Understanding Neighborhood Dynamics: a Review of The

Urban Studies, Vol. 33, No. 10, 1779± 1795, 1996

Understanding Neighbourhood Dynamics: A Review of the Contributions of William G. Grigsby

Isaac F. Megbolugbe, Marja C. Hoek-Smit and Peter D. Linneman

{Paper received in ® nal form, August 1996}

Summary. This paper summarises William G. Grigsby’ s contribution to our understanding of neighbourhood change. W e discuss seven contributions among Grigsby’ s most-lasting. First, he staked out the boundaries of the still-nascent ® eld very early in his career . Secondly, he situated the subject within the broader framework of metropolitan housing market dynamics. Thirdly, he developed a theoretical framework for investigating the subject that featured the analysis of housing sub-markets, the market process of neighbourhood successio n, and residential segregation. Fourthly, he identi® ed the economic, social, institutional and demographic forces that create neighbourhood change. Fifthly, he linked neighbourhood decline and deteriora tion to the spatial concentration of poverty . Sixthly, he underscore d the signi® cance of this understanding for formulating public policies to deal with deteriora ted neighbourhoods. And seventhly, he provided a remarkably complete and robust framework for analysing neighbourhood change. This last-mentioned contribution is the culmination of his lifetime work and will prove perhaps to be his most signi® cant. It provides a road map to future research on neighbourhood dynamics that others may wish to follow. It is very important to note that Grigsby’ s contributions are so foundational to the modern ® eld of housing economics and housing policy that many of the ® rst-ge neratio n analysts like John Kain, John Quigley, William W heaton, Richard Muth and Anthony Downs do not bother to cite his works. Grigsby’ s contributions have become ingrained in the core of housing policy. The paper concludes by noting that Grigsby did not let the state of technology or the availa bility of data limit his vision. As a result, his ideas about neighbourhood change remain fresh and will remain important for years to come.

1. Introduction W illiam G. Grigsby is both a pioneer in and laborated with three other authors in 1987 to chronicler of the study of neighbourhood produce The Dynamics of Neighborhood change. As a pioneer, he staked out the still- Change and Decline, one of the most incis- nascent ® eld early in his career especially in ive reviews and theoretical treatments of the his 1963 book Housing Markets and Public subject to date (Grigsby et al., 1987). Policy. As chronicler and synthesiser, he col- Professor Grigsby’ s own writings attest to

Isaac F. Megbolugbe is at the Fannie Mae Foundation, 4000 Wisconsin Avenue, N.W., Washington, DC 20016, USA. Fax: (202)± 274± 8111. E-mail: [email protected]. Marja C. Hoek-Smit and Peter D. Linneman are in the Wharton Real Estate Center at the University of Pennsylvania, 313 Lauder-Fischer Hall, 256 South 37th Street, Philadelphia, PA 19104. Fax: (215)± 573± 2220. E-mail: Marja C. Hoek-Smit: [email protected]; Peter D. Linneman: [email protected]. The authors gratefully acknowledge the assistance of Eric Belsky, Ayse Can and Christopher Balian. The research reported here was supported by the Of® ce of Housing Research. The opinions expressed here do not necessarily re¯ ect the positions of Fannie Mae or its of® cers.

0042-0980/96/101779-17 $6.00 Ó 1996 The Editors of Urban Studies 1780 ISAAC F. MEGBOLUGBE ET AL. the breadth and depth of the ® eld of study standard housing. Unlike most observers, that he helped to found. His work is founda- Grigsby did not view this situation as the tional to the modern ® eld of housing eco- inevitable outcome of the depreciation and nomics and urban housing policy. Although natural physical decay of housing. Instead, the ® rst-generation analysts such as John he convincingly argued that in most cases the Kain, John Quigley, William Wheaton, creation of sub-standard housing was an ac- Richard Muth and Anthony Downs do not tive process of disinvestment in the standing cite Grigsby’ s insights into housing markets stock. He pointed out that it is possible to and urban housing policy, they are very extend the physical life of the stock almost much ingrained in the literature. The purpose inde® nitely through maintenance and im- of this paper is to situate his work in the provement. The choice to maintain or im- context of the research conducted on neigh- prove is an economic one, he reasoned, and bourhood dynamics. Grigsby has been highly hence the deterioration of the existing stock in¯ uential, and his insights remain fresh to- is not an inevitable physical process. This day. Grigsby exposed many veins of research simple insight, also arrived at by Lowry that others would mine more intensively (1960) and Ratcliff (1949), had profound later. It is interesting to note that some of the implications for how Grigsby framed the directions taken by his research on neigh- process of neighbourhood decline. bourhood change were not, however, fore- Grigsby’ s primary purpose for writing shadowed in his early works. In fact, some Housing Market and Housing Policy was to are even at odds with his early formulation of alert planners and public of® cials that an the issues. understanding of the operation of housing We limit ourselves here to a discussion of markets must precede policy prescriptions Grigsby’ s views on neighbourhood dynam- for housing problems. To that end, he pro- ics, only touching on related issues of public vided a theoretical framework for analysing policy. Our treatment, therefore, only par- housing markets. The framework built on, tially re¯ ects his considerable contributions. but extended beyond, the earlier work of Grigsby’ s contributions in the area of public Fisher (1951), Maisel (1948), Rapkin et al. policy were equally prodigious. We hope that (1953) and Smith (1958). this paper contributes to the subject that has been so close to his heart by tracing the 2.1.1 Housing sub-markets. At the heart of literature on neighbourhood change to the Grigsby’ s initial conceptualisation of neigh- present, and by exploring where one of its bourhoods was the notion of housing sub- earliest pioneers stands in relation to his markets that are dynamically shaped by ® eld. shifts in supply and demand. Grigsby and Rapkin had earlier employed such a conceptualisation to evaluate demand for housing in 2. Grigsby’ s Contribution a redevelopment area of Philadelphia (Rap- Grigsby ® rst fully articulated his views on kin and Grigsby, 1959a). But in his later neighbourhood change in his seminal book work, Grigsby laid out his ideas in far greater entitled Housing Markets and Housing detail. Policy (1963).1 As the title suggests, Grigsby Following Rapkin et al. (1953), Grigsby placed housing policy issues within the argued that distinct sub-markets exist within broader context of housing markets. housing markets. These sub-markets are dis- tinguishable because the homes within them are viewed as more or less perfect substitutes 2.1 Housing Markets and Neighbourhood by the households demanding them. The dis- Change tinct character of sub-markets makes some At the time the book was written, an esti- more sensitive than others to speci® c shifts in mated 9m low-income families lived in sub- housing demand or supply. Though distinct, UNDERSTANDING NEIGHBOURHOOD DYNAMICS 1781

