Understanding Gentrification and Who It Impacts

Gentrification happens when wealthier demographics move into low-cost neighborhoods, bringing new businesses and tax revenue — plus high prices that may displace existing residents. It is a controversial issue with no single cause or solution, and experts continue to debate its complexities.

Cities are living, breathing entities. Residents come and go. Local economies rise and fall. Neighborhoods are trendy one day and then resigned to obscurity seemingly the next. 

But sometimes, the area that becomes the next big thing is no accident. When hip coffee shops and boutique clothing stores move in, it may be a result of gentrification.

What Is Gentrification?

Gentrification is a process through which wealthier individuals move into neighborhoods with low living costs — often occupied by working-class or minority residents — and transform those localities into high-value, sought-after areas. 

Sociologist Ruth Glass coined the term in her 1964 book London: Aspects of Change, borrowing from the word “gentry,” which refers to the British upper class. 

Both large and small areas can undergo gentrification, which is often swift. Gentrification may increase home prices and displace original residents, but it can also have positive effects. It is a complex topic that deserves a deeper dive. 

Understanding Gentrification

Ruth Glass wrote the book on gentrification in London, but this phenomenon happens in cities globally, from New York to Lisbon, Portugal. No matter where it occurs, it has similar causes and benefits. 

Causes of Gentrification

Both public policy and natural human behavior can cause gentrification. Some of the most frequently cited causes include:

• Urban renewal: City-led initiatives to upgrade aging and inadequate infrastructure. Urban renewal programs sometimes involve the city seizing and demolishing buildings.
• Urban regeneration: A more holistic initiative to improve land use, livability and “sense of place” for existing residents. Urban regeneration is often a public-private partnership.
• Rapid urban growth: When a city attracts new industries and jobs, it also attracts new workers — and those workers need an affordable place to live.
• Tax incentives: Tax breaks and other economic incentives that promote growth in poor neighborhoods can bring new populations into those areas, displacing original residents.
• Rising housing prices: Tight housing markets price out young people and families, who then seek out more affordable neighborhoods. 
• Traffic congestion: Increased commute times correlate to decreased quality of life and may encourage people to move into affordable areas closer to the city.

Benefits of Gentrification

Gentrification isn’t necessarily all bad. Both cities and individuals can benefit from: 

• Increased property values: As a neighborhood becomes more desirable, competition for housing increases and prices go up. Existing residents will see property values rise.
• New businesses and jobs: Wealthier demographics provide customers for restaurants, cafes and shops, which in turn provide jobs for residents.
• More tax revenue: Higher property values and new businesses lead to more tax revenue to reinvest in the neighborhood.

The Controversy Behind Gentrification

Gentrification has benefits and drawbacks. It can cause friction and conflict, furthering economic divisions. And it doesn’t affect everyone equally. 

So, what does gentrification mean for existing residents? And how can we combat the negative effects?

Complex Issues Posed by Gentrification

Gentrification is historically a controversial and complex topic. Some of the most common arguments against it include: 

• Gentrification can disproportionately affect communities of color, the poor and the elderly.
• Residents who move may need to move farther away and to less-desirable neighborhoods. 
• Landlords and property owners may use “renovictions” to evict residents under the guise of renovating a property. 
• Government programs such as low-income housing assistance may become unavailable to existing residents.
• An influx of new residents can weaken existing social ties and change a community’s culture.

Gentrification doesn’t happen naturally. It is a result of embedded, structural issues — issues that cities can address. 

Arguments Around Gentrification

As rent and living costs skyrocket around the country, the topic of gentrification is heating up — and some studies and experts argue that our long-held beliefs may not be true. 

• “The people who move into the area are to blame”: Some experts argue that blaming gentrification on the artists and college-educated young people and families that move into the neighborhoods is misplaced. They contend the real issue is wealthy landowners and homeowners who block affordable housing developments in other areas, plus the property owners and developers who have financial capital in the gentrified neighborhood — and the ability to evict existing residents.
• “Gentrification displaces residents”: A 2019 study by the National Bureau of Economic Research (NBER) found “no evidence that gentrification is associated with meaningful changes in mobility rates.”
• “Gentrification negatively affects existing residents”: Another 2019 study from the Federal Reserve Bank of Philadelphia found that “many original resident adults stay and benefit from declining poverty exposure and rising house values.” 

What does gentrification mean for today’s city dwellers? While historically it may have resulted in displacement and negative outcomes, it is possible that cities may be now creating accommodative policies that reduce those effects. 

Final Thoughts: Whom Does Gentrification Affect? 

Gentrification affects the original residents of a neighborhood the most. While increased development and higher property values can benefit them, they may also lose their sense of place as the neighborhood changes. 

Gentrification also affects the populations that move into neighborhoods: They enjoy shorter commutes, urban amenities and affordable housing, at least until rent and housing prices rise. 

Lastly, gentrification affects the city, providing more tax revenue and a “makeover” that can improve its image. Still, the benefits of gentrification likely don’t affect everyone equally, and any drawbacks are concentrated on existing residents. One thing is clear: The book on gentrification is far from closed.

Top Takeaways

• Gentrification is a process of urban development that quickly changes low-income, working-class neighborhoods into high-value, desirable areas. 
• Public policy, collective behaviors and individual preferences can all cause gentrification. 
• Gentrification can increase property values and tax revenue, but it may also displace existing residents.
• Gentrification is ultimately a result of structural issues and housing prices, and not necessarily the fault of artists, college graduates and young people who often move into gentrifying areas.

(Reporting by NPD)