The Real Cause of Gentrification

When cities like Oakland prohibit new apartments and condos in wealthy neighborhoods, low-income areas pay the price.


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Pat Mazzera

Rockridge and Temescal are sprinkled with "missing-middle" housing, small apartment buildings that were contructed in 1920s to the ’40s, but then were banned.

As chairman of the then-powerful Berkeley Civic Arts Commission, McDuffie was politically formidable. He later helped establish both the California state parks and the East Bay regional parks systems and served as president of the Sierra Club and chair of the Save the Redwoods League. In 1913, he convened a meeting at the Claremont Hotel to discuss the creation of zoning laws in Berkeley that would exclude people of color. It was one of the first meetings of its kind in the nation. A flier for the meeting read, “The location of one laundry near Dwight Way … deteriorated that neighborhood until only negroes and Orientals would rent nearby buildings.”

In 1916, McDuffie convinced the Berkeley City Council to approve an exclusionary zoning ordinance, arguing that it was needed for “protection against the disastrous effects of uncontrolled development,” according to a 2013 historical report in The Concord Review. The city expedited the ordinance “to prevent a prominent negro dance hall from locating on a prominent corner” in the Elmwood, according to the report.

A year later, in 1917, the U.S. Supreme Court outlawed city zoning rules based on race, but in the decades afterward, Berkeley and Oakland adapted by banning apartment buildings in neighborhoods like Rockridge, Elmwood, and areas of Temescal and only allowing single-family homes, under the assumption that low-income people would not be able to afford to buy a house in an upscale area. Real estate agents and banks then kept the neighborhoods white for years through red-lining practices—refusing to sell homes or offer mortgage loans to people of color in traditionally white areas.

In the 1950s, ’60s, and early ’70s, Oakland and Berkeley finished walling off white neighborhoods from development through the implementation of strict building-height limits and parking mandates that effectively made apartment buildings impossible to build.

Today, there is no evidence that racism still plays a role in opposing new dense housing in Rockridge, parts of Temescal, and in neighborhoods like Elmwood and Claremont. Instead, residents of those areas cite concerns about parking and traffic, “greedy developers,” and “shadows” cast by tall buildings as reasons to oppose new housing.

But regardless of what motivates today’s opponents of more housing in wealthy areas, the legacy of Duncan McDuffie remains.

The harmful impacts of exclusionary zoning reach far beyond neighborhoods such as Rockridge. The decision to ban dense housing development in wealthy areas has been a major factor in the Bay Area’s housing shortage. It has helped spur suburban sprawl and created a significant barrier to reducing greenhouse gases. And it has played an indirect role in the gentrification of low-income neighborhoods and the displacement of longtime residents.

The nonpartisan state Legislative Analyst’s Office noted in a 2015 report that after California’s metropolitan areas adopted zoning rules and other regulations on new development, particularly in the Bay Area, the creation of new housing in coastal cities slowed dramatically. From 1980 to 2010, the total percentage of new housing in California’s coastal metros grew by just 32 percent, compared to 200 percent during the previous three decades. In all, the report estimated that the state’s coastal metros should have added 3.3 million more units of housing than they did to keep up with population growth and demand.

“It’s a very common dynamic—of neighborhoods that are well-resourced that work to repel new housing,” said Sarah Karlinsky of the urban planning group SPUR, which advocates dense housing near major transit corridors.

Exclusionary zoning also has led to a huge financial windfall for middle- and high-income property owners, many of them white. Those fortunate enough to have purchased or inherited homes in upscale parts of the Bay Area during the latter half of the 20th century have seen their home values soar. According to the LAO, in 1970, the median home price in California’s coastal metros was 50 percent higher than the rest of the country. By 2015, it was 300 percent higher. According to real estate firm Trulia, the median home price in Rockridge as of early April was $1.3 million. The median rent? $5,650 a month.

Exclusionary zoning also has had grave consequences for the environment. Because of the dearth of new housing in cities, much of the Bay Area’s growth in the past 30 to 40 years took place in the region’s far-flung suburbs, with open space plowed under for single-family housing. Not only did the region lose millions of acres of natural and agricultural land in the process, but it’s also losing the fight against climate change, as motorists are forced to navigate hours-long commutes and sit in mind-numbingly bad freeway traffic.

In California, passenger vehicles are the single-largest generator of greenhouse gases, according to 2015 report from the California Air Resources Board. And living in suburbia is a major cause: According to UC Berkeley’s carbon calculator, a family of four with an income of $120,000 that resides in the 94507 zip code of Walnut Creek in Contra Costa County produces a staggering 137 tons of carbon dioxide, on average, a year. But if that same family were to move to the 94618 zip code of Rockridge and take advantage of the neighborhood’s transit access, its carbon footprint would shrink to just 87 tons annually.

“Here in the Bay Area, one of the most important things we can do for the environment is to say ‘yes’ to more housing near job centers and near transit,” said Stephanie Reyes, chief operating officer of Greenbelt Alliance. “And many communities in the Bay Area with access to transit have a lot of opportunities for putting in more dense housing.”

Developers have long sought to build in wealthy, transit-rich neighborhoods like Rockridge and parts of Berkeley. Rents and home prices have traditionally been high enough in those neighborhoods—even during economic downturns—to support the high costs of construction in the Bay Area. Several developers interviewed for this report said they would like to build in wealthier areas—if they were allowed to do so. But many residents of those neighborhoods steadfastly oppose upzoning and dense housing projects, because they’re worried about quality-of-life impacts and their home values.

“It’s really the baby boomers who are trying to preserve what they have at the expense of their children and grandchildren,” said Michael Ghielmetti, president of the Oakland-based Signature Development Group. “From my perspective, we have two choices: We can go out into the suburbs and build on farmland, or we can build here.” 

For years, developers weren’t building here much at all, because rents and home prices in downtown, Uptown, and West Oakland—areas of the city that have liberal zoning rules and allow tall, dense housing projects—were not high enough to support new construction. Developers just couldn’t generate enough money for housing projects to pencil out. 

However, the bans on new housing in wealthy neighborhoods, coupled with the tech boom, eventually drove up prices throughout the region to the point that they’re finally high enough to support new housing in what had been traditionally low-income areas. Oakland currently has about 3,000 units that are approved or under construction, most of it concentrated in downtown, Uptown, and West Oakland, with another 15,000 to 20,000 units of housing in the development pipeline.

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