Grigsby pointed out, sub-markets are linked ® ltering had taken on multiple meanings. together by an intricate web of connections Ratcliff, for example, had characterised it as driven by cross-elasticities in demand. Hence a change in occupancy from a higher-income a change in any one sub-market has the group to a lower one, while Fisher and Win- potential to affect many others (though most nick de® ned it as a downward shift in the powerfully in their own sub-market). relative price (or rent) of a unit. Lowry then Supply and demand changes, Grigsby ar- proposed a de® nition that linked ® ltering to gued, are capable of being subjected to sys- general price changes and argued that homes tematic analysis. Households frequently failing to appreciate at the rate of general move to maximise the utility of their housing price in¯ ation were ® ltering down. within an overall budget constraint. Neigh- What set Grigsby apart from the others bourhoods or properties can become obsolete was that he moved beyond debates over how when demand changes. Demand can change to de® ne ® ltering properly and instead recast in response to changes in income, the demo- the issue as a question of the changing use of graphic composition of households, income existing stock within the broader conceptual- distribution and level, employment and isation of the housing market. This is why he population. Grigsby contended that move- characterised his study as ª concerned primar- ments of families through the supply ily with the use, reuse, continual alteration and exchange of secondhand capital assetsº establish the linkages {among sub-mar- (Grigsby, 1963, p. 21). Armed with this kets}, cause values to shift, areas to im- framework, he was able to conduct what he prove or decay, and housing to become called ª hypothetical casesº to illuminate how available or unavailable to lower-income various market factors affect the rate and groups. (Grigsby, 1963, p. 56) extent of change in the relative price, occupancy and condition of the existing stock. This vision of urban housing markets has Although lacking the powerful statistical proven remarkably durable and has spawned tools and data which are now available, an enormous body of research (Kain and Grigsby was nevertheless able to identify the Quigley, 1975; Rothenberg et al., 1991). basic drivers of stock changes. Grigsby helped to establish the notion that the best way to evaluate neighbourhood s is to 2.1.3 Ingredients of a theory of neighbour- analyse them as dynamically linked sub-mar- hood decline. It was not until several years ketsÐ a view now taken for granted by most later that Grigsby would advance a more of those in the ® eld today as the proper frame formal theory of neighbourhood decline. of reference. Grigsby, in fact, took an important step to- ward making these connections when he 2.1.2 From ® ltering to re-use of the stock. de® ned in a footnote the new term Grigsby concluded that the availability of ª locational obsolescenceº (Grigsby, 1963, low-income housing depended on the hous- p. 100). Grigsby de® ned locational obsol- ing consumption behaviour of higher-income escence as the process by which shifts in groups. Unlike higher-income families who demand for shared attributes of a neighbour- can afford newly built homes, low-income hood (owing to location, housing and site households, he reasoned, must accept what- characteristics) make obsolete entire neigh- ever existing stock trickles down to them at bourhoo ds. prices they can afford. This was not a new Grigsby pointed out the important idea. As Grigsby acknowledges, analysts of in¯ uence of externalities on the direction and the ` ® ltering’ process had held the same be- pace of neighbourhood change. De® ciencies lief for some time (Ratcliff, 1949; Fisher and in structures, the environment and public ser- W innick, 1961; Lowry, 1960). But the litera- vices or community facilities could ª lead ture on ® ltering was confused because both landlord and owner-occupants to con- 1782 ISAAC F. MEGBOLUGBE ET AL. clude that funds needed to repair and im- issues around which debate continues to rage prove housing in a given area would yield- are all in this early work, from demand-side higher returns elsewhereº (Grigsby, 1963, versus supply-side housing subsidies, to p. 234). Among other neighbourhood condi- deconcentration of the poor versus urban tions that could lead to spatially concentrated renewal, to displacement.2 disinvestment, he included that fear by each owner that his expenditure 2.1.4 Towards a theory of neighbourhood would be worthless because neighbors renewal. Grigsby’ s framework leaves open would not follow suit¼ and the existence the possibility that shifts in demand, supply of one or two blighting in¯ uences which, and economic activity can produce upward while not serious in themselves, {could} price pressures and encourage the upgrading cast a cloud over the area, thereby deter- of housing and income occupancy (gen- ring investment and creating a chain reac- tri® cation). But he also acknowledged the tion of further blight and decay. (Grigsby, fact that the dominant direction of change is 1963, p. 235) downward. The best and newest housing is built for higher-income groups but eventually Grigsby here echoed the application of game passes down to successively lower-income theory (the prisoner’ s dilemma) to predicting groups until it reaches groups so low that group disinvestment in residential upkeep they can not afford to cover maintenance and foreshadowed the theory of contagious costs. Once a neighbourhood reaches this spread of urban decay (Dear, 1976). stage, Grigsby argued, public intervention is Grigsby concluded that a policy aimed at necessary either to restore the neighbourhood accelerating the ¯ ow of housing to lower- to health or to clear it for reinvestment in income groups by encouraging new construc- new structures. But, he cautioned, renewing tion would likely be an inadequate low-in- one neighbourhood often can be accom- come housing policy. He perceptively argued plished only at the expense of another as that direct additions to the low-income stock in This would seem to presume that the excess of demand place greater downward physical condition of a home is closely pressure on the prices of the existing low- related to its age. Equally important, how- income stock. And he warned that unless ever, may be the proportion of income rents or incomes are subsidised in a which owner-occupants and landlords are re-investment area, low-income households able and willing to allocate to mainte- are likely to be forced into other marginal nance, repair, and improvement of the neighbourhood s. marginal and substandard stock. (Grigsby, 1963, p. 129) 2.2 Towards a Theory of Neighbourhood The meager incomes of the residents of Succession blighted and slum districts, certainly are By the mid 1970s, some of Grigsby’ s views the chief underlying cause of inadequate began to change while others came into maintenance in these areas. (Grigsby, sharper focus. The direction of his theoretical 1963, p. 234) exposition shifted even more decisively from Instead, he advocated a policy of supporting deterioration of housing to deterioration of rising real incomes, increasing government neighbourhood s and parallelled the shift expenditures to meet the housing needs of from sub-standard housing as the most special groups, increasing housing and signi® cant policy issue to neighbourhood maintenance expenditures, and desegregating deterioration and the spatial concentration of the housing market. Suf® ce it to say that poverty. In a 1975 book authored with virtually all the urban and housing policy Rosenberg, Grigsby mused on whether the UNDERSTANDING NEIGHBOURHOOD DYNAMICS 1783 dynamics of neighbourhood decline were renovation decisions by owners. New supply well enough understood to support popular is built to satisfy the demand of upper- policy prescriptions. income groups seeking better homes and creates openings in the existing stock for 2.2.1 Delinking ® ltering from a priori lower-income occupants. Obsolescence, decline. In 1977 Grigsby and his colleagues de® ned as a decline in demand for a product developed the theoretical formulation of independent of a change in the product itself, housing markets. They tied together sub- is fuelled by income growth as rising expec- markets, ® ltering and neighbourhood change tations reduce demand for particular home more explicitly and wrote that ª the forces types and neighbourhoods among upper- that cause the separation of socioeconomic income groups. Obsolescence can also be and ethnic groups cause ® ltering to affect caused by changing demographics, shifting entire neighborhoods not scattered struc- patterns of employment, and changes to turesº (Grigsby et al., 1977, p. 31). They neighbourhood quality. As occupants who chose to use (rather than reject) the term are ® nancially able to move out of obsolete ® ltering, but de® ned it unambiguously as the housing relocate, their housing ® lters to ª process by which dwellings descend over lower-income groups (even if the price of time from higher to lower income house- housing does not fall). Public actions that holdsº (Grigsby et al., 1977). 