p e c i a l type of subsidy. S o c i a l differences  (income, age, e t h n i c i t y . . . ) between.the in-coming  groups and the o l d residents: b i g income differences may r e s u l t i n an improvement of housing beyond what o l d residents can a f f o r d , thus creating tensions between groups.  H i s t o r i c designation, of neighborhoods  are l i k e l y to be rejected by very low-income residents.  Rehabilitation  subsidies and other programs should aim at minimizing the differences i n housing q u a l i t y that each group can achieve.  Ethnic, age differences,  though they can eventually be an asset to the upgrading neighborhood, may produce a d d i t i o n a l tensions.  Neighborhood p o l i c i e s should contem-  plate the a c t i v e p a r t i c i p a t i o n of a l l groups, oriented to detect tensions and f i n d a way to minimize them. S o c i a l f a b r i c , type of community services: a c l o s e l y - k n i t neighborhood may s u f f e r more severe d i s r u p t i o n by massive resettlement.  The location .and -  type of the" improvement" works. should.-;;in: this-_case.be controlled,-, -in-order to minimize t h i s e f f e c t .  R e h a b i l i t a t i o n of buildings providing services to  the community (grocery store, recreation centers) should be s c r u t i n i z e d . Relative importance of l o c a t i o n f o r o l d residents: preservation p o l i c i e s should give p r i o r i t y to those households f o r which t h e i r l o c a t i o n i s highly r e l a t e d to a c c e s s i b i l i t y to work, f r i e n d s h i p and other neighborhood t i e s .  Those groups l e s s s e n s i t i v e to l o c a t i o n may. i n some cases be  b e t t e r - o f f since the sale of t h e i r houses i n upgraded areas may allow them to move to more desirable l o c a t i o n s . -  Land a v a i l a b i l i t y , e x i s t i n g d e n s i t i e s : since a t l e a s t two groups are competing f o r the same area, and a t h i r d group (new, low-income house-  158 holds) i s also a f f e c t e d , a v a i l a b l e land for. development,, or p o t e n t i a l f o r higher d e n s i t i e s would present a good p o t e n t i a l in-order to accomodate the increased demand.. In any case, r e h a b i l i t a t i o n combined with housing stock increases should be encouraged. At the c i t y . l e v e l : Population growth rate and c h a r a c t e r i s t i c s : since one of the maj.or problems of the g e n t r i f i c a t i o n process i s t h e . d e t e r i o r a t i o n of.housing, options f o r new, low-income population,, the rate of low-income- immigrat i o n i s an important element i n the assessment of the costs and .benefits of the process.  At the same time, the rate, of growth of the type.of.  households that t r i g g e r the process i s also important: a low proportion of these types of households would not produce a s i g n i f i c a n t change i n trends; t h i s would happen only i f these groups grow at a rate such, that they a l t e r the 'tipping point' and change the expectations i n the a f f e c t e d neighborhoods. Land a v a i l a b i l i t y i n p e r i p h e r a l areas: t h i s f a c t o r r e l a t e s d i r e c t l y to the occurrence of g e n t r i f i c a t i o n and the magnitude of the expectation' e f f e c t , which w i l l be higher i n cases.where r e s t r i c t i o n s to urban, expansion reduce the average s i z e of the l o t s i n . p e r i p h e r a l areas.. -  Rate of new b u i l d i n g construction: the proportion of new ,construction as r e l a t e d t o the rate of population growth may be an indicator, of the e f f e c t s of segregation a t t i t u d e s i n m u l t i p l y i n g the succession  process./  This would be true regardless of the occurrence of g e n t r i f i c a t i o n . B u i l d i n g construction beyond the d i r e c t demand produced by growth wouldi n d i c a t e , other things equal, a t l e a s t some degree of i n s t a b i l i t y i n , some neighborhoods produced by the a l t e r a t i o n of the s o c i a l mix considered acceptable