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Non-traditional effect: how does the LGBT community affect the value of real estate?

Where to look for real estate, which will definitely rise in price in 10–20 years? There are dozens of theories by which analysts are trying to predict price increases in different locations around the world. One of the most discussed ideas is how the concentration of representatives of the gay community among its residents influences the cost per square meter in urban areas. Editorial Tranio tried to understand the history of non-traditional issue.

Gentrification
The theory of the impact of the LGBT community on the value of real estate is associated with another phenomenon: “gentrification”. This term was first used in 1964 by the British sociologist Ruth Glass in her book London: Aspects of Change (Ruth Glass), describing the process by which more affluent residents of the capital began to inhabit areas traditionally occupied by representatives of the working class. .

In the 70s, scientists began to use the term “gentrification” in relation to New York. One of the most striking examples is the Williamsburg district in northern Brooklyn: after the closure of local factories, the ethnic composition of the residents began to change (as reported in the report of the New York Financial Controller Scott Stringer, the number of Latin Americans decreased by 16%) and the average income level of most residents, according to the NYU Furman Center, grew from 40–60 thousand dollars a year to 60–80 thousand and more. As a result, the rental price in Williamsburg increased more than anywhere else in New York: according to the NYU Furman Center, if the average rental rate growth from 1990 to 2014 in the city was 22.1%, then in Williamsburg rent increased by 78.7%.

As residents of New York say, the opening of new coffee houses is the first sign of gentrification of an urban area.
As the New Yorkers say, the opening of new coffee houses is the first sign of the gentrification of the city’s Patrick Tomasso / Unsplash
Gatefication
One of the first to speak about the influence of the LGBT community on the real estate market in the early 2000s was the talk of the American researcher Richard Florida. He came to the conclusion that the sphere of high technologies and the creative class are closely related, to which he attributed Bohemians and LGBT people. Therefore, in his opinion, the areas where representatives of this group clustered, developed economically faster, and housing prices there grew more strongly than in others. Florida formulated the 3T theory: technology, talent, and tolerance are the three conditions for the economic development of urban areas. His ideas caused a public outcry, and many experts subjected them to harsh criticism.

In 2000, five of the ten most high-tech regions of the United States entered the top ten regions where most LGBT people live
In 2000, five of the ten most high-tech regions of the United States entered the top ten regions where most LGBT people live: Josh Wilburne / Unsplash
However, the theory of Florida has found its followers. Thus, the British edition of The Guardian cites the results of research by sociologist Amin Ghaziani (Amin Ghaziani): housing in areas where the number of same-sex couples is more than 1% of the total population is 10% more expensive. However, according to Gaziani, the statement about the financial advantage of the gay community is a myth: “11.9% of same-sex couples in the US live in poverty, for traditional couples this figure is 5.7%.” According to The Guardian, until the 80s of the 20th century, the LGBT community was extremely reluctant to issue loans, so they had to look for cheaper real estate, which they could pay for without attracting a loan. These areas, for example, in the 50s were the world famous Soho in London today. Non-traditional buyers were also more flexible in choosing a place to live: childless same-sex couples did not have to look for areas with a good school nearby. Now, many LGBT people are forced to leave places where they have lived for several decades: the rent of housing in these areas is no longer affordable for them.

According to Amin Ghaziani, the income of same-sex couples raising children is 15 thousand dollars less than traditional families
According to Amin Ghaziani, the income of same-sex couples raising children is 15 thousand dollars less than traditional families Nick Karvounis / Unsplash
In June 2017, the American real estate portal Trulia published a study on how the LGBT neighborhood affects the cost of housing. Trulia analyzed the US census data and the OkCupid dating site to find out where the couples and singles who belong to the gay community live in. Thus, by calculating the “LGBT index” for each postcode, Trulia compared the results with the data on the cost of housing in different areas of American cities in the period from 2012 to 2017. It turned out that even in 2012, when the American real estate market was in crisis, the cost per square meter in areas where representatives of the gay community lived was 28.9% on average.

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