3 To avoid con- contribute to ® ltering include production of fusion, Grigsby would later use the term subsidised housing (creation of an over- ` neighbourhood succession’ to refer to this supply of low-income housing), road con- process and argued that the term ® ltering had struction and opening up markets that previ- been rede® ned too many times to serve a ously excluded low-income residents. useful purpose (Grigsby et al., 1987). By characterising neighbourhood change 2.2.2 Deterioration and abandonment. in terms of occupants rather than in terms of Grigsby and his fellow authors argued that the condition of the stock, Grigsby and his deterioration resulting from low-income colleagues were able to make the theoreti- occupancy alone is inevitable only when cally important point that such transition housing reaches families that are so poor that from higher- to lower-income occupants they cannot cover the costs of operating and need not be accompanied by an a priori maintaining a housing unit at its current qual- deterioration in housing quality or a ity. Eventually owners of such properties are reduction in prices in a neighbourhood. forced to defer maintenance and let building s Instead, only under certain speci® c circum- run down. Given that the operation of hous- stances is it reasonable to expect succession ing markets tends to concentrate spatially to a lower-income population to move hand- those on the lowest rung, much neighbour- in-hand with physical deterioration. hood deterioration can be explained as the They argued that ® ltering resulted from outcome of ® ltering. both ` macro’ forces and ` micro’ neighbour- Taking this conclusion as self-evident, hood forces. The macro forces are population Grigsby turned to cases where deterioration change, income change, obsolescence and spreads even in the absence of a growing public actions. The micro forces include low-income population. In areas where the redlining, physical deterioration and social low-income population is declining, he deterioration. Decline in population can lead reasoned, owners recognise that they can no to ® ltering as a fall in demand causes prices longer expect to realise an adequate return to decline and makes homes once occupied due to growing vacancies and falling prop- by higher-income families available to erty values. In response to reality, they begin lower-income families. The result of an in- to defer maintenance and lead a process of crease in population is less certain because it deterioration that is accelerated by growing depends on the response of suppliers and the negative neighbourhood externalities. In 1784 ISAAC F. MEGBOLUGBE ET AL. areas where the low-income population is haps impossible task given the lack of cen- stable, deterioration begins to spread to other tralized public control over the housing neighbourhoods after it ravages one area. marketº . And they warned that ª unless atten- W hen owners allow properties in a neigh- tion is given to the way in which metropoli- bourhood to deteriorate to such an extent that tan population and employment trends are occupants are compelled to leave, the process likely to affect different parts of the com- repeats itself elsewhere. In areas with no munity¼ neighborhood strategies run the low-income population, Grigsby and the oth- danger of being individually inappropriate ers argued, a host of factors other than the and collectively contradictoryº (Grigsby et ability to pay can nevertheless result in deal., 1977, p. 49). This was one of Grigsby’ s terioration. Some families may fail to main- strengths: realism in understanding what tain their homes because they do not value policies can really do as opposed to what we maintained homes and some may be unaware wish they could do. that maintenance is needed. But for a neighbourhood rather than individu al structures to 2.3 An Integrated Theory of Neighbourhood deteriorate, a broader set of residents must Succession reach the common conclusion that ` something bad’ is about to happen to the neigh- Grigsby’ s arguments took greatest shape in bourhood that makes investment in The Dynamics of Neighbourhood Change maintenance a poor economic decision: and Decline (Grigsby et al., 1987). This work presents a detailed theory of neighbour- This ` something’ could be a proposed hood succession. He broadens the de® nition highway, possible intrusion of a blighting of his subject to include any signi® cant use, expected invasion of low-income or change in the characteristics of neighbour- minority households, or just an intuitive hood residents over time. Although Grigsby feeling that the neighborhood does not once again focused on changing income have a bright future. (Grigsby et al., 1977, composition, he argued that the same pro- p. 44) cesses that give rise to this change also give To close the circle and summarise their argu- rise to other changes in neighbourhood ments, Grigsby and his fellow authors argued demographics, including race, age, social that deterioration ends in abandonment when class and family composition. change produces permanent vacancies. In summary, 2.3.1 Residential differentiation and neighbourhood change. Grigsby and his col- Population decline, subsidized new con- leagues began their treatment of the subject struction, shifts in living patterns or em- by noting that the spatial separation of demo- ployment locations, or rising or falling graphics groups along certain measurable incomes should make their effect felt dimensions, especially income, is a pre-con- through the ® ltering process in such a way dition for the succession process. Unlike his as to concentrate abandonment at the low- earlier treatments of the subject, Grigsby est quality level. (Grigsby et al., 1977, noted that p. 46) It is extremely important¼ that the social Even though Grigsby acknowledged that and economic forces which produce separ- ® ltering does not lead to decline in all low- ation be understood¼ because it is these income neighbourhood s, he did view the link same forces which are creating geographi- between ® ltering and abandonment in at least cal isolation of lower income groups, the some neighbourhoods as ineluctable. He and companion phenomenon of succession and his colleagues concluded that ª programs decline. (Grigsby et al., 1987, p. 10) aimed at halting deterioration¼ sometimes must arrest the ® ltering process itself, a per- After reviewing the extant explanations of UNDERSTANDING NEIGHBOURHOOD DYNAMICS 1785 residential segregation, the authors con- succession leads to decline. He and his col- cluded that ª various social, governmental, leagues concluded that ª although no one economic, and market forces working in would deny that inadequate incomes is an combination seem to make it part of the extremely important force in neighborhood ` natural’ order of thingsº (Grigsby et al., decline, the low-income explanations do not 1987, p. 18). Grigsby rejected the idea that go far enoughº (Grigsby et al., 1987, p. 49). any single theory explains residential segre- They were driven to this conclusion by in- gation. Instead, he had come to believe that stances where the extent of neighbourhood the process is overdetermined and dif® cult to decline was more (or less) than income or derail even if policy-makers wish to do so. wealth alone would suggest. Grigsby warned against concluding that 2.3.2 A general framework for analysing behavioural problems are associated with neighbourhood change. After traversing low income, but at the same time acknowl- what was by then a well-worn path of ex- edged that chronic isolation and concen- plaining the concept of housing sub-markets, tration could contribute to them. On the Grigsby and his colleagues presented what supply side, Grigsby and his colleagues ex- they called ª a framework for analyzing plained that market intermediaries and hous- neighborhood successionº . In a mere four ing investors can speed up the process of pages, they described a framework that is decline by overreacting to early symptoms of deceptively simple (see Figure 1). decay. They reviewed the evidence on the processes of ` milking’ (deliberate under- Changes in social and economic variables maintenance to maximise short-term pro® ts) (1) cause households acting directly or and ` redlining’ (withdrawing mortgage funds through a system of housing suppliers and from an entire neighbourhood based on ex- market intermediaries (2) to make differ- pectations of falling property values). They ent decisions regarding level of mainte- concluded that there is little evidence for nance, upgrading, conversion, whether to milking but that redlining may occur. How- move, new construction, boarding-up, and ever, they underscore the dif® culty in assess- demolition (3), producing changes in ing whether redlining causes falling values or dwelling and neighborhood characteristics is a legitimate response to them. In any (4). (Grigsby et al., 1987, p. 33) event, they acknowledge the possibility and Boiled down to its barest essentials, here is suggest that decline may be an insurable and the core of a theory of neighbourhood change hence manageable risk. They also returned to that had been hinted at in Grigsby’ s earlier Grigsby’ s earlier ideas about negative exter- works and latent in the works of a generation nalities, including physical and social de- of urban researchers. The full potential to terioration. model the causal chain traced in this framework from social and economic change to the 2.3.4 Public policy and neighbourhood de- spatial pattern and pace of neighbourhood cline. With respect to the role of public change has not yet been fully tapped. policy in neighbourhood change, Grigsby and his colleagues singled out rent controls, 2.3.3 Variations in the extent of low-income excessive code enforcement, real property area decline. Grigsby once again devoted taxes, federal income tax, policies that en- special attention to the circumstances under courage decentralisation and lax FHA under- which succession leads to neighbourhood de- writing practices. The authors rejected the cline (here used synonymously with neigh- notion that rent control, by capping rents, bourhood physical and social deterioration). somehow inevitably leads to undermainte- This time, however, Grigsby was more cau- nance. They also concluded that code en- tious in his treatment of the role that inad- forcement leads to decline only when the equate income plays in explaining how cost of the repairs needed to bring a property 1786

