Investing in Homeownership without Pricing Everyone Out of the Neighborhood

Modest Money  |

As a homeowner and member of two neighborhood boards, I think about this a lot: I live in a city where many dozens of blocks lie totally vacant – the hundred-year-old houses they hold falling into deep decay. Like many residents my age, I bought a house a couple of years ago, amazed at the low price I was able to find. Like many other people who made a similar move, I’m white, college educated, and young.

The next word that is likely to pop into your mind is gentrification. It’s fair that you should bring this up. There have been old neighborhoods all across the country which have been transformed for the worse, as a new privileged class became neighborhood homeowners, bringing with them a string of developments that quickly raised rent prices beyond what longtime, largely minority residents could pay.

This is especially true since home buying has become such a great investment for young adults. With the rise of modern investment methods like Betterment and Prosper, Millennials are old enough to be getting savvy about investment. But investment savvy is exactly the characteristic that many are citing as the driving force behind gentrification.

It’s an ugly thought, yet it’s also one that isn’t totally accurate to our neighborhood’s situation. My house is a row house, one of 25 on this side of the street on the 2700 block. They’re small, old houses. When one has a problem, it tends to spread to the neighbors. When we moved in, both of our neighbor houses were long since vacant. When the house to the north of us got a leak, the water spread to our floor. When the house to the south developed a carbon monoxide leak from improperly winterized electronics, some leaked into our home. Vacant homes like these made up over 30% of our street when we moved in, and improvements to them became improvements for the whole neighborhood, which no longer had to watch them fall apart.

Gentrifying Residents Right out of Their Homes 

Our neighborhood has seen a 55% increase in millennial age residents during the last five years. Because of widespread vacancy throughout the neighborhood, many like me were able to buy a house for cheap. A lot of us performed the renovations ourselves, and are now reaping many of the personal and financial benefits of home ownership. Friends of mine have bought unused commercial properties, and we’ve successfully advocated for new green spaces and lower speed limits on our neighborhood’s busiest streets.

But then things got serious. A large developer bought up a few blocks, and construction is underway. We still enjoy a true diversity within our neighborhood – diversity of income, of ethnicity and education – and many of us fear that this is going to go out the window. I’ve already lost one neighbor to rent increases. She and her son were both born in this neighborhood, and are now house-jumping, trying to find a place that will keep rent at the same level for more than a year. We’ve asked ourselves, is this process inevitable? What can be done to stop it? Here are some solutions we’ve come up with:

  1. Take Ownership of Housing – Certain young members of our community have bought up houses and business spaces, and have committed them to long term, rent-capped use. It’s not Section 8 – it’s house owners who agree to keep their rent at a certain level, and never to raise it more than a certain amount in a given year. Prospective residents, priority given to long term members of our community, can be set up with rent at one of these places through our neighborhood community organization.

  2. Bring in Employment – One big factor in our neighborhood was that corner store spaces needed to be rezoned. In the 70s, our city determined that disused commercial spaces should be rezoned as residential, in order to cut down on problem businesses like liquor stores which historically preyed upon impoverished neighborhoods. Today, with the neighborhood becoming healthy again, these businesses could mean walkable jobs for many in our community. Getting these rezoned and open again has provided real employment for people in our neighborhood…and this is expanding.

  3. Work With Developers – As a very organized neighborhood, our community leadership has sway with developers. Representing hundreds of members, we’ve been able to give the “yes” and “no” to different decisions made by local developers. There have been victories and losses, but we’ve managed to impact their commercial and housing projects in ways that we believe will be affordable to the people who have called our neighborhood home for many years.

Gentrification is real, and in some cases unavoidable. But we’ve found that strong communities can curtail many of the most negative aspects of gentrification. After all, gentrification starts as improvement. And everybody wants improvement. But left to itself, money can quickly take the development of a community, a town, or a city out of control, leaving longtime residents with no one in their corner. We believe that if our neighborhood leaves our most vulnerable residents behind, it can one day leave our most privileged members behind. It’s an effort worth making. As the North American housing market continues to recover, many of these stories will be told, but I hope that more and more of them feature sensitivity to low-income and longtime residents, and that our efforts with and for these people continue to be successful.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:



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