Over-the-Rhine is seeing a tremendous resurgence, with huge amounts of investment triggering ever-greater demand for real estate in the historic downtown neighborhood. Where once the conversation revolved around blight, disinvestment, and open-air drug markets, the script has quickly flipped to fears of displacement, over-speculation, and the impact of market forces on affordable housing and diversity.
This vacant building on Republic St. recently sold for $235,000, then sold again for $260,000 two days later.
The speed with which this shift has occurred is astounding. Buildings that only four years ago weren’t attractive enough to warrant someone paying $1, are now selling for $150,000 or more. Investors who for years avoided Over-the-Rhine, preferring to keep their money parked in tried-and-true markets like Clifton and Pleasant Ridge, are now scouring the neighborhood, sending out mailers to every last property owner, offering cash on the spot for their buildings. Of the 1,500 buildings in the historic district, less than ten have not already been snatched up by investors, developers, owner-occupants, or neighborhood nonprofits.
A marketing email the author received in September from an investor that has been aggressively targeting OTR
Much of this resurgence has led to undeniably beneficial outcomes – the elimination of blight, the return of vibrancy, the reduction in crime, etc. But the near frenzied state of the Over-the-Rhine real estate market also raises questions — questions that, as the executive director of a real estate focused nonprofit, I have become keenly aware of. These questions strike at the core of the capitalist economic system and can be summarized as follows: If one owns an asset (building), should one always sell/rent that asset for as much as one possibly can? Should one extract the maximum possible amount of money out of that asset? Should any consideration be given to the potential (negative) impact such a sale would have on the community?
In Over-the-Rhine, there are hundreds of rational economic actors faced with these decisions on a regular basis. Certainly no one can be blamed for selling something for its market value. But how does it impact the community? What if everyone behaved this way in Over-the-Rhine from this point forward?
The easiest example is affordable housing. When someone sells a vacant building for $200,000, it places a very strict limitation on what that building can eventually become. The pool of potential buyers at that price point is likely to be limited to developers who want to build higher-end condos, or couples who have the means to spend $500,000 for a rehabbed home in Over-the-Rhine. If everyone from this point forward sold their property for its market value, Over-the-Rhine would, socioeconomically speaking, become very un-diverse.
These 3 new townhomes on Republic St. have gated parking. ‘Unit A’ is selling for $598,000.
I am reminded of David Throsby and his discourse on different types of value. Certainly there is economic value and it has a very important place in our society; but there are other types of value — artistic value, cultural value, historical value — that don’t necessarily reflect economic value. My fear is that it is these types of value that are not being adequately represented with the fevered pitch of real estate speculation in Over-the-Rhine. When an investor comes to Over-the-Rhine and buys and sells property based solely on the prospect of individual/familial financial gain, the best interests of the neighborhood are given short shrift.
My raison d’etre in Over-the-Rhine is to help it become a model for other places. It can become a community in the truest sense of the word, where social cohesion is elevated by breaking down superficial barriers and differences between neighbors and where artistic, cultural, and historical values are appreciated as much as the almighty dollar. When rational economic actors place economic value above all else, it limits the space available for these values — limits the potential for small local businesses to open up shop, for working class people to walk to the symphony, for the beauty of Over-the-Rhine’s architecture to be fully appreciated, for the exchange of ideas among people of diverse backgrounds. Here’s to hoping the new property owners of Over-the-Rhine are willing to make a small sacrifice for a more balanced approach to development in the neighborhood — a sacrifice for a greater good.