50 Years of PD&R's Gentrification Research

50 Years of PD&R's Gentrification Research
By Jason Bladen and Peter Mateyka

Important questions about the equity of outcomes for low-income households from neighborhood investment are central to debates over gentrification. Editorial credit: James Andrews1 / Shutterstock.com

The term "gentrification" originated in the 1960s to describe a process of neighborhood change in which middle- and higher-income households moved into working-class neighborhoods in London, causing an influx of investment in these neighborhoods but also displacing the original working-class residents. At the time, the concept of gentrification had not received significant attention in the United States, whose central cities had been undergoing a process of disinvestment for several decades. By the mid-1970s, however, this situation began changing as the central areas of some large U.S. cities began to see the return of high-income households and investment — a trend that has continued to the present day. Understanding the role of gentrification in transforming neighborhoods, towns, and cities has become essential for creating successful housing policy. Scholarship from the Office of Policy Development and Research (PD&R) has been critical in advancing debates about the conceptualization and measurement of gentrification, but PD&R's most significant contribution has been understanding the effects of gentrification on displaced residents. Important questions about the equity of outcomes from neighborhood investment are central to debates about gentrification and how HUD fulfills its mission "to create strong, sustainable, inclusive communities and quality, affordable homes for all [emphasis added]." This article summarizes PD&R's exploration of gentrification since its founding in 1973 through its reports and other publications.

Gentrification and the Legacy of Urban Renewal

Researchers have long debated how to define and measure gentrification, identify the causal forces that spur gentrification, and determine the range and severity of impacts that gentrification has on low-income households. PD&R's more direct contributions to this work occurred mostly after it launched the journal Cityscape in 1994, but commonalities exist that tie PD&Rs earlier work to its later work on gentrification. Central to much of the debate over gentrification is concern that the neighborhood revitalization that increased neighborhood investment creates does not benefit all residents; such revitalization frequently comes at the expense of lower-income households. From its start, PD&R has wrestled with the question of how the revitalization (or "renewal," or "renovation," related, but distinct concepts) of urban neighborhoods can be accomplished equitably, benefiting both lower- and higher-income households and businesses. This focus was apparent in two early PD&R-funded studies through the Real Estate Research Corporation (RERC). One study focused on reviewing the impact of federal urban renewal programs, and the second study focused on locally initiated neighborhood preservation studies. These studies were intended to determine how successful federal policies had been in countering neighborhood decline, which had been a concerning trend in larger cities for several decades, and recommend strategies for future efforts. In 1975, HUD/RERC held workshops and prepared several reports to disseminate the results.

Urban renewal was a controversial federal policy that resulted in the demolition of old and blighted housing and other neighborhood structures in inner cities and the displacement — often permanent — of lower-income households, many of which were headed by Black residents. The policy began with Title 1 of the Housing Act of 1949 and had largely ended by 1973, when PD&R was founded. Summarizing the results of the urban renewal study, Anthony Downs, then the president of RERC, argued that urban renewal "sought to grapple with a super-complex problem almost entirely through improving housing and other structures." The study results suggested that urban renewal, particularly in the program's early years, failed to fully remove blight from many downtown areas, and when the program did remove blight, it did so at the expense of lower-income households, who were displaced to other areas of the cities. When viewed in the aggregate, urban renewal did have some positive outcomes; the program was successful at strengthening the economies of many downtown areas, although it achieved this goal by replacing lower-income households with higher-income households rather than by improving the housing conditions of low-income households. Downs proposed addressing this inequity by having federal and local governments counter neighborhood decline by targeting assistance in the form of jobs, job training, funding, and enhanced political power to low-income neighborhoods and households.

PD&R's Early Work on Understanding Gentrification and Displacement

A PD&R report on displacement published several years after the RERC studies focused primarily on the potential unequal outcomes of different types of neighborhood investment and highlighted the negative outcomes of disinvestment. In the late 1970s, researchers noticed that longstanding population declines in some central cities were starting to reverse as more affluent households began relocating to older urban neighborhoods in downtown areas. Rather than federal programs stimulating redevelopment in declining cities, investment in the form of new middle- and high-income residents and private capital was returning to some large cities. Researchers and policymakers began using the term "gentrification" to describe the neighborhood changes that this reinvestment brought to cities.

