Is our current building boom the second half of the 1960s 'urban renewal'?

The major American cities have been experiencing both a sustained rise in housing prices and a significant building boom that is creating more upscale housing and even entirely new neighborhoods from the ground up. Are these, almost sixty years later, the hoped-for outcome of the urban renewal of the 1950s and 60s?

Urban renewal was intended to be a two-part process. First, demolish; then, rebuild.

First, the demolition.

The effects of this phase of urban renewal are so complex that it does them injustice to attempt to simplify them into a few sentences. Urban renewal reshaped cities, away from the traditional patterns of European development into something new and distinctly American. It also reshaped cities from pedestrian- to car-focused, adversely affecting the walkability of many neighborhoods. And there was a profound lack of respect for history and its tangible value (heritage tourism) and intangible benefits (a strong sense of place).

The thinking which underpinned urban renewal was misguided and undeniably racist. It went hand-in-glove with federal policies like redlining (denying mortgages in areas with a significant black, Latin, or immigrant population) and racist covenants (which prohibited minorities from buying in many of the new suburbs being developed after World War II). This effectively segregated the American population by keeping certain areas entirely white, and within cities, created ghettos that concentrated poverty and unemployment. The process that is too-glibly referred to as 'white flight' was a bit of social engineering that segregated a population by making it difficult for young buyers to purchase in the city and easier for them to buy in the suburbs. This reshaped the American housing landscape.

Urban renewal often deliberately put highways through neighborhoods, particularly minority neighborhoods. For example, many neighborhoods of the southern Bronx have been cut off from each other because of the highways surrounding and running through these neighborhoods. And many of the growing Chinatowns – flourishing in the first half of the twentieth century – were reduced by eminent domain, and bisected or surrounded by highways, which curtailed their growth. This was the case in Providence, Rhode Island, and in Boston.

Second, the rebuilding.

In Boston, the lifeless Government Center rose on the site of a lively commercial district, and bland but expensive condo towers rose on the site of the demolished West End.

But this phase of urban renewal did not happen equally across all neighborhoods and cities.

In many cases, funds were provided for demolition, but the anticipated redevelopment did not happen. For decades, cities suffered because what had been a functioning, walkable entity was now pocked by vacant lots and blocks. Entire streets were de-mapped and historic neighborhoods destroyed in favor of tower blocks of low-income housing projects. The experience of walking some neighborhoods had changed completely.

For decades, these sites languished. But since the 1990s, real estate in major cities has been significantly increasing in value. In many neighborhoods, some of the most dramatic changes have been in the neighborhoods that had been hit hard by redlining. As we argued here, this is in part because redlining, racial covenants, and urban renewal collectively served as price distortions, artificially suppressing housing prices in otherwise desirable neighborhoods. Many of these neighborhoods – like Bedford-Stuyvesant and Crown Heights in Brooklyn, or Dorchester and Roxbury in Boston – were historic neighborhoods close to the urban core, with architecturally-significant housing.

As prices rise in these largely intact neighborhoods, the benefits typically go to individual homeowners rather than developers. On the other hand, historically-intact neighborhoods offer few opportunities for large-scale development – the kind that offers potential upside that is compelling to institutional developers.

A second wave of rebuilding, today.

As we've discussed earlier, many of the neighborhoods that were hit hard by urban renewal rather than redlining have a more difficult road to an organic recovery. The qualities which would have been catalysts for that kind of recovery, the same catalysts in Boston's South End or Brooklyn's Park Slope – historic houses, traditional neighborhood plan, and walkability – were lost to demolition.

However, the neighborhoods that have been hit hard by urban renewal now have the potential for larger, game-changing developments.

In the 1950s and 60s, urban renewal created opportunities for large-scale redevelopment, and yet simultaneously siphoned off the very lifeblood of the cities that would have made them lively, desirable, and interesting. Federal policies were actively creating incentives for young people and families to move to the suburbs.

For decades, these building sites created by urban renewal languished. In many cases, the housing prices for the surrounding neighborhood had fallen to below the replacement cost for the same buildings. As a result, there was little incentive to build.

In the past few years, this has begun to change as the surrounding neighborhoods are often reviving and are seeing housing prices rise – sometimes significantly. As a result, some of the overlooked neighborhoods which had been greatly damaged by urban renewal are finally getting a chance to be re-imagined. And the economics work, as well. Not only has the price for existing housing stock risen, but there can be sufficient demand for product which exceeds the value of the surrounding neighborhoods – as we have seen in Boston's Seaport and Somerville's Assembly Square.

The significant open sites are not just valuable in and of themselves, but in large part because of recent rezonings which permit mixed-use and considerably denser development. In addition, with a significant parcel of land, developers have the ability to create spaces for the amenities which draw a particular audience for their properties.

Across the cities we've covered, the most valuable neighborhoods on a per-square-foot basis tend to be entirely new ones, built from the ground up. In some cases, even the ground itself needed to be imported, to create infilled land. In Boston, for instance, the entirely new Seaport neighborhood is more expensive on a per-square-foot basis than even the storied Beacon Hill or Back Bay. And in Somerville, the brand-new Assembly Square neighborhood is more expensive than Harvard Square in Cambridge.

However, these neighborhoods are also the most expensive because they tend to have only one type of housing product – large, luxury condos – and so the pricing is relatively high and homogenous. Historic neighborhoods tend to have a mix of newer and older housing stock, as well as larger rowhouses with lower prices per square foot. This tends to bring the average price lower than a neighborhood of all new condos.

The new neighborhoods are taller, denser, more expensive ... and whiter.

This new building boom can be seen as the bookend to the urban renewal of the 1950s and 60s.

The urban planners and policy makers of that time did not expect that it would take more than half a century for their vision of a modern city to become realized.

And, if we are being generous, they perhaps did not understand the generations of suffering that they would inflict upon cities through the segregation their policies created. Deliberately or inadvertently, they created the conditions that would lead to a generation of real estate bargains for individual homeowners and now, massive opportunities for developers to transform large parcels of urban land within the context of a densely-developed historic city.

Constantine A. Valhouli is the Director of Research for NeighborhoodX.