by some groups. On the other.hand, • a r e l a t i v e l y low rate of new b u i l d i n g construction  may be i n d i c a t i n g the occurrence of g e n t r i f i c a t i o n , since i t may be r e s u l t i n g from changes of preferences of some groups f o r o l d rather than new housing. I f t h i s i s the case, other f a c t o r s should be analyzed to assess the impact of t h i s particular indicator. Transportation changes, such as new t r a n s i t systems, new t r a n s p o r t a t i o n c o r r i d o r s , may a f f e c t the a c c e s s i b i l i t y component of the l o c a t i o n variables.  Improved a c c e s s i b i l i t y can be argued to play against the  occurrence.of g e n t r i f i c a t i o n to the extent that g e n t r i f i c a t i o n i s indeed r e l a t e d to the r e l a t i v e importance of a c c e s s i b i l i t y to CBD as compared to other l o c a t i o n f a c t o r s . Improved a c c e s s i b i l i t y , i n any case, reduces some of the problems a f f e c t i n g low-income groups i n g e n t r i f y i n g areas, to the extent that these improvements reduce the time and monetary costs of commuting i n areas where the poor may be displaced i n the g e n t r i f i c a t i o n process.  In summary, the g e n t r i f i c a t i o n process appears to represent a planning s i t u a t i o n characterized by c o n f l i c t i n g goals and long-term uncertainty.  Rehabilita-  t i o n subsidies i n t h i s s i t u a t i o n contribute to achieve some goals but defeat others.  The a n a l y s i s submitted i n t h i s research suggested some of the groups  a f f e c t e d ( e i t h e r p o s i t i v e l y or negatively) by both g e n t r i f i c a t i o n and rehabil i t a t i o n , some i n d i c a t o r s that can be u s e f u l f o r the assessment of the incidence of these e f f e c t s i n s p e c i f i c cases, and some planning t o o l s that could be used e i t h e r i n conjunction or as an a l t e r n a t i v e to r e h a b i l i t a t i o n i n order to improve the achievement of p a r t i c u l a r goals. The conclusions and i m p l i c a t i o n s o u t l i n e d above are p r i m a r i l y based on the conceptual l o c a t i o n model that was derived from the review of d i f f e r e n t bodies of l o c a t i o n theory.  Although the major v a r i a b l e s presented i n the model  appear to be consistent w i t h most of the approaches to l o c a t i o n theory that could be reviewed i n the research, the v a l i d i t y of the conclusions and i m p l i -  1.60 cations i s s t i l l subject to the accuracy of the model i n d e s c r i b i n g r e a l l i f e situations.  In t h i s sense, both a more complete development of the model and  i t s t e s t i n g by e m p i r i c a l research may a f f e c t the set of conclusions presented here. This u n c e r t a i n l y w i t h respect to the r e l i a b i l i t y of the model adds to the uncertainty of long-term e f f e c t s as predicted from the model i t s e l f and suggest a more general i m p l i c a t i o n f o r planning p o l i c y .  Whatever the p r i o r i t i e s  determined by the policymaker i n terms of d i f f e r e n t planning goals, the a c t u a l planning decisions should be such that permit the achievement of these goals w i t h i n t h i s framework of uncertainty. Thus, rather than one p a r t i c u l a r program (such as r e h a b i l i t a t i o n or neighborhood improvement s u b s i d i e s ) , t h i s s i t u a t i o n c a l l s f o r a more comprehensive planning strategy which includes a range of d i f f e r e n t p o l i c i e s to apply as d i f f e r e n t f a c t o r s change i n each case and a t each point i n time; a t the same time the strategy should include a monitoring system capable of detecting changes over time of the long-term trends. The research has suggested some of these p o s s i b l e planning t o o l s , and some i n d i c a t o r s that could be h e l p f u l formonitoring. The a c t u a l choice of plans and programs depends on the p r i o r i t i e s determined by the policymaker.  