Friday, October 5, 2007

Elorza on Gentrification

Jorge Elorza (Roger Williams) has posted Absentee Landlords, Rent Control, and Healthy Gentrification: A Policy Proposal to De-Concentrate the Poor in Urban America on SSRN. Here's the abstract:

Empirical data overwhelmingly suggests that the presence of middle- and working-class homeowners is beneficial for inner city communities. Yet, absentee landlords have a systematic financial advantage over resident landlords when it comes to purchasing homes in blighted neighborhoods. This advantage has disastrous effects for inner-cities as the communities with the greatest need for the stabilizing presence of middle- and working-class homeowners are the ones least likely to attract them. The lack of in-moving homeowners and the resulting increase in poverty cause declining neighborhoods to fall deeper into downward spirals.

In this Article, I propose a rent control plan designed to attract middle-and working- class homeowners to blighted neighborhoods, and I argue that many positive outcomes will result. By designing this plan, I hope to breathe new life into the rent control debate by challenging the conventional wisdom that rent control has only one legitimate purpose, reducing tenants' rents, and by calling attention to the externalities caused by the absentee landlord industry. Second, I provide a legal and economic model for inner cities to de-concentrate poverty and to better integrate the poor into mainstream society. Third, I develop a model for healthy gentrification whereby vicious cycles of poverty are transformed into virtuous cycles of stability.

Ben Barros

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