I II III IV Cause households, acting To make different decisions Producing changes in dwelling Changes in social and economic directly or indirectly through a regarding and neighbourhood characteristics variables system of housing suppliers and market intermediaries

Level of maintenance New household income profiles Number of households Owners in existing neighbourhoods ISA Developers Upgrading Household size and composition (succession)

Conversion A Per capita income Builders Whether to move Other changes in existing C

Societal values and attitudes as Repair firms F

Where to move neighbourhoods . they affect housing preferences Sub-contractors M New construction Social environment Cost of housing relative to that of Brokers EGB Boarding-up Household behaviour other goods and services Lenders Demolition Race, ethnicity O

Insurers LUG Technology, especially transport Social-group ties Public agencies and communication Physical environment Consumer product and service Neighbourhood groups B Dwelling unit E mix Other ET

Public-sector policies and Locational attributes AL programmes inside and outside Prices and rents . housing Creation of new neighbourhoods Location, amount and type of and elimination of old ones business investment

Figure 1. Fram ework for analysing neighbourhood change. Source: Grigsby et al. (1987, p. 31). UNDERSTANDING NEIGHBOURHOOD DYNAMICS 1787 up to code is less than the discounted net bourhood change, we now place that contribu- expected revenue over the life of the repairs. tion in the context of the broader literature on They rejected the idea that an ad valorem tax the subject. creates problems, but noted that assessments tend not to fall fast enough when prices are 3.1 Concepts of Residential Neighbourhoods dropping in a neighbourhood to avert onerous tax burdens that aggravate the problem. They The obvious place to begin is with the rejected too the idea that accelerated de- de® nition of neighbourhood. Many re- preciation of rental property encourages searchers have advanced de® nitions (Cole- shoddy workmanship and leads to accelerated man, 1978; Lachman and Downs, 1978; physical deterioration. They also viewed dimly Rodwin and Hollister, 1984; Galster, 1987). the argument that the federal government was Broadly speaking, they can be grouped into behind the deconcentration of urban areas. The explanations that describe residential neigh- authors viewed more favourably the argument bourhoods as that FHA insurance, in cases where it was (1) homogeneous areas sharing demographic granted too liberally, contributed to decline by or housing characteristics; way of accelerated loan defaults. Their view (2) areas that may have diverse characteris- of the role of subsidised new construction was tics, but whose residents share some co- mixed. On the one hand, they pointed out that hesive sense of identity, political new construction can create excess supply, organisation or social organisation; drive down prices and speed abandonment. On (3) housing sub-markets in which homes are the other hand, they pointed to evidence sug- considered close substitutes; and gesting that this effect was exaggerated be- (4) small areal units that do not necessarily cause of strong substitution effects of have any of the above characteristics. subsidised construction for unsubsidised construction (Murray, 1979; Swann, 1973). Each de® nition serves a different research On balance, however, Grigsby and his co- purpose and focuses on different aspects of the authors placed the blame for neighbourhood areal differentiation of residential spaces. The decline primarily on concentrations of poverty. four descriptions also are not necessarily mu- tually exclusive. Housing sub-markets, for Given the existence of needy households example, are often co-terminous with neigh- who are spatially concentrated, physically bourhoods characterised by housing or deteriorated neighborhoods are inevitable. It demographic characteristics. It is the unique is the role of other factors in accelerating the site, situation and building characteristics in spread of decay outward from these areas a neighbourhood that often make homes in into sound neighborhoods that demands that neighbourhood close substitutes. These explanation. Unfortunately, the magnitude factors also make neighbourhoods desirable as of their individu al and collective impact well as affordable to only certain demographic seems impossible to detect. All that can be groups. ® rmly concluded is that since succession is Over the years, Grigsby mostly used the the constant companion of urban growth and homogeneous area and housing sub-market change, so too will the decline of at least de® nitions of neighbourhood to discuss neigh- some neighborhoods until society has bourhood change. As noted above, he was one solved the low-income problem. (Grigsby et of the ® rst and most in¯ uential urban analysts al., 1987, p. 58) to focus on the role of sub-markets as a means of conceptualising and analysing neighbourhood dynamics. He also made explicit the 3. Grigsby’ s Contributions in Context connection between housing sub-markets and Having laid out the broad outlines of Grigsby’ s the production of areas with shared demo- contribution to the understanding of neigh- graphic and housing characteristics. 1788 ISAAC F. MEGBOLUGBE ET AL.

