Research Symposium on Gentrification and Neighborhood Change

Research Symposium on Gentrification and Neighborhood Change

Prospect Heights in Brooklyn is one of the many neighborhoods in New York City that are considered to be gentrifying.

A growing number of neighborhoods, mostly in major metropolitan areas, are currently experiencing gentrification. First coined by sociologist Ruth Glass in the 1960s, “gentrification” refers to a form of neighborhood change that occurs when higher-income groups move into previously low-income areas, potentially altering the cultural and financial landscape of the neighborhood. In many American metropolitan areas, rising demand for housing in gentrifying neighborhoods has exacerbated the affordability crisis, increasing the potential for displacing long-term, low-income residents and creating greater barriers to entry for new low-income residents looking to move to places of opportunity. On May 25, 2016, the Federal Reserve Bank of Philadelphia, in partnership with HUD’s Office of Policy Development and Research, New York University’s Furman Center for Real Estate and Urban Policy, and the Federal Reserve Bank of Minneapolis, hosted the Research Symposium on Gentrification and Neighborhood Change. Panelists discussed their research findings on the patterns and consequences of gentrification as well as policy responses to promote equitable development in neighborhoods undergoing rapid change.

Understanding the Patterns and Causes of Gentrification

Researchers find that gentrification over the past 10 to 15 years has been driven by a dramatic increase in the movement of higher-income, white, college-educated residents, primarily aged 25 to 44, into the urban core of metropolitan areas. At the same time, the mobility of lower-income minorities out of downtown areas has remained relatively steady since the 1970s.

Several factors contribute to gentrification, including changing residential preferences among higher-income households, changing conditions of low-income neighborhoods, public and private investment patterns, and housing affordability pressures. Jessie Handbury, assistant professor at the University of Pennsylvania’s Wharton School, points to increasing numbers of high-income workers who have reverse commutes — living in the city but working in the suburbs — as evidence that gentrifiers are motivated by a preference for downtown amenities

Another factor in the growing attraction of urban centers to gentrifiers, says Ingrid Gould Ellen, faculty director of the Furman Center for Real Estate and Urban Policy at New York University, is the decline in violent crime rates across major metropolitan areas. Ellen finds that white, college-educated households with members aged 25 to 44 years old are two to three times more sensitive to reductions in violent crime than other households when deciding to move into a central city.

Policymakers should be concerned with ensuring that everyone can benefit from new public and private investments, says Eric Belsky, director of the Division of Consumer and Community Affairs for the Board of Governors of the Federal Reserve System. Finally, although gentrification contributes to rising rent pressures, the rental affordability crisis that has been building since the late 1970s may itself be a primary driver of gentrification, explains the symposium’s keynote speaker, HUD Assistant Secretary for Policy Development and Research Katherine O’Regan. As affordability declines, higher-income households have looked to a broader set of neighborhoods than they once considered, including lower-income urban neighborhoods.

Research on the Consequences of Gentrification

Among the potential consequences of gentrification, the displacement of longtime low-income residents and small businesses is a top concern for policymakers. Much of the research, however, has demonstrated little evidence of large-scale direct displacement of residents. Columbia University professor Lance Freeman explains that because low-income households have higher mobility rates, the link between gentrification and mobility is not particularly strong.

Although widespread resident and small-business displacement does not always occur as a neighborhood gentrifies, the benefits of new investment into a neighborhood are not always equally distributed. Lei Ding, community development economic advisor at the Federal Reserve Bank of Philadelphia, finds that the risk of vulnerable residents ending up in neighborhoods with even lower incomes increases. Using credit scores as a proxy for the financial health of residents, Ding’s research also shows that although credit scores for all residents of gentrifying neighborhoods improved, the improvement was smaller for less-advantaged residents. In addition, the financial benefits were available only for those less-advantaged residents who could remain in place. Vulnerable residents who were displaced saw their credit scores decline significantly. Zaire Dinzey-Flores of Rutgers University notes that not all subpopulations benefit equally; in fact, those who are displaced face worse outcomes.

Policy Approaches to Gentrification

The research findings on the patterns, causes, and consequences of gentrification point to both challenges and opportunities for policymakers. Because gentrification can occur without direct displacement, Freeman suggests that policymakers should focus on limiting its disruptions and amplifying any benefits to long-term residents, and Dinzey-Flores adds that strategies that keep low-income residents in these neighborhoods without an increased rent burden are paramount. According to Jeffrey Lubell, director of housing and community initiatives at Abt Associates, a multipronged response, including preservation, protection, inclusion, revenue generation, incentives, and property acquisition, should be targeted to specific neighborhoods and properly encourage the preservation and expansion of affordable housing. He considers the present moment to be a “critical inflection point to shape the ways our cities grow,” for which the right policies can be a positive force but the wrong ones will likely lead to resegregation and inequality.

At the federal level, O’Regan highlights three recent HUD recent initiatives aimed at increasing the stock of both subsidized and unsubsidized affordable housing to relieve some of the pressures associated with gentrification. First, the Federal Housing Administration reduced multifamily insurance premiums for mixed- and low-income housing developments that are energy efficient, which could spur the rehabilitation of an additional 12,000 housing units each year. Second, the Rental Assistance Demonstration program taps private capital to keep some of the 10,000 public housing units that are lost every year to disinvestment and disrepair by transferring units to permanently affordable project-based Section 8 contract financing. Third, the Affirmatively Furthering Fair Housing rule requires meaningful community engagement through an Assessment of Fair Housing for any jurisdiction receiving HUD funding, which may be a mechanism to incentivize and support local action for securing affordable housing in gentrifying areas.

HUD’s public housing and Housing Choice Voucher (HCV) programs may also help residents stay in gentrifying neighborhoods without rent burdens, allowing them to enjoy some benefits of gentrification.

Perspectives From the Practitioners: Best Practices and Case Studies on Equitable Development in Neighborhoods

At the local level, municipal governments and nonprofits grapple with rapid neighborhood change, seeking equitable outcomes for long-term residents. In Philadelphia, the development boom in Center City has resulted in rapid price appreciation for housing, says Beth McConnell, policy director of the Philadelphia Association of Community Development Corporations (PACDC). PACDC works for equitable development by strengthening inclusive communities with resident engagement and education, preserving quality affordable housing through the repair of existing mixed-income properties, expanding economic opportunities in neighborhood corridors with programs such as storefront improvements for small businesses, and attacking blight through consolidated public ownership of land and acquiring delinquent properties. Recognizing the potential for displacement once the 11th Street Bridge Park is completed in Washington, DC, the Local Initiatives Support Corporation, DC (LISC DC) has contributed $50 million to the Elevating Equity Initiative to ensure equality in development around the park, said Oramenta Newsome, vice president of LISC DC. Similarly, the city of Saint Paul, Minnesota, has been actively trying to mitigate displacement along the METRO Green Line, which connects the central business districts of Minneapolis and Saint Paul, as it continues to expand. The city has also developed a 10-year strategic plan with two dozen organizations to invest in the production and preservation of affordable housing. Four years into the program, the city has already reached its baseline goal of preserving or adding 2,540 affordable units.

Inclusive, Equitable Neighborhoods for All

Gentrification and neighborhood change are, and remain, sensitive topics for residents, policymakers, and researchers. However, using the research to explore the impetus behind the mobility decisions of gentrifying households and the resulting outcomes for long-term residents is important for understanding how, where, and when to target policy actions appropriately.

For a more expansive and detailed discussion of the event, please see the Research Symposium on Gentrification and Neighborhood Change Summary Report.