Most new housing is built for higher income people. Most affordable housing is just market rate housing that is now cheap.

Daniel Kay Hertz is a Senior Fellow at City Observatory and a graduate of the Harris School of Public Policy at the University of Chicago. He joins the Strong Towns Podcast this week to talk about housing finance and how it impacts disadvantaged neighborhoods.

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Charles Marohn:    Hey, everybody, this is Chuck Marohn with Strong Towns. This week we are talking about federal housing policy and I've got on the line with me, Daniel K. Hertz. Daniel is a senior fellow at City Observatory. He's a recent graduate of the MPP Program at the Harris School of Public Policy at the University of Chicago. Not only does he write for City Observatory he also has his own blog where he focuses on primarily Chicago housing issues. Daniel, welcome to the Strong Towns podcast.

Daniel Hertz:   Thanks so much for having me.

Charles Marohn:    Are you a Chicago native?

Daniel Hertz:     I am a Chicago native, yeah. I grew up here. We moved around a little bit in high school so I actually spent 2 years in Madison, Wisconsin before we moved back to the Chicago area. We moved to Evanston when I was 16.

Charles Marohn:   This is the first time you and I have ever chatted so I'm going to give you the ultimate test to determine, from Chicago, whether you and I are going to be friends or not. Are you a White Sox fan or a Cubs fan?

Daniel Hertz:   I'm a Cubs fan.

Charles Marohn:     Okay.

Daniel Hertz:    I grew up on the north side.

Charles Marohn:    Then we can be friends.

Daniel Hertz:   Okay, glad to hear it. Definitely I grew up watching Mark Grace and all those.

Charles Marohn:   Oh, great. I'm in the AL Central. I do not like the Chicago White Sox. No offense to ...

Daniel Hertz:    Yeah, there you go. That's right.

Charles Marohn:    ... people who do. But, yeah, I can't cheer for the White Sox in any way. I was in Chicago and I brought my daughter to a White Sox game and we wore our Twins jerseys and she is 6 years old, this cute little kid with a pink Twins jersey on. She got booed. We walking to our seats, they booed her. I thought, you guys.

Daniel Hertz:   Yeah, Sox park can be a little rough I guess.

Charles Marohn:     All right. I want to talk about housing policy and you've written some very insightful things on gentrification which is one of those kind of hot button issues. The thing I find most interesting about what you've written is that gentrification not only deals with displacement but there's also another element to it that's not often discussed. Can you talk a little bit about some of your insights?

Daniel Hertz:    I've written about gentrification both from the perspective of Chicago and also sort of across the country. One of the things that we talk about at City Observatory is sort of the connection that's made between gentrification and displacement, the dominant narrative. I actually have a, not to give away too much, I have an article coming out in [inaudible 00:02:58] Magazine next month about this. If you ask urban planners or people who follow these issues what's one of the biggest issues, what's one of the biggest problems in American housing policy today and in American cities in general they'll say displacement caused by gentrification.

It's understandable because in some areas you can have very high profile neighborhoods of New York and San Francisco and Chicago too. There really has been some pretty dramatic demographic changes over the last 20-30 years. A trend of young people and young professionals and higher income people moving into city centers and increasing demands for urban living is real, all of that is very real. We think that that focus is misguided or misleading in at least two ways. One of them is that the connection between gentrification and displacement is both weaker and different than is generally believed.

In all most all of the studies that we've seen that have been looking for the connection between gentrification and displacement have showed that, in fact, there isn't really a notable increase in out-migration from moderate and low income people in gentrifying neighborhoods and that really the force for demographic change is the change in the people who are moving in. Which has to do both with changing demands for who wants to live there but also then that is also a mechanism by which raising prices could price people out. People who previously would have considered moving to a neighborhood don't partly at least because of prices. That's a very different narrative and may lead to different policy solutions than the more common narrative.