Una versión más actualizada de este artículo está disponible como parte del capítulo 5 del libro Perspectivas urbanas: Temas críticos en políticas de suelo de América Latina.

¿Es la segregación espacial urbana una consecuencia del funcionamiento normal de los mercados inmobiliarios urbanos, reflejo de las preferencias individuales acumulativas, o es más bien resultado del mal funcionamiento de mercados inmobiliarios urbanos que privatizan los beneficios sociales y socializan los costos privados? ¿Proviene quizás de prejuicios contra ciertas clases o razas? ¿Crean guettos las políticas de viviendas de interés social, o los crean las acciones de agentes y prestamistas inmobiliarios que ponen sus prejuicios personales por encima de toda objetividad, generando y alimentando estereotipos sobre conciudadanos y vecindades? ¿Podrían cambiar los patrones de asentamiento intrametropolitanos si se modifica la política del suelo, o para ello es imperativo que se produzcan transformaciones sociales profundas relacionadas con valores como tolerancia, oportunidad y derechos humanos?

Treinta y siete académicos y asesores de trece países se enfrentaron a éstas y otras preguntas afines en el “Seminario Internacional sobre Segregación en la Ciudad” organizado por el Instituto Lincoln en Cambridge, Massachusetts durante el pasado mes de julio. Los organizadores del seminario, Francisco Sabatini (Universidad Católica de Chile) Martim Smolka y Rosalind Greenstein (Instituto Lincoln) plantearon una amplia gama de aspectos para explorar las dimensiones teóricas, históricas y prácticas de la segregación. Los participantes, procedentes de países tan diversos como Brasil, Israel, Kenya, Países Bajos, Irlanda del Norte y los Estados Unidos, trajeron consigo su formación profesional como juristas, sociólogos, economistas, planificadores urbanos, científicos regionales y geógrafos. A medida que intentaban llegar a un acuerdo sobre el significado de la segregación, las fuerzas diversas que la crean y la refuerzan, y las respuestas políticas posibles, se fue haciendo obvio que no hay respuestas simples y que muchos puntos de vista contribuyen al debate interminable. Este breve informe sobre el seminario ofrece una muestra de esta discusión.

¿Qué es la segregación y por qué es tan importante?

El trabajo de Frederick Boal (Escuela de Geografía, Universidad de Queens, Belfast) es fruto del gran caudal de literatura sociológica sobre segregación y su propia experiencia de vida en medio de los conflictos entre católicos y protestantes en Irlanda del Norte. Boal sugirió que la segregación debe entenderse principalmente como parte de un espectro que abarca desde el movimiento extremista de limpieza étnica hasta el más idealista de asimilación (véase la fig. 1). Tal como pasa con tantos temas vinculados con políticas, para estudiar el problema de la segregación es preciso observarla, más que como una dicotomía, como un continuo de grados o niveles de separación, cada uno con diferentes manifestaciones espaciales.

Para Peter Marcuse (Escuela de Posgrado de Arquitectura, Conservación y Planificación, Universidad de Columbia, Nueva York), la segregación supone la imposibilidad para elegir o la presencia de coerción, o ambas. Marcuse llama “agrupaciones en enclaves” a grupos de diferentes razas o etnias que deciden vivir juntos por voluntad propia. Por otra parte, llama “segregación en guettos” cuando a los grupos se los obliga a vivir aparte, bien sea explícitamente o a través de mecanismos más sutiles. La clave que distingue a estos dos patrones—la imposibilidad para elegir—invita a una respuesta del orden público.

El significado y la importancia de la segregación varía según el contexto histórico. Para William Harris (Departamento de Planificación Urbana y Regional, Universidad Estatal de Jackson, Mississippi), escritor de temas de segregación espacial en el sur de los Estados Unidos, la segregación no puede entenderse ni tampoco enfrentarse sin un conocimiento profundo del papel que ha desempeñado y sigue desempeñando la raza en la historia de los Estados Unidos y del orden público. Flavio Villaça (Escuela de Arquitectura y Urbanismo, Universidad de São Paulo, Brasil) entiende la segregación dentro de un marco conceptual de clases, en donde los factores principales que influyen en los patrones residenciales son el nivel de ingresos y el estatus social, y no la raza. En Brasil y muchos otros países con larga historia de regímenes autoritarios, el estado suele encargarse de prestar los servicios urbanos. En estos países, los patrones residenciales urbanos determinan el acceso a agua y a instalaciones sanitarias (y por tanto, a la salud) así como a medios de transporte, infraestructuras de servicios públicos y otros servicios urbanos.

