Today marks the fourth year since we launched City Observatory

On October 17, 2014, we started up City Observatory.

Many thanks to all those who’ve made this endeavor possible over these past four years. This project simply wouldn’t have been possible without the efforts of our contributors and co-authors–including Daniel Kay Hertz, Dillon Mahmoudi, Michael Andersen, Alex Baca and Patty Stubel.

We’re grateful to the John S. and James L. Knight Foundation for its founding support fo City Observatory, and are pleased to add the Quicken Loans Community Fund as a current sponsor of City Observatory. We especially want to acknowledge Carol Coletta, who came up with the idea for City Observatory in the first place.

It’s been an exciting time to be in the thick of national discussions about cities. If you’re a regular follower of City Observatory, you’ll be familiar with many of the key themes and lessons we’ve been emphasizing.

The United States is facing a shortage of cities–we have a huge demand for great urban living that is only partly being met. What we observe as a shortage of housing and a widespread housing affordability problem is mostly a manifestation of the imbalance between the kinds of places people want to live and where housing has been built.

As our measures of the “Dow of Cities” emphasize, there’s been an increasing demand for central urban locations, and a relative decline for peripheral suburban ones. Home prices in central, and especially in walkable urban neighborhoods has gone up because these places are highly valued, and because, in many cases, a combination of density limits, apartment bans, parking requirements and arbitrary, NIMBY-dominated approval processes have essentially made it illegal to build more of these kinds of neighborhoods.

A key manifestation of this urban shift has been the locational preferences of young adults. We’ve shown that the “young and restless“–25 to 34 year olds with a four-year degree, are increasingly choosing to live in the close-in urban neighborhoods of the nation’s largest cities.

The growing desirability of cities has profoundly changed the rules of the economic development game. Corporate location decisions are increasingly dictated by the H.R. department:  which communities have strong concentrations of skilled young workers and are these places attractive to others we might recruit? The result has been an unprecedented resurgence in job growth in urban centers.

The shift back to cities hasn’t come without controversy. Change is hard, and many observers have reflexively associated cities with poverty and segregation. Neighborhoods that attract new residents are often labeled as gentrifiying, and as our colleague Todd Swanstrom wrote, the “g-word” becomes a conversation stopper.

But as we’ve shown at City Observatory, despite the outsized media attention it attracts, gentrification is extraordinarily rare. Of the 1,100 high poverty neighborhoods in the US in 1970, more than 90 percent are still high poverty areas today, with fewer than a tenth seeing reductions in poverty rates to less than the national average. Far more common–but much less remarked upon–has been the steady decline of formerly healthy neighobrhoods into places of concentrated poverty. The number of such neighborhoods has tripled in the past four decades.

In addition, not only is gentrification rare, but its effects are often benign or positive. Despite concerns that gentrification automatically implies displacement, there’s almost no statistically significant difference between out-movement rates of low income households in gentrifying and non-gentrifying neighborhoods.

Our new study, America’s Most Diverse, Mixed Income Neighborhoods, shows that the metropolitan areas where gentrification is a hot issue (San Francisco, Los Angeles and New York) have the highest concentrations of neighborhoods with high levels of both racial/ethnic and income diversity. In addition, some neighborhoods that are described as gentrifying–like Corktown in Detroit, and Bedford-Stuyvesant in New York–are among the most racially, ethnically and income diverse places in their respective metropolitan areas.

The most common reaction to concerns about gentrification–simply trying to block all change–simply makes the problem worse. Blocking new housing development only worsens the shortage of housing in neighborhoods experiencing change, and guarantees that wealthier, newer residents will outbid lower income occupants for housing. To some, it’s a seeming paradox, but if you want to minimize displacement, you need to build as much housing as you can, of all types. New market rate housing, even for high income households, leads to less bidding by higher income households for existing housing, and seems to help hold down rental price increases.

Our national challenge in the years ahead is to capitalize on the growing demand for urban living to create greater opportunity for all. For decades, economic opportunity and wealth were decentralizing, moving from the center to the suburbs, and leaving the poor and people of color cut off from upward mobility.  The movement back to the center creates a situation in which we can use new investment and added economic activity to revitalize urban neighborhoods, improve public services and increase opportunities for those who’ve often been left behind.

We hope you’ll continue to be with us in the year ahead.  Cheers!