As researchers speculated on a back-to-the-city movement, concerns that neighborhood revitalization would cause housing prices to spike and displace low-income residents became a focus of public policy. Section 902 of the Housing and Community Development Amendments of 1978 mandated that "involuntary displacement of persons from their homes and neighborhoods should be minimized" and required HUD to write a report with recommendations for national policy. The resulting report, although not specifically using the word "gentrification," was motivated by concerns about the unequal outcomes of revitalization:

The benefits resulting from the renewed interest of middle- and upper-income households in older urban neighborhoods in a number of cities are clear. But the question of whether these benefits are at the expense of those least able to protect themselves has led to concern about displacement resulting from reinvestment in urban areas.

The report defined "displacement" as an involuntary move driven by circumstances beyond the household's control. One of the report's key assertions was that displacement can result from direct public actions, such as urban renewal policies, or indirect public or private action, such as neighborhood revitalization or neighborhood disinvestment and abandonment. Using data from the 1976 Annual Housing Survey (now the American Housing Survey) on respondents' reasons for moving, the report found that although approximately 500,000 households were displaced annually, most of this displacement was indirect and stemmed from private-market activities. The primary reason for displacement was housing abandonment and disinvestment rather than reinvestment from higher-income households and private businesses. Later research would employ more detailed methods to identify those displaced by reinvestment; this report, however, represented an early attempt to measure the impact of gentrification on low-income households.

This displacement work by PD&R ties together a phenomenon of neighborhood decline in cities, urban renewal policies, and neighborhood reinvestment that often is called "gentrification." The implementation of policies meant to stimulate revitalization, market forces, or public and private disinvestment can result in unequal impacts for their constituents. PD&R's research in the 1980s and early 1990s, although not focused directly on gentrification, continued to evaluate how effectively government programs revitalized distressed cities and neighborhoods and generated equitable outcomes for all residents. These results were sometimes mixed, because federal policies became more decentralized and harder to evaluate, but a clear trend exists showing that HUD had learned from past issues and adapted its policies and strategies to make its programs more equitable for low-income households. These new strategies included the Urban Development Action Grant Program, which provided funds to economically distressed cities to stimulate private investment; the Community Development Block Grant program, which provided grants to communities to offer housing and employment opportunities to low- and moderate-income residents; and the HOPE VI program, which sought to revitalize public housing developments and create mixed-income neighborhoods. HOPE VI, initiated in 1992, had a goal that was similar to that of the earlier urban renewal programs — revitalizing older housing and downtown areas — but it placed significantly more emphasis on creating equitable outcomes for low-income households.

Gentrification Through the Lens of PD&R's First Research Journal

By the time PD&R launched Cityscape in 1994, the passage of time had given researchers clarity about the effects of the urban renewal and HOPE VI initiatives and how those efforts influenced the more recent movement of more affluent households and investment to central cities. Researchers were beginning to recognize the growing and contested effect of higher socioeconomic status (SES) households on inner city neighborhoods. Cityscape operated with a series of guest editors until 2007, when Mark Schroder became its permanent editor. The guest editors were responsible for recruiting other contributors and largely drove symposium topic selections; however, the initial guest editors primarily were interested in other housing topics such as urban environmental policy, promoting homeownership, and employing regional cooperation and governance to solve metropolitan issues. Initially, gentrification received scant attention beyond its relationship to urban economic growth. Future articles, however, generally attempted to dissect gentrification along the lines of its determinants, benefits, and costs as well as local and federal government responses.

