Selling the gay amenity

Vancouver real-estate agent Mark Kowall hasn’t heard of urban thinker Richard Florida.

Nor has he read Florida’s landmark book The Rise of the Creative Class: And How It’s Transforming Work, Leisure, Community, and Everyday Life (Basic Books, 2003). The former public-policy professor at Virginia’s George Mason University asserts in the book that American cities that attract gays, artists, and bohemians are prosperous because they are also the places where creative workers—from engineers to actors—want to live.

But when asked, Kowall agreed with a point Florida makes in a recent paper he coauthored with Charlotta Mellander, an economics graduate student.

In "There Goes the Neighborhood: How and Why Bohemians, Artists and Gays Affect Regional Housing Values", the authors attempt to prove that the presence of these types of people increases real-estate and housing prices. They argue that neighbourhoods populated by such residents see an increase in amenities that in turn make them more attractive for others to move into.

Noting that 80 percent of his clients are gay, Kowall related that his gay clients usually look for areas that have a “lot of upscale amenities”.

“They like coffee shops and restaurants within walking distance,” Kowall told the Georgia Straight. “They also like a building that is sort of on the leading edge as far as architectural design and things like that. I would say it’s more of a refined taste.”

Kowall also pointed out that very few gay couples raise children so they’re not usually seeking an area with schools and daycare centres.

“It’s more [a question] of proximity to shopping and entertainment, which is why the area between the West End and Yale[town] is popular,” he said. “Are they willing to pay more? Yes. They are able to, they are willing to if they get the right product.”

In their paper released last spring, Florida and Mellander wrote that artistic and gay populations improve the supply side of the equation by providing an “aesthetic-amenity premium”.

“Artists and bohemians are direct producers of amenities,” they state. “As selective buyers with an eye for amenity, authenticity and aesthetics, locations where artists, bohemians, and gays concentrate are likely to be highly sought after for their cultural amenities, desirable neighborhood character, and aesthetic quality of the housing stock.”

Aside from an “aesthetic-amenity premium”, gays and artists, according to the authors, also offer a “tolerance or open culture premium” that drives up demand in communities where they live.

“This tolerance or open culture premium acts on the demand side by reducing barriers to entry for human capital; increasing the efficiencies of human capital externalities and knowledge spillovers; promoting self-expression and new idea generation; and facilitating entrepreneurial mobilization of resources, thus acting on regional income and real estate prices,” Florida and Mellander say.

Former Vancouver city councillor Gordon Price teaches urban issues and regional-development concerns at SFU and UBC. Also a lecturer on land use and transportation, he maintained that “more significant” factors actually drive real-estate prices, such as immigration, incomes, and access to transit and job areas.

“Where you have a lot of people coming into a region with a limited supply that can’t be increased in the short-term, there’s going to be an upward pressure on demand, which I think is what we’re experiencing now,” Price told the Straight when asked to comment on the Florida-Mellander paper.

Citing the West End as an example, he also said that gay neighbourhoods in Vancouver tend to be in places where there is a large supply of one-bedroom apartments for rent, and that provide access to a job base, particularly in service industries such as tourism.

Price said that the Florida-Mellander paper has an “intuitive appeal”, but that there needs to be good academic work to test its thesis.

Such a test might actually be done in a Canadian setting. This fall, Florida will be moving to the University of Toronto, where he will serve as professor of business and creativity. He will also head the Centre for Jurisdictional Advantage and Prosperity at the university’s Rotman School of Management.