Según Villaça y otros, en muchos casos la actividad del mercado del suelo y las regulaciones y los códigos urbanos se han aplicado de maneras furtivas o incluso abiertamente para crear vecindades selectas bien dotadas de servicios que separan las clases superiores del resto de la sociedad, al cual prácticamente se le hace caso omiso. Este cuadro tiene paralelismos en los Estados Unidos, en donde el acceso a escuelas de alta calidad y a otras valiosas amenidades lo determinan fundamentalmente patrones residenciales que tienen estrecha relación con la segregación, ya sea por nivel de ingresos, raza u otras características demográficas. Igualmente, los participantes del seminario señalaron la correlación entre las comunidades precarias y la situación de los peligros ambientales. Las zonas de barrios o guettos pobres, habitadas generalmente por personas de raza negra, son el vertedero de los aspectos negativos del mundo urbano moderno, como lo son desechos peligrosos y otros usos indeseados del suelo.

Ariel Espino (Departamento de Antropología, Universidad de Rice, Texas) presentó un análisis del uso de la distancia para reforzar desigualdades sociales, políticas y económicas en la vivienda. Cuando las diferencias sociales y económicas están claramente especificadas y entendidas, las élites dominantes “toleran” la proximidad física. Por ejemplo, los sirvientes pueden vivir cerca de sus patrones, incluso en la misma casa, porque las relaciones económicas y las normas de comportamiento dictan la separación por clases.

¿Por qué persiste la segregación?

Una suposición que prevaleció a lo largo del seminario fue la de que todos los residentes de la ciudad (es decir, los ciudadanos) deberían tener acceso a los servicios urbanos, o al menos a un nivel mínimo de servicios. Sin embargo, Peter Marcuse lanzó al grupo la idea de pensar más allá de un nivel mínimo y de considerar el acceso a amenidades urbanas en el contexto de los derechos. Se cuestionó si la riqueza, la herencia familiar, el color de la piel o la identidad étnica deberían ser los factores determinantes en el acceso a los bienes públicos, no sólo educación, salud y abrigo, sino también a otras amenidades directamente relacionadas con la ubicación física. Expresándose en un lenguaje evocador de las ideas de Henry George sobre la propiedad común a finales del siglo XIX, Marcuse preguntó si era justo o correcto, por ejemplo, que los ricos disfrutaran de las mejores vistas de océanos, ríos u otras bellezas naturales, mientras que los pobres estuvieran relegados a zonas menos atractivas.

Robert Wassmer (Departamento de Orden Público y Administración Pública, Universidad Estatal de California) describió los procesos económicos involucrados en la ubicación residencial, tal como los entienden los economistas de la escuela del “public choice” (decisiones públicas). Según esta perspectiva, los compradores de viviendas eligen no sólo una casa y su terreno, sino también un diverso grupo de ventajas que varían según el sitio. Algunos compradores pueden optar por un paquete de conveniencias que ofrece más sistemas de transporte público y menos vistas panorámicas, mientras que otros pueden preferir mayor acceso a autopistas y a escuelas públicas de mejor calidad. Sin embargo, no todos los ciudadanos tienen las mismas oportunidades para hacer esas selecciones. Varios participantes añadieron que este debate forma parte de una discusión más amplia sobre acceso y selección en la sociedad, dado que casi todas las opciones están restringidas hasta cierto grado, y que muchas restricciones varían sistemáticamente entre los grupos sociales.

Otros participantes señalaron las maneras en que las políticas gubernamentales (p. ej., sistemas tributarios, legislación de vivienda) e instituciones privadas (p. ej., agentes de bienes raíces, instituciones prestamistas) actúan en conjunto para influir en el comportamiento de los mercados inmobiliarios, y por consiguiente, en el efecto de las políticas del suelo en acciones públicas y privadas. Greg Squires (Departamento de Sociología, Universidad de George Washington) informó de un estudio sobre el proceso de búsqueda de vivienda en Washington, DC. Sus hallazgos ponen en evidencia el papel que desempeñan los agentes de bienes raíces al “orientar” a compradores e inquilinos hacia vecindades de las mismas razas. Como resultado fundamental, los negros no disfrutan de las mismas oportunidades que tienen los blancos y sus posibilidades de obtener su solución habitacional preferida son menores, lo cual se contrapone al modelo de “public choice”. Entre los hallazgos de Squires está el hecho de que la selección de la vivienda está determinada por el estatus social o económico. Por ejemplo, en el proceso de búsqueda de vivienda, las amenidades más solicitadas por los clientes negros difirieron de aquéllas preferidas por los blancos, en parte porque aquéllos disponían de menos recursos particulares (tales como automóviles) y requerían viviendas situadas cerca de servicios centralizados tales como transporte público.

