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Is The Pandemic Priming Neighborhoods For A New Wave Of Gentrification?

Last year, we might have viewed gentrification as one of the worst aggravators of the housing market. We did not expect a pandemic. We’ve spent months indoors, lost work or transitioned to telecommuting, and watched once-bustling streets go silent; and as the coronavirus persists, more and more people have fled cities to hunker down in rural locations.

The question of gentrification still looms, and in deciphering what this exodus means for the future of housing, some have looked to the phenomenon of disaster gentrification in particular.

“When [people] talk about disaster gentrification, they’re referring to instances where a community was hit by a disaster that caused, at a minimum, temporary displacement,” says Lance Freeman, a professor at the Graduate School of Architecture, Planning, and Preservation at Columbia University, and a leading researcher on gentrification. “In the rebuilding process, the area was rebuilt for people from higher social economic status households,” preventing original tenants from moving back to their neighborhoods and uprooting communities.

New Orleans in the wake of Hurricane Katrina is perhaps the best-known example of disaster gentrification—reported by CityLab: “Those neighborhoods with a higher percentage of physical building damage were more likely to have gentrified one decade after the storm”—but it has occurred in New York, Miami, and other cities that have experience major climatic disasters. With the pandemic now worldwide, it’s worth considering if the pattern will reappear, though for different reasons—namely, people forced out of their homes by financial hardship, and a migration from urban to rural areas.

For gentrification to occur, two things must happen. For one, “you have to have an area that has very low values on residential real estate, which involves disinvestment and [maybe] abandonment of certain areas,” says Bruce Mitchell, a senior analyst for the National Community Reinvestment Coalition (NCRC).

The second thing? Investment—or, as Freeman notes, a rebuilding of an area so that it effectively prices out the current residents in favor of higher-income renters and buyers.

Right now, the U.S. is currently in a recession, with  about 31 million people unemployed. With so much uncertainty around when the pandemic will end, people will continue to suffer economically, especially those who live in lower-income communities, which are disproportionately people of color, notes Freeman.

“If you look at the number of predominantly white communities and then at the number of communities of color, the disinvestment in the community of color will be more disproportionate than in the white neighborhood,” he adds. “In that sense, you can say they experience more gentrification because they’re disproportionately in the working-class, disinvested neighborhoods.”

 

According to the Center for American Progress, “Housing instability triggered by the coronavirus pandemic is a growing threat across the United States, especially in communities of color.”

It notes that where 9% of white homeowners missed or deferred a mortgage payment in May, 20% of Black homeowners did the same.

If people of color and low-income communities continue to suffer economically, will they be forced to abandon their homes for areas that are more affordable, causing an abandonment or disinvestment of a neighborhood? And will that prime a neighborhood for gentrification to occur? Perhaps so—especially when you consider how many people in these neighborhoods are renters.

“In the short term, it looks like there are going to be a lot of repercussions having to do with the current rental crisis and the inability of people to pay their rent because they simply don’t have the income,” says Mitchell. “[If] people can’t pay rent, then landlords—particularly small landlords—are not going to be able to meet their mortgages, perhaps.”

While Mitchell views the eviction and rental crisis as something that may cause an increase in temporary homelessness, others are concerned that city residents will voluntarily turn to small towns and rural places due to the rise in telecommuting, or be forced into these areas in search of more affordable living.

“The workplace has increasingly moved into people’s homes,” says Mitchell. “It could result in movement out of central cities to areas that are less expensive.”

Rural gentrification has occurred in the past. Freeman notes, “In the New York area, you had these smaller towns in Upstate New York along the Hudson River that many artists and other creative types moved to starting at the latter part of the last century. They were drawn to those areas because housing is cheaper, [and] it’s scenic.”

Though some may have sought rural areas at the beginning of the pandemic, Freeman doesn’t foresee Americans moving to rural areas en masse.

“As we’re seeing in many of these smaller communities, you’re still not immune or protected from the virus, necessarily,” he says. “I think in the short term, perhaps that’s happening. I’ve seen anecdotes about it, but I don’t think it’ll be a permanent trend.”

We’ve also heard these anecdotes and reports of New York City residents moving to Upstate New York, Connecticut, and Vermont, or Californians in cities like San Francisco heading to Montana. In April, Redfin’s CEO said demand for rural homes was higher than for urban homes, and in May, the company noted that Redfin page views of homes in towns with fewer than 50,000 residents were up 87% year over year. And yet, the company also found that 27% of users who were looking to move during the pandemic were focused on metros like Las Vegas and Sacramento.

Comparing these statistics to actual homebuyer behavior will take time. In the meantime, we should keep in mind that many reports of city dwellers migrating to rural areas have centered on residents of metropolises in California and New York; those anecdotes are not necessarily representative of the entire nation.

