What Is Gentrification?

Gentrification is the transformation of a neighborhood from low value to high value. It is viewed as a process of urban development in which a neighborhood or portion of a city develops rapidly in a short period of time, often as a result of urban renewal programs, including real estate investment. This process is often marked by inflated home prices that bring in higher-income residents and displace a neighborhood's previous residents.

Understanding Gentrification

Gentrification is derived from the word "gentry," which historically referred to people of an elevated social status. In the United Kingdom, the term "landed gentry" originally described landowners who could live off of the rental income from their properties.

In its current context, gentrification was first popularized by the British sociologist Ruth Glass in 1964, when she used the term to describe the influx of middle-class people into London's working-class neighborhoods, displacing the former residents of those localities.

Numerous cities around the world experience the phenomenon of gentrification, which can have a direct impact on housing market dynamics. In most major cities, some neighborhoods that were previously less than desirable have morphed into vibrant districts with plush condominiums and offices, new coffee shops and restaurants, expensive retail storefronts, and various entertainment choices.

Gentrification Poses Complex Issues

Gentrification is a complex social issue with both benefits and drawbacks. Young families welcome the opportunity to buy reasonably priced homes in a safe community with sound infrastructure, and a wide choice of amenities and services. Local municipalities and governments also benefit from collecting higher taxes on rising property values and increased economic activity.

However, the neighborhood's original inhabitants—also families, as well as singles of various ages—are often displaced by rising rents and a higher cost of living from the very community that they helped build.

Why Gentrification Is Controversial

Gentrification has become controversial because, historically, it has come with a significant component of discrimination against racial minorities, women and children, the poor, and older adults. Even as it may bring about a reversal in the decline of a city, displacement caused by gentrification can force prior residents into poorer and relatively unsafe areas, with limited access to affordable housing, healthy food choices, and social networks. In turn, this can trigger increased stress levels and decreased mental health.

According to the Centers for Disease Control and Prevention (CDC), vulnerable segments of the population are at increased risk for negative health effects of gentrification, such as shorter life expectancies and increased rates of cancer, diabetes, and cardiovascular disease.

Displacement often leads to the exclusion of the original residents, particularly people of color, and a lack of government support—for low-income housing assistance, for example—as well as weakened social and community ties.

The Causes of Gentrification

An oft-cited study by the Brookings Institution Center on Urban and Metropolitan Policy highlights some of the factors that contribute to gentrification.

1. Rapid job growth in both a city's downtown core and along its periphery can foster gentrification.
2. Tight housing market dynamics play a critical role in causing gentrification and can vary from one location to the next. In the gentrification wave of the 1980s, for example, constrained housing supply was a feature of the San Francisco Bay Area, and relative home affordability was an issue in Washington, D.C.
3. Preference for city amenities can play a factor because certain demographic groups have traditionally preferred to live in urban neighborhoods because of attractions like cultural venues, a plethora of appealing restaurants and shops, vibrant street life, and population diversity. The presence of such features can help city planners to identify which neighborhoods would tend to gentrify.
4. Increased traffic congestion can contribute because as metropolitan populations rise and infrastructure ages, the resultant increase in traffic congestion and commute times, along with the consequent decline in quality of life, can contribute to gentrification.
5. Targeted public-sector policies play a role because many cities pursue revitalization policies—including tax incentives, public housing plans, and local economic development tools—that offer incentives for middle- and high-income families to move into distressed communities, or for original residents to upgrade their homes.

Challenging Long-Held Views

Some research challenges certain long-held views about the negative effects of gentrification. In a July 2019 paper, researchers at the Federal Reserve Bank of Philadelphia and the U.S. Census Bureau found that gentrification can create some important benefits for original residents, and few observable harms.

• The study found no evidence that original residents who moved out—including the most disadvantaged residents—relocated to observably worse neighborhoods or experienced negative changes in employment, income, or commuting distance.
• Many adult original residents stayed in their gentrifying neighborhoods and benefited from declining exposure to poverty and rising home values. Children also benefited from increased economic opportunity; some were more apt to attend and complete college.
• The quantity and composition of people moving into the neighborhood, not the direct displacement of previous residents, drove the most visible changes associated with gentrification.

The Bottom Line

In the 21st century, gentrification has rapidly spread across many cities in the world, for both good and bad. While there are positive outcomes to gentrification, such as a reduction in crime and the rehabilitation of spaces, it can adversely impact local populations, pricing them out of their homes as housing costs increase. Gentrification needs to be managed with care by local governments to ensure individuals across the entire income spectrum can reap the benefits.