The Economist’s Free Exchange is caught up in the debate this week about the possible downsides of urban renewal and gentrification. Case in point: a New Yorker magazine article about Red Hook, Brooklyn, described as somewhere between “hipster outpost and bobo sanctuary” — where rising real estate prices have pushed out the starving artists and other creative types. And that has left the community at a development standstill.
In rapidly developing urban areas, even the neighbourhoods untouched by significant developments appreciate, presumably based on the possibility that future growth will add value to the land. This could conceivably cause the hipster pioneers–the valued but price sensitive artists and other creative types–to skip outlying areas of the city all together in favour of other, cheaper cities.
Of course, we all know of a Red Hook. Another hipster enclave that was invaded by Starbucks and yoga studios and SUVs.
It’s the same story in cities across North America. But what is the alternative, and is there anything we can really do about it? Afterall, we are talking about presumably free markets to buy and sell property.
But, the Economist goes one step further and points out that perhaps our real estate markets aren’t fluid enough — and that as a result we are letting valuable urban resources go to waste.