Although he addressed certain de® nitional ology (which came to be called factorial issues (Grigsby et al., 1987), Grigsby left ecology) led to questions about the validity others largely untouched. For example, he of the theories, it unquestionably provided did not contribute much to the debate over ample evidence of strong residential differen- the appropriate scale for de® ning neighbour- tiation along socio-economic, class and hoods and bounding them according to racial/ethnic lines (Timms, 1971). shared characteristics. Rather, he used more Factorial ecology was designed to uncover convenient census boundary de® nitions in his the underlying demographic structure of resi- empirical work. This is hardly surprising in dential differentiation. Factor analysis was that the researcher’ s capacity to free himself used to collapse multiple demographic vari- from the constraints imposed by census ables into a smaller set of basic factors to geography did not fully emerge until the late distinguish among residential areas. Despite 1980s with advances in spatial analysis, geo- its power to treat dozens of variables, it graphical information systems and the misses some key dimensions of residential explosion of address-level information in differentiation. Although the obvious factors digital format. These advances spawned a such as income, occupation, ethnicity, race, rich literature on the spatial aggregation age and family composition were included, issues associated with de® ning housing sub- others were not. Notably, factor analysis in- markets and other neighbourhood cluded little information of the occupation or boundaries. social status of wives. An awakening to that fact and the potential to investigate the spa- 3.1.2 The underlying structure of residential tial production of gender-differentiated differentiation. Grigsby’ s attention to hous- labour markets has sparked new research on ing sub-markets and demographically homo- this important and distinguishing feature of geneous areas had antecedents. An neighbourhood s (Pratt and Hanson, 1988; awareness of the fact that populations are not McClafferty and Preston, 1992). randomly distributed across metropolitan landscapes informed sociological research at least as far back as the 1920s. Burgess and 3.2 Causes of Residential Segregation Park (1925) are generally credited with focusing the attention of urban sociologists Residential segregation is the outcome of on the areal differentiation and pattern of multiple processes. Theorists have generally residential space along demographic lines. At opted to stress one of the following: the time of their original work, available data and methods did not permit detailed empiri- (1) household preferences (Alonso, 1964; cal investigation of these patterns. Although Muth, 1969; Clark, 1988, 1989, 1991); casual observation revealed the strong ten- (2) exclusionary zoning (Downs, 1973; dency for groups of different socio-economic Danielson, 1976) status, race, class and ethnicity to occupy (3) discrimination (Wienk et al., 1979; distinct and largely separate neighbourhoods, Turner et al., 1991; Galster, 1992). the most important factors in the differentiation of residential space were not evalu- Grigsby concluded that different perspectives ated statistically until the 1950s (Shevsky on the causes of residential segregation and Bell, 1955). The advent of factor analy- should be more properly viewed as comple- sis enabled sociologists to return to and test mentary and reinforcing rather than as com- the spatial organisation theories of differenti- petitive (Grigsby et al., 1987). He pointed ated neighbourhoods as advanced by Burgess out that suppliers also play a central role in and Park as well as by Hoyt (1939) and the creation of segregated spaces because Harris and Ullman (1945). Although the ap- they are unwilling to intersperse less-afford- plication of the technique for urban soci- able homes with more expensive ones. In UNDERSTANDING NEIGHBOURHOOD DYNAMICS 1789 this, he echoed an earlier formulation by economic, public service and psychological/ Kain and Quigley (1975) in which they con- opinions and expectations. And he tracked tended that segregation is caused by the in- multiple variables to measure each character- teraction of the collective action of istic. But Grigsby’ s de® nition was functional consumers through local governments, the and enabled him to trace more readily the locational decisions of individu als and the causal chain of events leading to many other investment decisions of suppliers. Grigsby changes in neighbourhood character. From was unwilling to conclude that the process is Grigsby’ s perspective, it was change in the ª primarily a product of imperfect market income mix of a neighbourhood from upper processes or of public designº (Grigsby et income to lower income that created the al., 1987, p. 18). He instead concluded that objective conditions required to create the the process was mostly rooted in consumer potential for physical deterioration of the preferences refracted through social, govern- stock, changing expectations about the for- ment, economic and market forces. He char- tunes of the neighbourhood, economic de- acterised segregation as the ª natural order of terioration of housing markets, social thingsº , a conclusion that he might moderate deterioration and the withdrawal of quality today in light of growing evidence of the public services. In fact, Grigsby chose not to multiple and more malevolent forces that de® ne neighbourhood change in terms of actively perpetuate segregation. these conditions. Perhaps a more serious gap in Grigsby’ s work is the lack of a well-speci® ed, market- based model of neighbourhood succession 3.3 Concepts of Neighbourhood Change from lower-income groups back to upper-in- In his later work, Grigsby decided that it was come groups. Although Grigsby acknowl- best to think about neighbourhood change as edged that change can move in any direction, a shift in the characteristics of neighbour- he was largely silent on the subject of gen- hood occupants (Grigsby et al., 1987, p. 27). tri® cation involving minimal or no govern- Although he focused on change in the mean ment intervention. Just as market forces can income characteristics of neighbourhood oc- cause neighbourhoods to obsolesce and grow cupants, he allowed for and at various points more marginal to upper-income demand, oth- in his career investigated changes in race, ers have shown that market forces can also social class and ethnicity as well. His de- cause neighbourhoods to become attractive cision to reduce the de® nition of neighbour- investments for higher-income groups (Gale, hood change to occupancy appears to have 1984; Palen and London, 1984). Some have been motivated by his desire to cast that devoted more attention to the circumstances change as fundamental to others that may that give rise to the encroachment of upper- follow in a neighbourhood, such as change in income groups in lower-income neighbour- the relative or absolute price of housing, the hoods and the process of succession from condition of the stock, the re-use of the stock one to the other. Pressures placed on prices and social and political institutions and ser- in low-income neighbourhood s by such up- vices. grading have become a concern among many Grigsby’ s preferred de® nition of neigh- community activists. bourhood change could be viewed by some as overly restrictive because of its focus on 3.4 Causes of Neighbourhood Change the process of change in contrast to relying on comparative statics as a proxy for change. Grigsby held that neighbourhood change is For example, Downs (1981) relying on the caused by the natural operation of housing notions of comparative statics identi® ed and markets under condition s of residential seg- analysed ® ve broad characteristics of neigh- regation and socio-economic change. Socio- bourhood change: population, physical, economic strati® cation, diverse age and 1790 ISAAC F. MEGBOLUGBE ET AL. household types, and cultural diversity give and decisions of the full host of agents in rise to differences in housing preferences and light of those changing variables, and the ability to pay for housing. These differences changes they bring about in dwelling and are crystallised in space through a process of neighbourhood characteristics. Unlike others residential segregation that is rooted in the who oversimpli® ed or focused on single as- preferences of consumers, but may be abet- pects of change, Grigsby did not back away ted by discrimination in housing and mort- from the complexity of neighbourhood gage markets. Clearly, certain demographic change. Instead, he embraced it. In so doing, groups share similar preferences and effec- he revealed its true nature and exposed the tive demand. Neighbourhoods change from dif® culty in predicting the speci® c locational higher- to lower-income groups when higher- outcomes of the neighbourhood change. income groups depart for other neighbour- Although Grigsby’ s housing sub-market- hoods that better meet their demands. based framework provides guidance for those Grigsby identi® ed most of the factors that who would seek to formalise it, it also pre- we now consider as causes of neighbourhood sents daunting challenges. Some have begun change. The factors can be grouped into to tackle those challenges directly and are those that are exogenous and those that are demonstrating that it is growing increasingly endogenous to the neighbourhood (see Table possible for a complete housing sub-market 1). Grigsby considered obsolescence a model to be ® tted (Rothenberg et al., 1991; ` macro’ or exogenous variable. He viewed Vandell, 1995). The most vexing problem is the forces that render a particular neighbour- how to create a model that traces the interac- hood’ s building , site or locational character- tions among many distinct sub-markets and istics obsolete as linked to broader explanatory variables in a multi-period simu- demographic, economic and political lation framework. changes and actions. It is worth noting that exogenous forces affect neighbourhood s in different ways depending on the speci® c 3.6 Locational Aspects of Neighbourhood character of the neighbourhood . Therefore, Change exogenous factors interact with the speci® c properties of a neighbourhood to determine Social scientists have also examined the lo- the fate of that neighbourhood. Endogenous cational pattern of neighbourhood change as factors can reinforce the direction of change opposed to demographic and economic pat- generated by the operation of exogenous terns. Burgess posited his concentric ring forces as they work on existing neighbour- pattern of neighbourhood change based on hoods, but they seldom initiate that change. invasion and succession (Burgess and Park, 1925), and Hoyt (1939) posited his axial model based on ® ltering. Grigsby subscribed 3.5 Models of Neighbourhood Change to Hoyt’ s basic concepts of ® ltering and ob- The literature is replete with models of solescence in explaining the location of neighbourhood change, including McKen- neighbourhood change. He also agreed that, zie’ s (1925) now-famous ecological model of except in cases where older stock has en- invasion and succession, Hoover and Ver- joyed continued upper-income demand due non’ s (1959) life-cycle model, Bradbury et to some special attribute, decline is most al.’ s (1982) staged model, Leven et al.,’ s likely to occur in the oldest, most outmoded (1976) arbitrage model, and Fainstein and stock. But he was less concerned than Hoyt Fainstein’ s (1982) urban restructuring model. and others with explaining the speci® c loca- Standing apart from these partial models of tion of neighbourhood change. His compara- neighbourhood change, Grigsby’ s integrated tive lack of interest is not surprising given theory fully captures the social and economic his own concept of neighbourhood change. variables that drive the process, the actions He viewed it as a process that characterises UNDERSTANDING NEIGHBOURHOOD DYNAMICS 1791

Table 1. Causes of neighbo urhood change identi® ed by Grigsby et al.

Exogenou s factors Demographic changes Changin g consumer expecta tions Changes in the number of househo lds Changes in age, size and family compositio n of househo lds Economic change s Changes in real incomes Changes in the relativ e cost of housin g Changes in the location, amount and type of business investment Governmental interven tions that affect housin g supply and demand Land-use regulations Tax policie s Public service deliver y Siting of public facilitie s Production of subsidis ed housing Federal transport policies Federal housin g insurance policies Other changes Rates of new construc tion Changes in transport and communications technolo gies Obsolesce nce Building Site Locationa l

Endogenous factors Negativ e externalitiesa Crime Physica l deterior ation and abandon ed housin g Social deterior ation Changin g expectations about future house-p rice appreciation Redlining Disinvestment by property owners

a Grigsby also noted that changin g racial compositio n can be viewed by white families as a negative externality. Changin g racial compositio n can therefore accelerate the transitio n of a neighbo urhood from higher-income white families to lower-inco me minorities and whites.