John Metzger (Programa de Planificación Urbana y Regional, Universidad del Estado de Michigan) examinó la influencia del mercado privado en la perpetuación de la segregación. Metzger presentó investigaciones sobre perfiles grupales demográficos usados por compañías como Claritas y CACI Marketing Systems para caracterizar los vecindarios. Dichos perfiles se venden a una amplia gama de industrias, entre ellas agencias inmobiliarias y financieras, como también a entidades públicas. La industria inmobiliaria se vale de los perfiles para alimentar el proceso decisorio de comercialización, planificación e inversión, y —señala Metzger— para propiciar enclaves de razas y la persistencia de la segregación. Las instituciones de préstamos hipotecarios se valen de los perfiles para determinar la demanda del consumidor. Los planificadores urbanos, tanto asesores privados y del sector público, usan los perfiles para la determinación de usos futuros del suelo, para la planificación a largo plazo y para guiar las actividades de planificación e inversión de distritos comerciales centrales, mientras que los promotores de bienes raíces los usan para definir sus mercados y demostrar las demandas aceleradas de sus productos. Los perfiles en sí suelen estar basados en estereotipos raciales y étnicos, y a su vez refuerzan la separación de grupos raciales y étnicos dentro de los mercados de bienes raíces regionales.

Xavier de Souza Briggs (Escuela de Gobierno John F. Kennedy, Universidad de Harvard) introdujo la idea de “capital social” en la discusión. El término “capital social”, tal como lo emplean actualmente sociólogos y expertos en teoría sociológica, encarna las redes y relaciones sociales dentro las comunidades, que pueden aprovecharse para el logro de metas individuales y comunes. Briggs argumentó que si bien el capital social es, al mismo tiempo, causa y efecto de la segregación en los Estados Unidos, también puede utilizarse para crear cambios positivos. Otros participantes cuestionaron la eficacia de la teoría y las investigaciones en capital social para resolver el problema de la segregación espacial urbana, señalando que éstas tendían a limitarse a la cuestión de “cómo mejorar la situación de los pobres” en vez de estudiar los mecanismos estructurales e institucionales que contribuyen a la segregación residencial y a la desigualdad de la renta. No obstante, los sociólogos opinan que el capital social es justamente lo que necesitan las comunidades para tener cierto control sobre sus ambientes inmediatos, en vez de ser simples receptoras de las consecuencias previstas e imprevistas de la economía política.

Justicia social y política del suelo

Durante el seminario, participantes de distintas partes del mundo dieron ejemplos de casos de segregación espacial utilizada como estrategia política por los poderes estatales:

• El gobierno colonial británico de Kenya instituyó leyes de planificación y de zonificación de exclusión para separar a los africanos nativos de los británicos. Esos patrones residenciales, establecidos hace casi un siglo, se reflejan en la Nairobi de hoy.
• Durante el régimen británico en Palestina, el gobierno militar forzó a los palestinos árabes a vivir en un solo sector de la ciudad de Lod, lo que facilitó la transformación de esta ciudad antiguamente árabe en lo que hoy en día se conoce oficialmente como Israel.
• El régimen militar de Augusto Pinochet desalojó a miles de chilenos de la clase trabajadora de ciertos sectores de sus ciudades para dar paso a pequeños enclaves exclusivos para familias de clase media y alta.
• El régimen del Apartheid de la República Sudafricana creó sectores residenciales separados por raza y mantuvo un aislamiento sistemático de grupos en prácticamente todos los aspectos de la sociedad.

Las conexiones entre estas formas extremas de segregación espacial y las fuerzas de mercados y políticas inmobiliarias de la mayoría de las ciudades modernas son complejas y difíciles de articular. Uno de esos vínculos se refleja en las maneras como se continúan aplicando las políticas inmobiliarias y las instituciones que apoyan los mercados inmobiliarios para brindar legitimidad a las prácticas discriminatorias.

Al imaginarse un mundo de ciudades cuyos habitantes tengan verdadera libertad para escoger dónde vivir, los planificadores del seminario se concentraron en políticas y programas gubernamentales que facilitan la integración, tales como el programa “Moving to Opportunity” del Departamento de Vivienda y Desarrollo Urbano de los Estados Unidos. Sin embargo, Stephen Ross (Departamento de Economía, Universidad de Connecticut) cuestionó los supuestos beneficios de las políticas de integración o repoblación lanzando esta pregunta: “¿Qué pasaría si dispersáramos personas de altos ingresos por toda la ciudad? ¿Qué cambiaría? ¿Nos ayuda esto a considerar con más detenimiento la importancia del espacio?”