7.3  FUTURE USES OF THE LOCATION MODEL The research could be considered f i n i s h e d at t h i s point since, the  conclusions and i m p l i c a t i o n s already o u t l i n e d have met, w i t h i n the time and resource l i m i t a t i o n s , the main objectives i n i t i a l l y stated. However, the l o c a t i o n model developed throughout the research i s an a d d i t i o n a l output that can serve a number of uses.  Some comments on the uses of the model were,  therefore, considered worth p o i n t i n g out. The l o c a t i o n model as presented i n the research is. conceptual i n nature.  I t provides a very general framework to synthesize a set of v a r i a b l e s  and t h e i r i n t e r r e l a t i o n s h i p s .  I t i s at a very i n i t i a l stage of development  161' and,  as such, needs f u r t h e r study oriented to define more accurately each of  the v a r i a b l e s ,  to design an operational counterpart, and to devise a more  precise measuring of the i n t e r r e l a t i o n s h i p s  among the main v a r i a b l e s .  Given these considerations, some comments can be made on how  the  model works and what type of uses could be expected from i t .  D e s c r i p t i o n of the model.  The  model i s i n f a c t a set of two i n t e r r e l a t e d sub-  models: an a c c e s s i b i l i t y matrix, which summarizes l o c a t i o n preferences i n f i v e dimensions, and a dynamic model of household moves.  The  dynamic model des- .  cribes the occurrence and volume of household moves and the a c c e s s i b i l i t y matrix describes the s p a t i a l d i s t r i b u t i o n of r e s i d e n t s , e i t h e r w i t h a f i x e d population or the d i s t r i b u t i o n of moves as detected i n the dynamic model.  In general, the  model permits the transformation of a set of data obtained from census i n f o r mation and land surveys i n t o a s p a t i a l d i s t r i b u t i o n of residents and household moves.  In doing t h i s , i t allows a description  p h y s i c a l and  of d i f f e r e n t areas i n terms of  s o c i a l c h a r a c t e r i s t i c s , as w e l l as a p r e d i c t i o n  of possible  changes. One puts, may 1)  The  way  be as  of describing the mechanics of the model, i t s inputs and follows:  spatial characteristics.of  a c i t y can be p l o t t e d i n a map,  can be i d e n t i f i e d with s i m i l a r a c c e s s i b i l i t y to CBD, and geographic t r a i t s .  The  and areas  l o t size configuration  Each of these areas i s given a f i r s t , two-dimen-  sional a c c e s s i b i l i t y coefficient 2)  out-  (geometry and geography dimensions).  s p a t i a l d i s t r i b u t i o n of the e x i s t i n g population, defined by  status, familism and  e t h n i c i t y , can be also p l o t t e d .  social  This d i s t r i b u t i o n  would a f f e c t the i n i t i a l boundaries of homogeneous areas.  An a c c e s s i b i l i t y  c o e f f i c i e n t can then be derived f o r the r e s u l t i n g areas; t h i s new  coeffi-  cient would include, both the two i n i t i a l dimensions plus the s o c i a l s e g r e gation c o e f f i c i e n t s derived from the e x i s t i n g s p a t i a l d i s t r i b u t i o n  c  162 3)  Housing q u a l i t y by area can be predicted '/and checked against the a c t u a l housing q u a l i t y i n d i f f e r e n t areas, and a value can be found f o r the housing (neighborhood) q u a l i t y dimension;): At t h i s point, the a c c e s s i b i l i t y matrix i n a l l the dimensions has  been b u i l t , and r e l a t i v e aggregate a c c e s s i b i l i t y c o e f f i c i e n t s have been found for  each of the homogeneous areas.  L)  Given an a c c e s s i b i l i t y matrix which describes both the p h y s i c a l and the s o c i a l components of l o c a t i o n , the dynamic part of the model can be used.. The next input i s , thus, population forecasts by s o c i a l type and forecasts of housing a d d i t i o n s .  5)  The next output i s a forecast of moves.  