most neighbourhoods, even though it is only to lower-income groups was an effective most visible in declining areas. mechanism for upgrading the housing conditions of most people. Rising incomes enable higher-income groups to purchase new hous- 3.7 Consequences and Implications of ing that exceeds current standards. The Change movement of upper-income groups to new Grigsby saw the results of neighbourhood housing frees-up better quality housing for change as positive for the majority of Ameri- successively lower-income groups. As a re- cans, but a bane for the poor. sult, all but the poorest who cannot afford rents that allow for adequate upkeep end up 3.7.1 The rising tide. Grigsby argued that the with better-quality housing. He argued turnover of the stock from higher- to middle- against the view that the expansion of the 1792 ISAAC F. MEGBOLUGBE ET AL. suburbs was choking off growth in the inner 3.7.3 Price effects. Neighbourhood change cities with little positive social bene® t. can affect the rate and direction of change in Grigsby believed that suburban development house prices. Grigsby argued that ® ltering was a natural and appropriate market re- often leads to real or even absolute price sponse to growing populations and that it declinesÐ as when ® ltering lowers effective would not have been viewed negatively had demand in a neighbourhood and suppliers the growth been accommodated within the accept lower prices to rent or sell their units. undeveloped boundaries of central cities However, Grigsby also recognised that (Grigsby et al., 1987, p. 57). The real culprit, ® ltering can sometimes result in price he argued, was not the process of neighbour- increases if groups locked out of a market hood change, but rather the concentration bid up prices on a limited stock freed-up by and persistence of poverty. In other words, it higher-income movers. Similarly, ® ltering was (and is) poverty and lack of political will can result in no change in price if lower to address itÐ not the process of neighbour- income occupants are willing to boost their hood changeÐ that keeps the rising tide from expenditures on housing to move into the lifting all the boats. On the other hand, better units vacated by higher-income Grigsby was sensitive to the role of the hous- movers. Most studies of the price effects of ing market in concentrating poverty and neighbourhood change, however, have been hence to its role in creating neighbourhood aimed at examining the effect of racial, not rather than scattered-site decline. income, succession on house prices (Hoyt, 1939; Laurenti, 1960; Bailey, 1966; Galster, 1977, 1992). 3.7.2 Decline and abandonment. Grigsby de® ned decline as an absolute negative 3.7.4 Concentration of poverty and the un- change in an area’ s physical or social quality derclass. Grigsby has unambiguously stated (residents or organisations) (Grigsby et al., that the concentration of poverty is a princi- 1987, p. 41). He held that decline is caused pal contributor to neighbourhood decline. It by succession and not vice versa. He argued is, he has consistently argued, the fact of that, except under exceptional circumstances, persistent poverty and the multiple forces the breakdown of social institutions, down- that cause poor households to concentrate turns in measures of social quality and physi- that turn ® ltering in the stock into broad cal decay are preceded by succession to very swatches of neighbourhood decline. Despite low-income groups. Grigsby further argued this, Grigsby has devoted little attention to that market intermediaries can fuel the pro- exploring the impact of this concentration on cess of decline and abandonment once it the populations subjected to it. Nor has he begins to occur within a low-income neigh- addressed the question of whether and why bourhood. He also acknowledged that nega- poverty concentrations have been increasing tive externalities can play a central role in in many cities since the 1970s. This stands in bringing about rapid changes once ® ltering contrast to the growing number of scholars has set up the necessary conditions for neigh- who have devoted considerable effort to bourhood decline. Although he felt that be- charting the path of poverty concentration havioural factors play a more limited role, he and understanding its causes and conse- did acknowledge that the concentration of quences (Wilson, 1987; Jargowsky and Bane, poverty may contribute to social pathologies 1991; Jargowsky, 1993; Kasarda, 1993; Gal- and deterioration. He also concluded that ster and Mincy, 1993). deterioration tends to spread outward even where the low-income population is stable or 4. Grigsby and the Future of Research on declining because that population moves into Neighbourhood Dynamics marginal areas when core areas become un- inhabitable. Grigsby’ s legacy to the study of neighbour- UNDERSTANDING NEIGHBOURHOOD DYNAMICS 1793 hood dynamics is signi® cant. At least seven That we are fast approaching a time when contributions can be counted among we will be able to formalise Grigsby’ s frame- Grigsby’ s most notable advances in the ® eld. work is illustrated by the work of Vandell First, he staked out the boundaries of the (1995) and Rothenberg et al. (1991). Formal then-nascent ® eld as early as 1960. Secondly, modelling, computing technology and the he situated the subject within the broader availability of necessary data in digital for- framework of metropolitan housing market mat are bringing us closer to estimating dynamics. Thirdly, he developed a theoreti- housing market behaviour through a system cal framework for investigating the subject of simultaneous equations. Advances in geo- that featured the analysis of housing sub- graphical information systems (GIS) technol- markets, the market process of neighbour- ogy will pave the way to delineating more hood succession and residential segregation. meaningful sub-market boundaries than are Fourthly, he identi® ed the economic, social, achievable through more arbitrary census- institutional and demographic forces that cre- tract geography. Goodman (1989) has ate neighbourhood change. Fifthly, he linked identi® ed several de® ciencies in the current neighbourhood decline and deterioration to treatment of neighbourhood dynamics that the spatial concentration of poverty. Sixthly, GIS and spatial analysis will help to re- he underscored the signi® cance of this under- solveÐ including failure to specify standing for formulating public policies to coef® cient structures over space and time, deal with deteriorated neighbourhoods. And failure to measure neighbourhood quality seventhly, he provided a remarkably com- properly, failure to deal effectively with spa- plete and robust framework for analysing tial autocorrelation, and lack of explicit char- neighbourhood change. This last contribution acterisation of neighbourhood effects. is the culmination of the others and will It has taken nearly 40 years to arrive at the prove perhaps Grigsby’ s most signi® cant. It threshold where the advanced theory of ur- provides a road map for future research on ban housing markets can be joined with em- neighbourhood dynamics that others may pirical evidence and spatial analysis to wish to follow. revolutionise our understanding and mod- What makes Grigsby’ s work still so fresh elling of neighbourhood change. Grigsby’ s today is that he never let the state of empiri- early formulation has helped to lead the way cal data and methods stand in the way of a to that threshold. Although it will be for frank exposition of the complexity of the others to cross it, future scholars will be process of neighbourhood change. Many indebted to Grigsby for his prescient ideas other analysts have restricted themselves to about neighbourhood dynamics and for his the available data and methods. But Grigsby passionate commitment to bringing housing developed a framework that draws together economic theory to bear on public policy. all the pieces of the neighbourhood-change puzzle. Until recently, it seemed impossible to formalise the framework in an empirically Notes speci® able model. Now it seems increasingly 1. The germs of Grigsby ’ s views were alread y possible that we will soon be able to ® t presen t in his 1959 works with Chester Rap- explanatory models. The day may not be far kin (Rapkin and Grigsby , 1959a and 1959b). Grigsby and Chester Rapkin examined the off when we can develop reasonably infor- demand for housin g in a racially mixed mative multi-period policy simulation mod- neighbo urhood . Though the work appeared els to capture the probable near-term course to be largely descriptive, it containe d a lot of of neighbourhood occupancy and housing pioneering concepts includin g the develop - changes. In many respects, the data, methods ment of the notion of a ª tipping pointº in racially changing neighbo urhoods ; it de- and economic theory are ® nally catching up scribed the conditio ns for and barriers to to Grigsby. Such a compliment cannot be stable inter-racial neighbourhoods; and it paid to many social scientists. conceptually undermined all of the empirical 1794 ISAAC F. MEGBOLUGBE ET AL.