Otra pregunta de Xavier Briggs obligó a los participantes a pensar en dónde se producen la mayoría de las interacciones sociales significativas. Específicamente, ¿qué debe pasar —y en qué circunstancias— para ir desde el movimiento extremo de limpieza étnica (según el espectro étnico urbano mencionado por Boal) al extremo opuesto de la asimilación? Briggs sugirió que es posible que instituciones como escuelas y lugares de trabajo estén en más capacidad de facilitar la diversidad en las interacciones sociales, que los vecindarios residenciales.

Al fin y al cabo, los planificadores urbanos desearían que se usen sus herramientas para formar ciudades que ofrezcan justicia para todos. Hablando de las condiciones de los ciudadanos árabes en la ciudad mixta de Lod, Haim Yacobi (Departamento de Geografía, Universidad de Ben-Gurion, Israel), tocó los cimientos de los ideales democráticos occidentales al preguntar lo siguiente: “Si una persona no tiene acceso total a la ciudad, si no puede participar de lleno en la vida de la ciudad, ¿está esa persona viviendo en una ciudad verdadera?”

William Fischel is professor of economics and the Patricia F. and William B. Hale ’44 Professor in Arts and Sciences at Dartmouth College in Hanover, New Hampshire. He was a member of the Hanover zoning board for 10 years, and has long served on the teaching and research faculty of the Lincoln Institute. He has written more than 50 articles and three books about the related topics of local government, land use controls, school finance and property taxation. Fischel’s most recent book pulls those themes together under the title The Homevoter Hypothesis (Harvard University Press 2001), and he will discuss them at a course at the Lincoln Institute on April 25.

Land Lines: The term homevoter doesn’t seem to be in any dictionary. What does it mean?

William Fischel: I coined the word to convey the theme of my book. My original title was Municipal Corporations and the Capitalization Principle, but when I tried it out on people their eyes glazed over. I had to think of something catchier, and homevoter popped into my head. In local government elections, residents tend to “vote their homes.” For example, if the school board proposes a tax increase to reduce class size, most homeowners will consider the impact of the taxes and the better school quality on the value of their homes as well as on their personal situations.

LL: What’s the difference between people voting their personal situations and voting their homes?

WF: If people voted only according to their immediate situation, almost every school referendum would be voted down. Since the last of the baby boomers graduated from high school in the late 1970s, only about a third of all American households have any children in public school. If people only cared about whether school expenditures benefited them directly, the two-thirds of voters without kids in school would vote down school referenda and save themselves some taxes. The reason they usually don’t is that they know that scuttling the local schools will drive their home values down. They may not like paying taxes, but most voters will not actively oppose a reasonable school budget.

LL: Why would home values override immediate concerns about taxes, since most homeowners plan to keep their houses for a long time?

WF: For the great majority of homeowners, the equity in their home is much larger than their holdings of stocks and bonds and savings accounts. An owner-occupied home is a huge asset, and it is nearly impossible to diversify the financial risk of holding on to it. People who own a lot of stocks can diversify their holdings by buying mutual funds. But you cannot diversify your homeownership portfolio by buying a tenth of a house in Cambridge, a tenth in Springfield, a tenth in Pittsburgh, and so forth. You are stuck with all your homeownership eggs in one local basket. If the schools are declining, so is much of your investment. You don’t have to plan to sell a home soon to be concerned about its value, just as you don’t have to be ready to retire to be concerned about your retirement investments.

LL: So even people who will never have kids are interested in the quality of public schools?

WF: They sure are, especially when they are buying a house. Many economic studies of housing values have found that the major determinant of house price differences among communities is the quality of public schools. Further, the difference in home values is not reflected in the cost of the structure but in the land value. If your home burned down and you decided to sell your lot instead of rebuilding, the price of the lot would reflect the value of the community’s public assets such as its schools. The structure itself would just reflect the cost of building it.

LL: What other community assets do homevoters pay attention to?

WF: Lots of things, including neighborhood traffic, local parks, good (or bad) views, local air quality, open space, crime rates and public libraries. Like school quality, all of these community characteristics are capitalized in home values if they are better or worse than average.

LL: Capitalized? As in the stock market?

WF: Yes, just as in the stock market. If Merck Pharmaceuticals develops an effective drug to treat cancer, the value of Merck stock will go up. That good news is quickly capitalized in (or reflected in) the price of the stock. If a particular city found a good way to control traffic noise and congestion, the value of homes there would rise. In both cases, the stockholders would be pleased.

LL: How is a city like Merck?