By assigning the new population to  areas having a c c e s s i b i l i t y c o e f f i c i e n t s s i m i l a r to those chosen by the f i r s t r e s i d e n t s , the model should be able to detect where the moves would s t a r t , i n which d i r e c t i o n they are l i k e l y to proceed, and how the process would a f f e c t the s o c i a l and p h y s i c a l c h a r a c t e r i s t i c s of both the affected and the surrounding neighborhood. 6)  To the extent that the a c c e s s i b i l i t y matrix accurately describes segregat i o n a t t i t u d e s , the model should also show i n which cases t h i s i n i t i a l change i n l o c a t i o n a f f e c t s the s t a b i l i t y of a neighborhood.  "Instability"  i n t h i s sense would be measured as the difference between the i n i t i a l s o c i a l composition and the one r e s u l t i n g a f t e r the f i r s t i t e r a t i o n of moves; t h i s i n s t a b i l i t y i s assumed to be d i r e c t l y correlated to the seggregation a t t i tude between the two groups at play. Thus, an i n i t i a l set of data (land surveys, distance to CBD, l o t s i z e s , population - e x i s t i n g and forecasted - by rank, familism and e t h n i c i t y , housing construction) -can been used to p r e d i c t a pattern of r e s i d e n t i a l  distri-  bution, a pattern of l o c a t i o n moves and a pattern of p h y s i c a l and s o c i a l changes i n d i f f e r e n t areas of the c i t y .  Uses of the model.  To the extent that these general data are a v a i l a b l e , some  p o s s i b l e uses of the model are suggested as f o l l o w s : 1)  The model can be used f o r d i r e c t f o r e c a s t i n g : the f i r s t and more obvious use would be that of p r e d i c t i n g the population composition and i t s counterpart i n terms of housing and neighborhood c h a r a c t e r i s t i c s i n d i f f e r e n t areas, and the changes that can be predicted from the population f o r e c a s t i n g .  2)  The model can be used to detect eventual problem areas: t h i s f i r s t f o r e casting should be able to detect cases i n which growth produces some types of problems, such as household moves beyond what could be considered the l i m i t i n terms of neighborhood s t a b i l i t y i n s u f f i c i e n c y of land or housing, stock i n s p e c i f i c areas, displacement of some groups to l e s s .desirable l o c a t i o n s , types of s o c i a l mix incompatible w i t h some types of segregation a t t i t u d e s , etc.  3)  The model can be used to assess advantages and problems of planning p o l i c i e s : a number of p o l i c i e s can be introduced to the model by assuming a s p e c i f i c e f f e c t of these p o l i c i e s on the values of the a c c e s s i b i l i t y matrix.  For instance:  Zoning regulations a f f e c t the l o t sizes i n the a f f e c t e d areas: theref o r e , they modify the geometric dimension of the a c c e s s i b i l i t y c o e f f i cient. Urban growth boundaries can be introduced i n a s i m i l a r  way.  R e h a b i l i t a t i o n subsidies modify the housing q u a l i t y dimension and the r e s u l t i n g c o e f f i c i e n t i n each of the a f f e c t e d areas. -  Transportation programs modify the CBD a c c e s s i b i l i t y or the geometric c o e f f i c i e n t i n those areas where t r a n s p o r t a t i o n i s improved. Immigration p o l i c i e s a f f e c t the s o c i a l c o e f f i c i e n t , and so on. These c o e f f i c i e n t s modified by p o l i c y would a f f e c t the o v e r a l l  s p a t i a l d i s t r i b u t i o n and the pattern of moves.  The model can be used to  p r e d i c t those changes and detect eventual gains or losses f o r d i f f e r e n t groups  16*£ i n terms of l o c a t i o n changes. 4.)  The model can be used f o r planning a n a l y s i s : some external forces not cont r o l l e d by the policymaker (such as changes i n s o c i a l a t t i t u d e s , economic expansion or recession) could also be introduced by assuming an e f f e c t on the c o e f f i c i e n t s of the a c c e s s i b i l i t y matrix.  