Advances in Understanding the Determinants of Gentrification

Regardless of their findings on the perceived benefits and costs of gentrification, researchers submitting articles to Cityscape have advanced the community's understanding of its determinants. After the 2016 Research Symposium on Gentrification and Neighborhood Change, which was sponsored by the Federal Reserve Banks of Philadelphia and Minneapolis, the Furman Center for Real Estate and Urban Policy at New York University, and HUD, Cityscape devoted an issue to sharing a selection of papers from the symposium. Hwang and Lin (2016) noted that gentrification since 2000 differs from the gentrification of the 1970s and 1980s, which was slower and limited to the central business districts of a few large cities. Declining crime rates and a rising demand for center city amenities are also driving gentrification in patterns that differ from those of the past. Furthermore, even if in-movers interact little with existing lower-SES residents, changing attitudes about diversity may "reduce the disamenity of living near" those groups. Hwang and Lin also identified householder age as a factor driving the newer wave of gentrification because young, childless, and educated individuals were drawn to urban life in ways that older households with children were not.

Benefits Associated With Gentrification

For some, framing gentrification as a beneficial force may be a controversial position, and to some extent, perhaps it should be. Nevertheless, an important component of gentrification is the renovation of previously blighted or less desirable housing stock. As home values in central cities appreciate, the tax base for those cities, as well as the ability of those cities to provide needed services for their constituents, also increase. The renewed housing stock accommodates excess demand for housing that limited suburban supplies cannot. Although gentrification often is depicted as white, higher-SES residents moving into disinvested central-city neighborhoods, minorities with the financial ability and opportunity to relocate are just as likely to gentrify these neighborhoods and thus benefit from their investments in inner city locations. In some cases, denser, mixed-use developments arise in these neighborhoods, which helps them become more walkable or accessible to public transportation. Local businesses aren't necessarily displaced by these more affluent neighbors, and when lower-income residents are able to stay in the neighborhood, they can benefit from living in an area that is safer and has more amenities and job opportunities. Finally, some owners who sell their properties to developers likely realize economic gains from these transactions, which may offer them access to new possibilities.

Downsides of Gentrification

For most people, however, gentrification does not come without costs. Some lower-income residents who are displaced may be difficult to track because "measures of displacement generally focus on exit from a unit, rather than exit from a neighborhood, which can tell an incomplete story on the varying pressures of low income households." Although existing research suggests that any residential displacement is modest at best, the research may be using an inappropriate time horizon that does not capture the departure of the most vulnerable residents. Even in neighborhoods in which displacement is not a significant effect of gentrification, rental cost burdens and property taxes in the area often increase substantially, which can make paying nonhousing expenses more difficult for lower-income residents. For some, the benefits associated with gentrification may outweigh the costs; however, moving is also an expense, and the cost burden of relocation often falls on those least equipped to absorb it. In addition, evidence suggests that those who move face worse financial health outcomes than those who are able to stay. One nonmonetary cost associated with remaining in a gentrifying neighborhood is within-neighborhood segregation, or microsegregation. Some research indicates that in-movers have little in common with existing residents even when they occupy the same mixed-income housing structure. In addition, in-movers often don't share the same political views, culture, or preferences for amenities as existing residents do, which can create tension, resentment, and a sense of loss. When businesses exit a gentrifying neighborhood, those vacancies often take more time to fill, and the new businesses that enter the neighborhood often don't cater to lower-income residents.

Local and Federal Responses to Gentrification

Neighborhood organizations, local governments, and HUD have implemented and advocated various strategies to minimize the perceived costs of gentrification and maximize the benefit of new economic development. For example, community organizations in Chicago took steps they considered to be "antigentrification," such as removing "bad owners, managers, and buildings, and rehabilitating…abandoned buildings, largely for low- and moderate-income residents." Another community in New York City pursued landmark designations to slow the rate of new development in the face of pro-growth forces in their neighborhood. Designating buildings as landmarks can prevent or stall efforts to gentrify a neighborhood because it prevents developers from converting these buildings to new uses and designs. With the advent of technology such as geographic information systems and a willingness to leverage the data, local and regional governments have begun implementing "early warning systems" to head off gentrification. Local governments can also consider changes to their zoning regulations that allow private developers to reap the full benefit of density increases for land use. Any policy that redistributes profit faces certain political headwinds and may remove the economic incentives developers have to invest, but Fyall and Casey (2017) proposed a method similar to cap-and-trade leases for development profit that could mitigate those effects. Nevertheless, local governments are limited in what they can do on their own. Although Schwartz (2019) found that New York City developed and preserved nearly 500,000 housing units between 1987 and 2018, the city would need significant federal support to adequately address its affordability crisis.