WF: They are both corporations. One is a municipality and the other is a business, but each has a corporate identity that is independent of its owners or residents. The main difference is that a city’s major stockholders, its homeowners, cannot diversify their assets. So unlike most business stockholders, residents pay close attention to what their corporation’s managers are doing. They make managers do their business in the open most of the time, and they make their board of directors—the city council—stand for election more frequently than business corporation boards.

LL: What about the role of other stakeholders, such as local business owners?

WF: Business people are usually behind development plans, and city councils pay attention to them. But in the municipalities where most people live—cities and towns of less than 120,000 population—homeowners have to be persuaded that the proposed development will do them some good. Just creating jobs and lowering taxes is not enough in most places. A job-creating, tax-paying factory whose traffic, noise and pollution devalue the homes of nearby residents will have a hard time getting permission to locate there. Homevoters may not be as active as developers, but they are usually more numerous and vocal, and few city councils can afford to ignore their concerns.

LL: And how do renters benefit from the system?

WF: Renters get the benefit of municipal services that are more consumer-oriented as a result of homevoters’ activism. But renters have a shorter time horizon because when they move they neither gain nor lose from the local improvements they leave behind. This may explain why renters tend to participate in local government less than homeowners. They don’t have the long-term financial stake that even the short-term homeowner has.

LL: What’s the downside of homevoters’ influence?

WF: The downside is exclusionary zoning. Zoning is a necessary tool for local governments to rationalize development. The problem is that homevoters can overuse this tool. Because homes are not a diversifiable asset, homeowners often become risk averse to any development that might reduce their home’s value. The NIMBY (Not In My Back Yard) syndrome is most often seen in homeowners, and my theory says they are rational to behave this way. But what is rational for the homeowners in a single community might not be rational for the larger region. Siting low-income housing, power plants, half-way houses and the other necessary but sometimes unlovely developments is impeded by having people too worried about their home values.

LL: Is there a way to control the bad side of homevoting and still keep the good side?

WF: Understanding where the problem comes from is a start. People who oppose low-income housing projects are not necessarily opposing low-income people. They may be mainly worried about their home values. One way to deal with that would be to offer home-value insurance for neighborhoods that feel threatened by proposed land use changes. An innovative program in Chicago offered home-value insurance to help forestall “panic selling” and thus stabilize neighborhoods with respect to both home values and socioeconomic composition. It might be worth extending home equity insurance to other situations in which neighborhood change raises the anxieties of homeowners.

LL: But people have lots of reasons to oppose neighborhood changes besides loss of property value.

WF: It is rare for people to mention property values in public discussions. It sounds too selfish to talk about in a public forum. But economists know that most of the things that people do talk about, such as traffic, noise, open space and service costs, clearly affect people’s home values. Whether owners are consciously relating these characteristics to home values or simply intuitively aware of this connection is hard to say. If developers could take home values off the table in such debates, it might go a long way to overcoming the NIMBY problem.

LL: You mentioned earlier that the quality of community life was reflected in land values. Would this argue for a tax on land rather than improvements in order to finance local services?

WF: I think it does, and in fact that’s what most property taxes really do tax. Local development is a highly regulated activity because of zoning laws, planning reviews and environmental impact statements. I believe that local land use regulation is tight enough to make buildings essentially indistinguishable from land as a tax base. Take the example of the home that burns down. The buyer of the lot typically has to put up another home of the same type, and the tax payment on land and structure will be the same as before. For the most part, owners of homes and businesses in zoned communities have only one allowable use for their land, so that increasing or decreasing local taxes is not going to affect that use. That’s exactly the same virtue as a tax on land. Beyond that, taxing property value gives voters cooperative incentives on the zoning front. Homevoters won’t want to trash another side of town with an unfriendly land use, because devaluing other people’s property would cause property taxes to be shifted to the remaining homeowners.

LL: A land tax is what Henry George advocated more than 100 years ago. Are you saying that the local property tax already is a land tax?

WF: Yes, within certain contexts. It is quite a bit like a land tax in largely residential communities and for most new development. Zoning limits a developer’s alternatives, so the tax rate will not alter his behavior. A general property tax would not be like a land tax, however, if it were administered by a large jurisdiction such as a state or national government, unless those governments also had local zoning controls in place. It is the combination of local zoning plus the property tax that approximates a land tax. Henry George’s ideas came in through the back door of suburban zoning and property taxation rather than through the front door of state and national taxation.

In the past decade, nearly 50 mansions have been demolished and replaced in the historic Chicago suburb of Kenilworth. Four demolition permits are currently pending review, while permits have been approved for two other historically significant houses. To slow the teardown trend, Kenilworth has enacted a nine-month waiting period between issuance of a demolition permit and initiation of the teardown process. However, the village does not have a historic preservation ordinance, and local officials generally support the rights of property owners to demolish and replace their houses. The National Trust for Historic Preservation included Kenilworth on its 2006 list of the 11 most endangered places nationwide (Black 2006).