The incidence of such ex-  t e r n a l f a c t o r s could be derived by comparing outputs of the model  before  and a f t e r the. .occurrence of these external phenomena. Another way of using the model f o r a n a l y s i s would be reversing the mechanics of the model: f o r instance, changes i n l o c a t i o n trends could be de- . tected by comparing a c c e s s i b i l i t y matrices derived from an area at two d i f f e r ent points i n time; differences i n s p a t i a l d i s t r i b u t i o n of residents would r e s u l t i n d i f f e r e n t values of some of the a c c e s s i b i l i t y c o e f f i c i e n t s .  This  type of a n a l y s i s may be h e l p f u l to explain the causes of the changes i n l o c a t i o n trends. This l a s t use i s e s s e n t i a l l y the method that was chosen f o r the a n a l y s i s of the g e n t r i f i c a t i o n process, i n which some causal f a c t o r s of g e n t r i f i c a t i o n were r e l a t e d to f a c t o r s that would change the values of the a c c e s s i - . b i l i t y matrix.  The a n a l y s i s was c a r r i e d out i n a very conceptual l e v e l , since  the purpose of the research was to point out general rather than s p e c i f i c e f f e c t of the g e n t r i f i c a t i o n process. A more s p e c i f i c a p p l i c a t i o n i s also p o s s i b l e , however,, i f s u f f i c i e n t data are a v a i l a b l e . For instance, an assessment on the p r o b a b i l i t y of g e n t r i f i c a t i o n to occur i n Vancouver could be based on e s s e n t i a l l y the same reasoning. Let/us assume that i n Vancouver the f o l l o w i n g v a r i a b l e s are present: High rate of population growth (high immigration -  rate)  Limited land to expand ( A g r i c u l t u r a l Land Reserve, urban growth boundaries, n a t u r a l geographic.barriers). Saturation of population capacity under the current  -  R e l a t i v e l y low d e n s i t i e s i n c e n t r a l areas.  zoning.  165 -  Growing importance of h i s t o r i c preservation movements. Given these assumptions, i t would be reasonable to p r e d i c t that at  l e a s t some degree of p r i v a t e r e h a b i l i t a t i o n should be underway or should occur i n the near future.  By d e r i v i n g the corresponding a c c e s s i b i l i t y matrix, before  and a f t e r the occurrence of these eventual causal f a c t o r s , and. introducing population growth f o r e c a s t i n g by s o c i a l type, i t should be possible to p r e d i c t , where t h i s g e n t r i f i c a t i o n process i s l i k e l y to s t a r t , which  neighborhoods  would be a f f e c t e d and which groups would gain and lose i n the process. At the same time, i f g e n t r i f i c a t i o n indeed occurs i n Vancouver, planners would be faced to the choice of p o l i c i e s which would present c o n f l i c t ing planning goals: the housing needs of the newcomers are i n c o n f l i c t with the r i g h t s of the residents to have t h e i r housing choice protected. Control of urban expansion c o n f l i c t s with the need of new housing.  Goals of d i v e r s i t y of  l i f e s t y l e s would be both looked f o r and defeated by high-income resettlement. The model presented here may prove a u s e f u l t o o l to assess i n more s p e c i f i c ways the incidence of these c o n f l i c t s and the e f f e c t s on l o c a t i o n options of p o l i c i e s oriented to meet each of these goals.  166 BIBLIOGRAPHY  Abu-Lughod, Janet. "The Consumer Votes by Moving", N. Foote, J . Abu-Lughod, Mary M. Foley & Louis Winnick, Housing Choices and Housing Constraints. McGraw-Hill Book Co., I960. Alonso, William. Location and Land Use, a General Theory of Land Rent. Harvard U n i v e r s i t y Press, 1964. B a i l e y , Martin. "Notes on the Economics of R e s i d e n t i a l Zoning and Urban Renewal". Urban Land Economics, V o l . 33, #5, August 1959, p. 288-292. Barret, Frank.A. " R e s i d e n t i a l Search Behavior:. 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