studies of changing prices in racially chang- DOW NS, A. (1981) Neighborhoods and Urban ing neighbo urhoods which were in vogue at Develop ment. Washington, DC: The Brookings that time, thus providing for a stronger con- Institution. ceptual and theoretic al model of neighbo ur- FAINS TEIN, N. and FAINS TEIN, S. (Eds) (1982) hood change than the boundary line model. Urban Policy Under Capitalism. London: Sage 2. Although not highligh ted in his work, the Publishing. role racial discrimination plays in neighbo ur- FISHER, E.M. (1951) Urban Real Estate Markets : hood change is clearly an issue for ª The Character istics and Financing. New York: abandon ment of low-quality housin g is inti- National Bureau of Economic Research . mately tied to the proble m of race¼ the FISHER, E.M. and W INN ICK, L.B. (1961) A refor- housing dilemma of Negroes is a double mation of the ® ltering concept, Journal of proble m, for it relates¼ not only to income Social Science s, 7, pp. 47±85. but also to market segregationº (Grigsby, GALE, D.E. (1984) Neighbor hood Revitaliza tion 1963, p. 320). and the Post-industrial City: A Multinatio nal 3. He was quick to add that the process can also Perspective. Lexingto n, MA: Lexington Books. work in the reverse directio n. GALSTER, G.C. (1977) A Bid-rent analysis of housin g market discrimination, American Economic Review, 67, pp. 144±155. References GALSTER, G.C. (1987) Homeowners and Neigh- borhood Reinvestment. Durham, NC: Duke A LON SO, W . (1964) Location and Land Use. University Press. Cambridge , M A: Harvard University Press. GALSTER, G.C. (1992) Researc h on discrimination B AILEY, M. (1966) Effects of race and other in housin g and mortgage markets: assessment demographic factors on the values of single- and future direction s, Housing Policy Debate, family homes, Land Economics, 42, pp. 215± 3(2), pp. 639±684. 220. GALSTER, G.C. and M INCY, R.B. (1993) Under- B RADBURY, K.L., DOW NS, A. and SMALL , K.A. standing the changin g fortunes of metropolitan (1982) Urban Decline and the Future of Ameri- neighborhoods : 1980 to 1990, Housing Policy can Cities. W ashingto n, DC: The Brooking s Debate, 4(3), pp. 303±354. Institution. GOOD MAN, A.C. (1989) Topics in empirical urban B URGESS, E.W . and PARK, R.E. (Eds) (1925) The housin g research, in: R.F. M UTH and A.C. City. Chicago: University of Chicago Press. G OO DMAN (Eds) The Economics of Housing C LARK, W .A.V. (1986) Residential segrega tion in Markets , pp. 49±143. New York: Harwood American cities: a review and interpret ation, Academic Publishers. Population Researc h and Policy Review, 5, GRIGSBY, W.G. (1963) Housing Markets and Pub- pp. 95±127. lic Policy. Philadelp hia: University of Pennsyl- C LARK, W.A.V. (1988) Understan ding residential vania Press. segregation in American cities: interpre ting the GRIGSBY, W., B ARATZ, M., GALSTER, G. and evidence: reply to Galster, Population Re- M ACLENNA N, D. (1987) The Dynamics of search and Policy Review, 7, pp. 113±121. Neighbou rhood Change and Decline. Oxford: C LARK, W .A.V. (1989) Residential segrega tion in Pergam on. American cities: common ground and differ- GRIGSBY, W.G., W HITE, S.A., LEVIN E, D.U. et al. ences in interpret ation, Populatio n Research (1977) Re-thinking Housing and Community and Policy Review, 8, pp. 193±197. Develop ment Policy, 82±83. Department of C LARK, W.A.V. (1991) Residential preferen ces City and Regiona l Planning, University of and neighbo rhood racial segrega tion: a test of Pennsylv ania, Philadelp hia. the Shelling segrega tion model, Demography, HARRIS, C.D. and ULLMAN , E.L. (1945) The 28, pp. 1±19. nature of cities, Annals of American Academy C OLEM AN, R.P. (1978) Attitude s towards neigh- of Political Scienc e, 242, p. 7±11. borhoods: how Americans choose to live. HOOV ER, E. and V ERNON , R. (1959) Anatom y of a Working Paper No. 49, Joint Center for Urban Metropolis. Cambridge, MA: Harvard Univer- Studies, Cambridge , MA. sity Press. D AN IEL SON, M. (1976) The Policies of Exclusio n. HOYT, H. (1939) Structure and Growth of Resi- New York: Columbia University Press. dentia l Neighbor hoods in American Cities. D EAR, M. (1976) Abandoned housing , in: J. W ashington, DC: FHA. ADAMS (Ed.) Urban Policy Making and Metro- JARGOW SKY, P. (1993) Ghetto poverty among politan Develop ment, pp. 59±99. Cambridge, blacks in the 1980s. Unpublished paper, School MA: Ballinger . of Social Work, University of Texas at Dallas. D OW NS, A. (1973) Opening up the Suburb s. New JARGOW SKY, P. and BANE, M.J. (1991) Ghetto Haven and London: Yale University Press. poverty in the United States, 1970 to 1980, in: UNDERSTANDING NEIGHBOURHOOD DYNAMICS 1795

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