The Gentrification Machine
Planting the seeds for neighborhood change
This story appears as part of “York & Fig,” a special series about gentrification from Marketplace’s Wealth & Poverty Desk:
There is a familiar storyline you hear in lots of gentrifying neighborhoods about how all the change got started. At some point it usually involves a cute little café. In Highland Park, a neighborhood in northeast Los Angeles, it’s a place called Café de Leche, which opened its doors in 2008.
The café has become a favorite meeting place for newcomers, often found sipping single-origin coffees or horchata lattes while hovering over laptops.
It’s also become a favorite target of disgruntled old-timers. They have tagged the café with words like “gentrifier,” posted symbolic “eviction notices” to its door, and infiltrated those laptops using an anonymous Wi-Fi network with a name that directed an expletive at hipsters.
“I don’t know,” Anya Schodorf said with a sigh, about the frustrations directed at the café. She owns it with her husband, Matt. “It’s just embarrassing and not good.”
Matt, originally from Ohio, and Anya, originally from Nicaragua, say they get why some Highland Parkers might feel uncomfortable with how fast the neighborhood is changing. But the idea that their little café started it all?
“We just opened a coffee shop,” Matt said. “There was no master plan.”
And despite all the storylines to the contrary, it would be improbable for the Schodorfs to have single-handedly constructed a master plan for gentrifying Highland Park, while simultaneously starting a small business in a recession and nearly losing their home to foreclosure in the process.
Which is why this story is not about Café de Leche, or any master plan of theirs. Instead, this story is about the much larger but much less visible network of professionals who surround Café de Leche, and who do make changing neighborhoods their business — a very lucrative one.
A Seed of Transformation
Let’s start with a professional house flipper named Steve Jones, known around here as the “Hipster Flipper” of Highland Park. He is open about the fact that Café de Leche was part of his master plan.
“When I first started doing work here in this area — the only thing that was really around was Café de Leche,” Steve explained recently. “And I said to those guys, ‘Listen, you can not go out of business. If you go out of business — I’m screwed.’”
To understand why, you need to know a little more about Steve Jones’ business, Better Shelter. Since the housing crash, Steve, who lives in a wealthier neighborhood across town, has worked with investors to buy more than 50 houses in Highland Park. Most of them were foreclosures. In a working-class place like this one, foreclosed houses were not hard to find back then.
“Where somebody might see urban blight and decay, I was like ‘Oh my gosh — look at all these homes I could do!’” Steve said. “I saw opportunity.”
Opportunity, that is, to make a lot of money. Steve buys these houses, guts them, renovates them with Dwell Magazine touches, and then sells them at a nice profit.
Steve took me to one house he did — a “reimagined” Spanish-style, white stucco with a mint green door, red-tile roof and big arched windows.
I asked him how much he made on this one, and he couldn’t remember the details, so he looked them up on a real estate app on his phone. When he brought up the record, he shook his head, as if he still couldn’t quite believe it. He bought it for $280,000, he tells me, put another $140,000 or so into the rehab, and sold it for — now he’s laughing — “$530,000! Oh my gosh!”
But to sell houses for that much, Steve knew he needed people who could afford to pay that much. People already living in Highland Park, for the most part, could not. So Steve needed to draw wealthier people from other areas. And he worried that the “urban blight and decay” in Highland Park that he saw as an opportunity might scare off the kinds of buyers he was courting.
Highland Park “might be a little bit of a shock to some people,” Steve said. “And so one of the things for us was to show this home buyer: Look, you can live in this neighborhood.”
And that is where Café de Leche fit in.