Regular readers know that I’m pretty heavily involved in buying and fixing up screwed-up buildings in improving neighborhoods. So, I’m not exactly an impartial observer of this discussion.
I spend a lot of time thinking about whether what we do helps or hurts the world. I can definitely see the “hurting” argument. After all, either directly or indirectly, we are pricing out some long-time residents of the neighborhoods in which we operate. That’s a fact, and no amount of argument can change it.
On the other hand, we’re also doing a lot of good:
- When we buy a building, roughly 1.5% of the purchase price goes to the city and county in taxes
- The seller’s broker and our broker, usually locals, make commissions equal to 5-6% of the sale price, feeding their families;
- The escrow and title companies earn fees, allowing them to employ escrow and title officers who are usually local;
- Because of Prop 13, when we buy, the annual property tax due on the property generally increases, benefitting the city and county;
- We and our contractors employ a ton of people to do the renovations, creating relatively high-paying construction jobs;
- We buy a ton of materials, which benefits local and national retailers and also generates a ton of sales tax revenue for the city and county;
- The new tenants in our buildings are more affluent and more apt to patronize local shops, restaurants, bars, etc., directly supporting a bunch more jobs and generating even more sales tax revenue;
- If we choose to sell a building, we pay 1.5% of the value to the city and county again, and the annual property taxes increase again.
- Again, the broker who sells the property for us and the broker representing the buyer earn commissions;
- And escrow and title earn fees again.
It would take someone a lot smarter than I am to fully-quantify the impact of our business on the economy of the city and county. But, that’s not really the point, is it? After all, gentrification is always going to be justified economically. But, what about culturally or morally?
I guess all I can say is that my own family, like those of many eastern European Jews, has been pushed and pulled around the globe by strong forces – economics, war, genocide, etc.
My personal take-away is that the status quo is fragile, that individual humans are always one election or coup or turn of the economic tide from having their worlds upended. Nothing is assured and nothing is permanent, including where we live.