The practice of demolishing and replacing houses in high-priced areas generates passionate controversy. The fight to save the Skiff House in Kenilworth is illustrative (Nance 2005). That property at 157 Kenilworth Avenue is one of the premier locations in one of Chicago’s most expensive suburbs, three blocks west of Lake Michigan and five blocks from the commuter train station in the village center.

The house was built in 1908 for Frederick Skiff, the first director of Chicago’s Field Museum of Natural History. This beautiful and historically significant house was designed by the architectural firm of Daniel H. Burnham, who was considered the preeminent architect in America at the turn of the twentieth century. He oversaw the construction of the 1893 World’s Columbian Exposition and helped design a series of lakefront parks as part of the 1909 Plan of Chicago.

Plans to demolish the Skiff House shortly after it was purchased in 2004 for $1.875 million created an uproar. While many neighbors supported the owner’s right to tear down the property—after all, they might want to do the same—others saw it as an assault on the community’s character. “Save 157 Kenilworth” signs began to appear in front yards throughout the village, and a neighborhood group, Citizens for Kenilworth, led a campaign to save the house. After months of controversy, and only days after an auction to sell off valuable parts of the house before demolition, a neighbor purchased the house for $2.35 million in order to save it.

Historic houses continue to be torn down in Kenilworth and elsewhere, but not all teardowns generate controversy. Residents of many Chicago suburbs have been supportive of the teardown trend. Naperville is a representative case. Founded in 1831 and incorporated in 1857, Naperville grew slowly until plans for the East-West Tollway (I-88) were announced in 1954. The population grew from 7,013 in 1950, to 21,675 in 1960, to 140,106 today.

Naperville’s downtown has undergone a renaissance over the last decade, attracting new restaurants, shops, and residences. Although the city has a historic district just to the east of the downtown area, teardown activity has been concentrated in what were formerly more humble areas. Small, older houses are being purchased for about $400,000 and replaced by much larger houses that may sell for $1 million.

The teardown trend in Naperville is illustrated by one small house being sold as a teardown, with an announcement of an upcoming public hearing posted in the yard. It is likely to be replaced by a house that is similar to the recently constructed house next door (see pages 6 and 7). Though teardown activity is not entirely without controversy in Naperville, it does not generate the same passion as the Skiff House did.

How Widespread is the Teardown Phenomenon?

Nationwide the teardown phenomenon has attracted much media and public attention. The decennial Census of Population and Housing offers a way to quantify the practice using the “net replacement method.” For example, suppose the Census lists 10,000 housing units in an area for 1990 and 10,500 units in 2000—an increase of 500 units. Now suppose the Census shows that 800 housing units were built during the decade. Then 300 of the newly built units must have simply replaced existing units. The 300 replacement units are a crude but nonetheless enlightening measure of teardown activity in that community.

Figure 1 shows counties where at least one census tract had a net replacement rate in excess of 4 percent. Teardown activity is clustered in older urban areas in the Northeast, Midwest, and California. In fact, the map does not look substantially different from a map of population density in the United States. This simple analysis shows that replacement of the preexisting housing stock is an extensive phenomenon that is national in scope.

Nevertheless, it is surprisingly difficult to track teardown activity on a case-by-case basis. The classic teardown is a house whose sale is followed by the issuance of both demolition and building permits, but timing is a key factor in tracking these permits. If a demolition permit is issued four years after a sale, was the house really sold as a teardown? Similarly, a building permit may be issued long after a dilapidated house was demolished, yet this situation is not what most people have in mind when they think of teardowns.

Some teardowns are carried out by the current owner without a sale. Other houses are so extensively remodeled that they are effectively teardowns, even though no demolition permit is issued. Even when data on sales, demolition permits, and building permits are available, it is difficult to merge the different sources of information since they frequently come from different agencies that vary in the quality of their database management.

The National Trust for Historic Preservation has described the Chicago metropolitan area as the “epicenter of teardowns.” Aside from Kenilworth, teardowns are common in both the city of Chicago and its suburbs. The Village of Skokie (2005) surveyed 20 of its neighbors in Chicago’s near north suburbs and compared the number of detached single-family housing unit demolition permits from 2000 to 2003 to the total number of such units as reported in the 2000 U.S. Census. Thirteen of the 20 communities reported demolition permits representing more than 1 percent of the housing stock over the four-year period.

