Gentrification: Causes, Effects and Responses

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Gentrification is a transformation process that typically occurs in urban neighborhoods when higher-income people move in and displace existing lower-income residents. The arrival of wealthier people leads to new economic development and an increase in property values and rents, which often makes housing unaffordable for longtime residents. Gentrification is a type of neighborhood change, a broader term that encompasses the physical, demographic, social, and economic processes that affect distinct residential areas. Though gentrification has been associated with some positive impacts such as urban revitalization and lower crime rates, critics charge that it marginalizes racial and ethnic minorities and destroys the character of urban neighborhoods.

Analysts often note that gentrification is easy to recognize but difficult to quantify or measure. To determine gentrification rates, researchers have examined changes in residents’ median income, education levels, racial and ethnic background, and rates of homeownership. The visible signs of gentrification may include a reduction in vacant housing and an influx of amenities that appeal to higher-income residents, such as specialty stores, cafés, art galleries, and entertainment venues. Though cities throughout the United States have experienced increases in gentrification rates, the phenomenon has been felt most acutely in cities with large populations. In the 2010s the cities that experienced the most intense gentrification included San Francisco, California; Denver, Colorado; Boston, Massachusetts; Miami, Florida; New Orleans, Louisiana; and Austin, Texas.

PROS AND CONS OF GENTRIFICATION

Pros

  • Urban renewal projects attract higher-income residents and new businesses to an area. Their presence increases a city’s tax base.
  • Gentrification has been linked to lower crime rates, economic growth and stabilization, and increased property values.
  • Long-term residents who can remain in gentrified areas report improved credit scores, reduced environmental health risks, and new employment opportunities.

Cons

  • As property values rise, rents and property taxes also increase. These increases can make housing unaffordable for long-term residents and small businesses.
  • Gentrification frequently results in the displacement of older residents, minority communities, and low-income families. Members of these demographic groups also face unique challenges and vulnerabilities, whether they are forced to move out of or remain in a recently gentrified area.
  • Long-term residents have reported a loss of neighborhood character, increased costs for local goods and services, and conflicts with incoming residents.

Many different factors can accelerate the gentrification process. Some of these factors relate to changes in the supply of housing and jobs in urban centers. During the first half of the twentieth century, industrial jobs fueled economic growth in most large US cities. Many people chose to live near city centers in close proximity to their work, causing urban property values to increase.

In the 1960s and 1970s, however, manufacturing industries shifted away from inner cities and many people abandoned urban centers for low-density, suburban housing developments on the periphery. With this departure, cities lost many affluent and middle-class residents who had contributed substantially to the local economy and tax base. Most of these migrating residents were white families, leading the exodus to be referred to as white flight. Many residential neighborhoods fell into disrepair, became less desirable, and experienced declines in property values. Decades later, investors seized upon opportunities to purchase distressed properties at low costs and develop the surrounding areas. As these urban renewal efforts attracted new residents, gentrification began to appear.

Since the turn of the twenty-first century, an increasing number of young, educated, upwardly mobile professionals have rejected the long commute from distant suburbs in favor of living in downtown areas to be close to work. Many young, dual-income couples have begun waiting longer to start families and have sought the convenience, diversity, and cultural attractions of urban living. In some cities, gentrification gives areas a specific character that attracts certain groups of new residents such as artists, high-tech workers, families, or affluent members of the LGBTQ+ community. The LGBTQ+ community includes lesbian, gay, bisexual, transgender, and queer people and others with a broad range of sexual orientations and gender identities.

Government policies are another factor that can increase the prospect of gentrification. Tax incentives for first-time homebuyers or favorable mortgage terms for people who purchase homes in low-income neighborhoods can encourage investment in urban areas. Local laws that limit new construction or support the preservation of historic homes or architecturally distinctive buildings can also foster gentrification. Economic development initiatives such as improving public transportation or building convention centers can also trigger the gentrification process.

As part of the Tax Cuts and Jobs Act of 2017, the federal government introduced a new tax designation for distressed urban neighborhoods, identifying them as Qualified Opportunity Zones (QOZ). The designation allows investors in these areas to defer taxes and qualify for other benefits. Some observers have expressed concerns that the QOZ designation would lead to disruptive gentrification. Research conducted in 2020 by the National Community Reinvestment Coalition (NCRC) found that QOZs experienced higher economic inequality, lower incomes, lower home values, and lower homeownership rates than other areas, demonstrating a need for intervention.

While the NCRC acknowledged that these areas did not yet show profound signs of gentrification or resident displacement, it warned that investors may abuse the designation as a tax haven while providing no benefit to local residents. Further, the NCRC notes, many QOZs exist alongside gentrifying areas and are likely to experience spillover gentrification in the future.

Researchers have also identified climate change as a driver of migration and social injustice. Climate gentrification serves as an umbrella term for the ways in which climate change can affect residential demographics. For example, climate gentrification occurs when an influx of wealthy residents move into areas less affected by climate change, leading to the displacement of local populations. However, climate gentrification also occurs when climate adaptation plans and resilience planning strategies allocate disproportionate amounts of public resources to protect wealthier communities, further increasing economic inequality.