HUD's budgetary allocation may be insufficient to directly address housing shortages such as that in New York City, but at the end of the Research Symposium on Gentrification and Neighborhood Change, Kathy O'Regan suggested three actions HUD could take: HUD could increase the supply of affordable rental housing, preserve affordable housing, and encourage localities to use the tools at their disposal. Around the time of the symposium, the Federal Housing Administration had reduced multifamily mortgage insurance rates, which O'Regan suggested could increase the production of affordable housing. No study has yet been conducted to examine whether that insurance rate cut accomplished that goal. O'Regan also suggested that the 2013 Rental Assistance Demonstration (RAD) was an important tool to address the effects of gentrification because it allows public housing agencies to maintain affordable housing in central city neighborhoods that may become financially out of reach to lower-income residents otherwise. Developers often leverage low-income housing tax credits in conjunction with RAD to produce new housing. This is a zero-sum activity, however, because increasing the supply of affordable rental housing necessarily means that fewer credits are available to preserve rental housing already within the RAD program. Finally, HUD can encourage localities to use tools such as early gentrification warning systems, consistent with its Affirmatively Furthering Fair Housing Rule, to decrease the likelihood of displacement.

PD&R has also used Cityscape to focus on other federal policies that affect housing supply such as Opportunity Zones (OZs), an initiative of the Internal Revenue Service. OZs created tax incentives for developing new businesses within any census tract receiving an OZ designation. OZs encouraged investment in low-income communities but did not consider whether any benefits would accrue to the lower-income residents within those zones. Kurban and colleagues (2022) found that OZs within Washington, DC, may have hastened the pace of gentrification in neighborhoods that were already undergoing gentrification because developers would get larger returns on investment by utilizing the tax credit in neighborhoods that were already improving.

Gentrification in the PD&R Learning Agenda

Gentrification was identified as a research priority for fiscal years 2022 to 2026 for the first time since PD&R established its Research Roadmap (now Learning Agenda). One goal of the current Learning Agenda is to understand the motivations of those who decide to stay in or leave gentrifying neighborhoods as well as the outcomes those individuals experience. The past several decades have shown that neighborhood revitalization does not automatically improve the quality of life of all residents. Community development that improves some neighborhoods while potentially displacing lower-income residents to less affluent neighborhoods with concentrations of poverty is a concern that transcends presidential administrations and is incongruent with HUD's mission.

Conclusion

Gentrification is a complicated subject that lacks a singular definition, consensus on its impact and importance, and a clearly defined set of causes. U.S. housing policies from the mid-20th century may have launched the gentrification process, but among the relatively limited set of neighborhoods gentrification affects, private development is currently the primary cause. One of the main concerns of gentrification is the threat of displacing lower-income households, but current research suggests that displacement is not a significant issue. PD&R's research has expanded our understanding of gentrification's determinants, benefits, and costs as well as the ways in which grassroots organizations, local governments, and HUD can minimize gentrification's negative effects. On the positive side, gentrification has transformed many once-blighted central city neighborhoods into beautiful spaces with amenities and opportunities that would not have existed otherwise. Lower-income residents who can remain in these changing neighborhoods could reap various benefits. Conversely, residents who are unable to stay in these neighborhoods may experience negative outcomes that present a challenge to HUD's mission of creating "strong, sustainable, inclusive communities and quality, affordable homes for all."

Acknowledgments

The authors would like to thank Todd Richardson and Eric Erickson for sharing their collection of historic PD&R materials. We would also like to thank Kathy O'Regan for sharing the context of the 2016 Research Symposium on Gentrification and Neighborhood Change and Mark Shroder for describing the Cityscape guest editor role and the history of Cityscape before he was selected as its permanent editor. The authors take full responsibility for any omissions.