Richard Dye and I (forthcoming) have used data from Chicago and six suburban communities to document the degree of teardown activity in the region. We were able to obtain data on house sales and demolition permits for Chicago; one of its suburbs to the west, Western Springs; the northwest suburb of Park Ridge; and four suburbs on the North Shore—Glencoe, Kenilworth, Wilmette, and Winnetka.

Between 1996 and 2003, the number of demolition permits ranged from 29 in Kenilworth to 273 in Winnetka and 12,236 in Chicago. Of course, Kenilworth has only 2,494 residents, whereas Winnetka’s population is 12,419, and Chicago has 2.9 million residents. Figure 2 shows the number of demolition permits as a percentage of total housing units for each community. More than 9 percent of Winnetka’s housing stock was torn down between 1996 and 2003, and teardown rates were also quite high in Winnetka and Kenilworth. Even Chicago, with more than 400,000 housing units, had a demolition rate near 3 percent.

These six suburbs were not chosen randomly. All had high median incomes in 2000, ranging from $73,154 in Park Ridge to more than $200,000 in Kenilworth. All of these suburbs have stations on commuter train lines to downtown Chicago, little or no vacant land on which to build, and good schools and other local public services. In other words, demand to live in these suburbs is high. Teardown activity in Chicago is concentrated in comparable neighborhoods within the city, such as Lincoln Park, West Town, and Lakeview on the near north side.

The Costs and Benefits of Teardowns

Teardowns can impose significant social costs. Local residents often complain that new houses destroy the character of a neighborhood. Those houses may be built to the limits of the zoning code, tower above their neighbors, and reach to the edge of the property line. Sometimes neighbors simply dislike the design of new buildings, particularly those that replace historic houses. When tall apartment buildings replace single-family houses or two-family houses in the city, neighbors complain of the loss of sunlight, lack of parking spaces, and increased traffic congestion. The construction process itself can be noisy and disruptive. New, expensive houses may cause assessments to increase in the neighborhood. And, teardowns may reduce the stock of affordable housing.

Teardowns also carry some benefits, however. In places that rely on the property tax to fund local services, the additional revenue from high-priced replacement houses is often quite welcome. Not all teardown buildings are historic, architecturally significant, or mourned when they are demolished. Some teardowns are simply eyesores.

Some of the new houses being built today will eventually be viewed as historically significant properties in their own right. Once entire blocks are rebuilt, the new housing no longer looks out of place. It is surprising to discover how stark and incompatible some properties built in the early 1900s appear in historic photographs taken before trees grew and the neighborhood filled in with similar houses.

It also is important to recognize that teardowns may help to curb sprawl. One reason people move to the urban fringe is to build a new house in a contemporary construction style. Allowing people to tear down a small, outdated house and replace it with a modern house may induce them to stay in centrally located areas. In general, encouraging housing and economic growth helps maintain the vitality of previously developed areas, which is a strategic complement to anti-sprawl policies designed to limit growth at the fringe.

Policy Responses

Local jurisdictions have been creative in responding to teardowns. Some policies are designed to the slow the amount of teardown activity by making it more costly, through demolition fees and fines for illegal demolitions. Others, such as a moratorium on new demolition permits or an enforced waiting period between permit issuance and the time when demolition can start, are simply designed to cool a potential teardown fever. Such policies also raise the cost of teardowns by making developers wait for some time after purchasing a property before being able to recoup their costs. Complementary policies include landmark designation and historic district designation, which make it more difficult or even impossible to tear down existing structures.

Policies on the other side of the balance sheet may give developers an incentive not to demolish existing structures. Communities may offer tax breaks to owners who rehabilitate existing houses rather than demolish them to build new ones. Or, owners may be granted variances from restrictive zoning provisions in order to enlarge rather than demolish an existing house.

At the same time, jurisdictions often use zoning to influence the type of new housing that is built in their community. Lot-coverage and floor-area restrictions are used to ensure that new structures do not dwarf their neighbors. Other policies include maximum building sizes; set-back and open space requirements; and restrictions on such design elements as garage and driveway locations, roof pitch, bulk limits, solar access, and the alignment of the new house with neighboring structures. Many communities have design review boards that can revoke building permits for structures that are not in compliance. These standards are not always clear beforehand, however, and they can increase the level of uncertainty for developers, delay construction, and raise costs.

Even if communities do not attempt to curb teardown activity, they often adopt policies designed to reduce the disruption caused by new construction. The builder may be required to notify neighbors when construction is about to begin, and a time window may be imposed for completion of the building. Construction activity may be limited to certain hours of day, the site may need to be fenced, and work vehicle and dumpster location requirements are often imposed. Communities also may require that contractors be bonded and certified.