The long-term effects of the novel coronavirus disease (COVID-19) pandemic on real estate remain unknown. However, many small businesses failed to survive economic slowdown, while many vulnerable residents suffered losses that caused them to lose their homes or leave their communities. Further, the pandemic led some wealthy residents to leave cities for more spacious settings. Despite these vacancies, rents did not fall substantially and, in some cases, rose. Further, large developers were better equipped to survive the financial disruptions caused by residential eviction moratoriums than small landlords.

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Gentrification can provide many benefits, both to residents of the local area and to the economic growth of the city. Gentrifying neighborhoods typically experience an increase in property values and a surge in new business development and job creation. These changes can increase the city’s overall tax revenues, allowing for improvements in city services and infrastructure. An influx of higher-income residents has also been associated with a decline in poverty and crime rates, making gentrifying urban neighborhoods safer and more desirable. Gentrification also involves significant urban renewal and revitalization efforts including the preservation of historic buildings and new development.

Common detrimental effects of gentrification include the displacement of long-term residents, as gentrification leads to rising rents, increasing property values, and higher taxes that make housing unaffordable. In many cases, the displaced residents are older, less educated, low-income, and members of minority populations. Renters are particularly vulnerable to these neighborhood changes, as they are either priced out or evicted when the buildings are sold or redeveloped. Though homeowners can sometimes take advantage of rising real estate prices to sell at a profit, they often find other housing opportunities limited and must relocate outside of the neighborhood. Commercial businesses may also be forced to relocate or close due to rent increases or pressure from new competitors—including large chain businesses—that cater to higher-income arrivals.

When longtime residents are displaced from a neighborhood, their health and well-being can be adversely affected. Relocation can cause people to lose access to supportive social networks, causing higher stress levels and a decline in mental health. Those who move to affordable but disadvantaged areas may experience higher rates of violence and crime, lower-quality schools, limited transportation options, and exposure to environmental hazards. They are also less likely to have access to healthy food sources, playgrounds, and exercise facilities. Research conducted by the US Centers for Disease Control and Prevention (CDC) has shown that populations displaced by gentrification face health risks such as higher infant mortality, lower life expectancy, and increased incidence of asthma, diabetes, heart disease, and cancer.

For established residents who remain in gentrifying neighborhoods, the transformation process is often a source of tension and political conflict. As wealthy, usually white newcomers commit resources to upgrading an area they view as neglected or rundown, existing lower-income residents, particularly minorities, may resent the changes and feel marginalized or excluded in their own neighborhoods, resulting in conflict along racial or socioeconomic lines and raising issues of social justice. When gentrification changes the physical appearance, racial and ethnic composition, and income profile of a neighborhood, its fundamental character undergoes a transformation as well.

What do you Think?

  • For what reasons is gentrification more common in US cities with large populations than in small- or medium-sized cities?
  • In your opinion, do the potential benefits of gentrification outweigh concerns about its detrimental effects? Why or why not?
  • How, if at all, should the federal government change its urban renewal policies to discourage gentrification and promote smart growth strategies? Explain your answer.

Residents, policy makers, and developers have sought and sometimes collaborated to address concerns about gentrification and try to mitigate its negative effects, particularly displacement. Some neighborhood groups have resisted gentrification through direct action such as organizing protests to prevent residents from being evicted from their homes. In some cases, community members designate an area as a displacement free zone (DFZ) and notify landlords and developers that efforts to evict existing residents will be met with resistance.

Researchers in Seattle identified four effective approaches communities can implement to most effectively resist gentrification. These include providing clear messaging that the community opposes gentrification, building partnerships between stakeholders, creating and maintaining information-sharing resources, and working toward community ownership of real estate. In California, for example, programs like the San Francisco Anti-Displacement Coalition and the Anti-Eviction Mapping Project share data to identify predictive factors of gentrification such as changes in zoning laws and street parking policies and shifts in rents, property values, and demographics.

Some developers and policy makers have embraced an approach to urban development commonly referred to as smart growth. Smart growth strategies consider the effects of development on public health, economic equality, and the environment. Smart growth encourages the reuse of existing structures, diversity in housing types, and the preservation of natural resources. Further, smart growth aims to ensure a supply of affordable housing. Many federal agencies have contributed to developing smart growth strategies including the CDC, the Environmental Protection Agency (EPA), and the Department of Housing and Urban Development (HUD).

Despite the claims of smart growth proponents, anti-displacement activists warn that these types of approaches to urban development and renewal fall far short of protecting longtime residents and ensuring housing affordability. In Washington, DC, a city that experienced one of the highest gentrification rates in the early twenty-first century, activist groups linked the use of planned unit developments (PUDs), which allow developers to exceed the limits of zoning restrictions, to increased resident displacement. Groups have filed several appeals to prevent such projects. Though such challenges have not consistently prevented projects from moving forward, they have had success at stalling developments and making such projects less desirable to investors.

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