According to the Wall Street Journal, the hot national housing market is spawning an organic revitalization of urban neighborhoods unaffected by traditional "urban renewal" programs:
- Now the national real-estate boom is starting to transform some neighborhoods long resistant to government or philanthropic recovery programs. The five-year-old boom in residential housing initially was concentrated heavily on economically vibrant cities like San Diego, Miami and New York. In the past couple of years, it has spread to some less obvious places, including long-distressed sections of Baltimore, Philadelphia and Oakland, Calif. Parts of these cities have turned into hot real-estate markets largely because their house prices still seem like bargains compared with those in more glamorous cities nearby.
The lowest mortgage interest rates in four decades have spurred spending on housing across the country and sent individual investors searching for real-estate opportunities much as they used to scour the financial news for the latest initial public offering. Cities are promoting blighted areas as investment opportunities, offering a lure many prosperous suburbs lack: vacant property suitable for developers.
Full article here.
Actually, "organic" may be somewhat of a stretch, as cities like Baltimore have gotten heavily involved in acquiring blighted housing (or demolishing aging public housing) and turning it over to private entities for redevelopment. The article correctly points out that interest in up-and-coming urban neighborhoods may fall off sharply as interest rates rise. So cities that want to keep the momentum moving in the positive direction would be wise to follow Joel Kotkin's advice (see my previous post) and focus on the basics, like reducing crime, reforming failing urban school systems, and improving infrastructure.