How successful are these policies in slowing the rate of teardown activity? As we have seen, the Skiff House was saved because Kenilworth’s nine-month waiting period between permit issuance and the start of demolition provided enough time for a buyer to step forward before the house was razed. However, the potential for profits in such transactions make it difficult to stop teardowns completely. If a developer can purchase an existing property for $300,000, demolish it for $20,000, and spend $400,000 to build a new house according to current construction standards, then he has incurred $720,000 in costs. With new upscale houses routinely selling in excess of $1 million in communities with many teardowns, it should not be surprising that developers continue this practice.

Implications for Land Values

Assessors encounter enormous difficulties in placing a value on land in built-up areas. When few vacant lots exist, it is nearly impossible to find enough sales of vacant land to assess the value of land accurately. In the absence of direct land sales data, land values can be estimated by subtracting construction costs less depreciation from the sale price of improved properties in the area.

Statistical analysis of mass appraisal data can account for such structural characteristics as square footage in order to control for the contribution of the building to total property value. With a complete set of these characteristics, the residual from the regression reflects the contribution of location to property value—in other words, land value. Unfortunately, any unobserved structural characteristic will also be part of the residual.

Teardowns can help estimate the value of land in developed areas. Consider the earlier example of a property that is purchased for $300,000, demolished for $20,000, and replaced by a million-dollar house. If the developer could purchase a vacant lot of the identical size next door for $290,000, which property would he prefer? If there is no salvage value for parts of the existing house, it will cost the developer $320,000 before it is possible to build on the lot with the existing house. Yet the vacant lot is available in the same general location for $30,000 less. The vacant lot is preferable even though it does not include a house—in fact, it is preferable precisely because it does not include an existing structure.

If the price of the vacant lot rises to $310,000, the developer still obtains a lot that is ready to build upon for $10,000 less than the cost of building on the neighboring lot. Only at $320,000 will the developer be indifferent between the two lots. It follows that the value of land in this case is $320,000. This key insight leads to an extremely useful method of valuing land in areas experiencing teardowns. The value of land is simply the sales price of a teardown property plus any demolition cost.

An important implication of this line of reasoning is that only location determines the value of a teardown property; characteristics of the structure are irrelevant except insofar as they influence demolitions costs or salvage value. This implication is somewhat surprising to people who think that a historic house has intrinsic value. Though it is tempting to think that the Skiff House in Kenilworth is worth approximately $2 million because of its historic and architectural value, a vacant lot next door would sell for nearly the same price. Any house near Lake Michigan in Kenilworth will sell for well more than $1 million. The conclusion to be drawn is simply that land is expensive along Chicago’s North Shore.

Richard Dye and I (forthcoming) test the prediction that only location characteristics influence sales prices in our sample of seven communities in the Chicago area. Our measures of location include such variables as lot size, distance from the nearest commuter train station, and proximity to Lake Michigan. Structural characteristics include such variables as building size, age, and whether the house is built of brick and has a basement, garage, or fireplace. We identify teardowns as houses for which a demolition permit was issued within two years of a sale. As predicted, structural characteristics do not significantly influence the sales price of teardown properties. Teardowns are purchased for the land underneath.

Final Thoughts

The teardown phenomenon is not new. Houses have been demolished and replaced for as long as they have been built. American cities grew rapidly in the late nineteenth and early twentieth centuries and again in the years just after World War II. Tastes now appear to be changing toward larger houses with spacious rooms and high ceilings. Many people find the existing housing stock less desirable than new construction. In this situation, it is not surprising that buyers purchase, demolish, and build new houses, especially in high-demand areas. The trick for local governments is to keep the costs of teardown activity from overwhelming the less obvious benefits.

Daniel P. McMillen is professor in the Department of Economics and the Institute for Government and Public Affairs at University of Illinois at Chicago. He has published widely in urban economics, real estate, and applied econometrics. He is a visiting fellow in 2006–2007 at the Lincoln Institute.

References

Black, Lisa. 2006. Kenilworth added to list of endangered historic towns. Chicago Tribune, May 20.

Dye, Richard, and Daniel P. McMillen. Forthcoming. Teardowns and land values in the Chicago metropolitan area. Journal of Urban Economics.

Nance, Kevin. 2005. Teardown ‘madness has to stop’: Developer rescues historic Burnham house, but says it’s just a start. Chicago Sun-Times, November 6.

Village of Skokie. 2005. Comprehensive Plan Appendix C: Near north suburban housing activity study. http://www.skokie.org/comm/Appendix%20C.pdf.

The character of institutions, political settings, and social relationships is critical in determining whether nonprofit developers are effective in reusing vacant, abandoned, and contaminated properties in their communities.