Shad Bogany, a realtor who serves on the board of directors for the Houston Association of Realtors (HAR), feels similarly to Freeman. While he notes that the real estate market dipped in April and May, Bogany says that people are currently buying and selling houses in droves. “We don’t have enough houses to sell,” he says.

For Bogany, there’s one reason that the market has remained strong, and it’s not that buyers are moving to areas they deem safer or cheaper—rather, “people are making decisions based on the low interest rates.”

 

Source:  Dwell

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Why Super Bowl LIV Could Spark Interest In Miami Gardens Real Estate

Tens of thousands of people passed through the turnstiles into Hard Rock Stadium for Super Bowl LIV, taking part in the spectacle and competition. And when it ended, nearly all of them bypassed the neighborhood entirely on their way out.

While the stadium’s privately-funded, $500 million renovation boasts an open-air canopy along with other impressive additions, the surrounding city of Miami Gardens stands in sharp contrast.

The city has so far failed to attract the wide-scale investment that some sports stadiums in other cities have brought, and has not seen a blossoming of new residential properties outside the stadium.

Hard Rock Stadium owner — and Related Companies’ founder and chairman — Stephen Ross began the massive renovations of the venue in 2015, which brought the Super Bowl back to South Florida after a decade of absence. In addition, the money that Ross invested in the stadium — he also owns the Miami Dolphins — led to the Miami Open tennis tournament there in April and potentially, a Formula 1 race.

Some real estate developers who have built or proposed projects in Miami Gardens believe the renovations may bring about new interest in the city as a whole. The city, incorporated in 2003, is a historic African-American community with a population of about 110,000. It largely consists of older residential properties and commercial and industrial properties. In 2017, the household median income was $41,000 — below the county’s average of $46,388.

“The stadium is starting to be an asset. It was just a football stadium, but now… you are seeing an active asset, you are drawing people,” said Barron Channer, the CEO of Woodwater Investments, a Miami-based real estate investment firm. He previously proposed building a mixed-use project near the stadium.

Some developments are already in the works.

Los Angeles-based Latigo Group recently broke ground on a 259-unit apartment project at 19279 Northwest 27th Avenue in Miami Gardens. Rents will range from $1,700 to $2,300 per month, and the project is one of the first new market rate apartment developments in the city. It’s part of a bigger mixed-use project that will include a 37,000-square-foot building on a 4.63-acre parcel that will be leased to 24 Hour Fitness.

Jonathan Roth of Miami-based 3650 REIT, which provided a $50 million construction loan for the project, said Miami Gardens could become an attractive place to build housing at reasonably priced rents, since land prices are cheaper.

“What is happening nationally, you have a lot of development, but it is all Class A going up. By going into Miami Gardens you are going to pay slightly less for the land,” Roth said.

Sitting right off the Florida Turnpike and I-95 and in between downtown Miami and Fort Lauderdale, Miami Gardens has become a hub for logistics and warehouses, the less sexy part of real estate.

In recent years, institutional industrial investors have been snapping up properties in the area. In October, private equity giant Blackstone acquired two industrial properties in Miami Gardens for $13.6 million at 5120 Northwest 165th Street. And in July, Longpoint Realty Partners bought an industrial park in Miami Gardens from Prologis for $25 million.

In the northeast Miami-Dade County submarket, which includes Miami Gardens, more than 197,000 square feet of industrial space was under construction at the end of 2019, according to a report from Avison Young. The net absorption was 1.1 million square feet, the most of any submarket in the county.

Yet, the question remains whether the city will pivot from attracting industrial development to more residential projects.

Some real estate experts are betting on it, in part due to the rising cost of land in other parts of South Florida, and a lack of developable land to build new projects. The city could also become an alternative for renters on a budget, who would otherwise move further south or west in Miami-Dade County.

Colliers International South Florida’s Gerard Yetming and Mitash Kripalani are listing two parcels of land in Miami Gardens at 1255 Northwest 210th Street, totaling 82.5 acres, which allow for a maximum of 50 residential units per acre. Yetming said he is getting inquiries from developers who are looking to build workforce residential development, and that developer interest is growing in Miami Gardens.

“The level has increased over the past couple of years,” Yetming said. “A few years ago, developers were more interested in downtown and an urban type of environment.”

With new investment also comes the risk of gentrification and displacement of existing residents, something communities in places like Miami’s Little Haiti are trying to combat amid projects like the Magic City Innovation District.

“Miami Gardens is and has been heavily defined by the presence of black residents,” said Channer of Woodwater Investments. “If this is not reflected in who is courted to, and actually investing at all levels, then economic development efforts would have failed their ultimate test.”

 

Source:  The Real Deal

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