One of the big issues that is currently facing our city (and in particular the campus area) is gentrification. Gentrification does not seem to have a particularly hard and fast definition. From what I have seen, it seems to mean demographic change. The term is frequently applied when a wealthy class of people moves in and makes improvements to a neighborhood. This drives property values up, and the poorest residents find themselves priced out.
I feel like gentrification is happening right now in the campus area. There has been a huge increase in luxury housing options since I became a student (The View on High, Norwich Flats, the new construction behind Tommy’s Pizza, ect.). These housing options are more expensive than the dorms. There are obviously enough wealthy students in order to support them, but the problem is that by building new and more expensive housing, they are slowly lifting the value of the property in the surrounding area. This is causing pain for regular students trying to find affordable decent housing.
This same thing is happening in Berlin. Berlin has recently enjoyed a reputation as an affordable and vibrant city. I read an article today (cannot find it) that said that the reason for Berlin’s affordability is that when the wall came down, there were many redundant buildings in the city, which, due to supply and demand could be bought very cheaply. This allowed the club scene to flourish, which resulted in Berlin becoming a popular destination and contracted the supply of housing. The result is that now Berlin is facing a housing crunch. The supply of new housing is far outstripping demand which is driving rents sky high (The Wall Street Journal). New luxury housing is adding fuel to the fire.
In Berlin, the government is using rent control to try to mitigate the problem. I know that rent controls have been used elsewhere, but the whole concept seems kind of counter-intuitive to me. Any time there is a shortage of something (assuming constant demand) the price is going to go up. If you try to control the price, it seems like the supply will respond to that price. The underlying problem however, is the demand. The demand will still be there (since the price is not going up), and now there is no incentive for developers to build and satisfy the demand. I will be interested to see how this works out for Berlin.
http://www.wsj.com/articles/berlins-housing-problems-boil-over-1444123804