What Is Gentrification, and Why Is It Bad?

FT Contributor
A half gentrified building with new elements on the left and old on the right.
Reading Time: 3 minutes

The exact definition of gentrification is hard to pinpoint, but Merriam-Webster defines gentrification as, “The process of repairing and rebuilding homes and businesses in a deteriorating area (such as an urban neighborhood) accompanied by an influx of middle-class or affluent people and that often results in the displacement of earlier, usually poorer residents.”

Even after simply reviewing the definition of gentrification, you may already be able to identify why this process is controversial. While middle-class and upper-class people are finding new places to live, work, or enjoy their time, low-class residents can be forced out due to rising housing prices and stagnant wages. In some cases of gentrification, residents earning minimum wage can no longer afford to live, shop, or eat in their own neighborhoods. Gentrification is a serious issue affecting many urban-dwelling residents across the country.

Causes of Gentrification

There usually isn’t a single cause for gentrification and the reasons to gentrify a neighborhood can vary, depending on the area. However, a few generally accepted theories and reasons for gentrification include the following:

  1. The large demographic of baby boomers: The baby boomer generation, which refers to a growing population of people who were 25 to 35 years old in the 1970s, is the biggest population bracket in the U.S. Gentrification may be caused by this generation seeking housing in urban areas close to their jobs.
  2. The choice to live in urban areas: The changing values, mindsets, and attitudes of the 1970s middle- and upper-middle-class may be causing gentrification. This population has become more “pro-urban,” so they’re more likely to gentrify urban areas to suit their lifestyles.
  3. Political movementsDesegregation and the civil rights movement led to neighborhoods also becoming desegregated. With prejudice no longer tolerated, it is more accepted for white Americans to move into urban neighborhoods that used to be considered “African American” areas. At the same time, wages for African American workers have been nearly stagnant for the past decade, and the median income for those workers is about 56% of the median income for white workers, which may be a reason for gentrification.
  4. Economic motivations: Changing inner cities from neglected areas to thriving metros can exponentially increase sources of revenue. This can motivate middle- and upper-class residents or investors to want to take over and gentrify these areas.

Signs of Gentrification

There are distinct signs that an area is undergoing gentrification, which may include:

  • Excessive construction and repair on the neighborhood’s roads.
  • Older apartments and homes being renovated.
  • Increasing property values on homes in the area.
  • Rapid ethnic diversification of the area’s population.
  • An increase in coffee shops, cafes, and specialty shops.
  • More expensive cars on the road and more access to rideshare programs.
  • Opening of new art galleries in the neighborhood.

Effects of Gentrification

Neighborhoods and residents that experience gentrification can feel the process’s positive and/or negative effects.

Benefits of Gentrification

Residents living in a neighborhood that’s experiencing gentrification may benefit from:

  • Increased job opportunities.
  • Decreased crime rates.
  • Reduction in urban sprawl.
  • Increased property values.
  • Improved neighborhood aesthetic.

Negative Effects of Gentrification

On the other hand, residents may feel negative effects of gentrification in their neighborhood, such as:

  • Increasing rent and home prices.
  • Long-term resident displacement.
  • Higher property taxes.
  • An increasing wealth gap.
  • Local businesses that sell goods and services at higher price points.

Where Does Gentrification Happen?

A 2019 study completed by the National Community Reinvestment Coalition found that most gentrification in the U.S. occurs in large cities. Populous cities such as New York, Los Angeles, and Chicago can expect to experience gentrification more often and this process doesn’t occur at all in rural or suburban areas.

Only certain neighborhoods or small areas within a city or urban center may experience gentrification and it’s known to occur exclusively in traditionally poor neighborhoods or areas mostly inhabited by people of color. These areas are generally considered “low-value,” which means the long-time residents living there are usually low-income and/or part of a minority group.

The residents in these low-value are the ones most negatively affected by gentrification and they may be forced to relocate due to rising housing prices. Gentrification is experienced more intensely and frequently in these low-value neighborhoods than in middle- or upper-class areas.

Is Gentrification Good or Bad?

The debate about whether gentrification is good or bad rages on. Some people argue that gentrification improves the desirability and liveability of poor and low-value areas, so it’s a positive process. However, others disagree and feel the potential displacement of long-time minority and/or low-income residents outweighs any benefits or improvements that the neighborhood may experience through gentrification.

While gentrification commonly does push residents out of their neighborhoods, some experts believe an area can be gentrified without resident displacement. In some cases, these experts have observed that gentrification provided investment and economic revival without immediate displacement of current residents.

These experts believe that if gentrification includes additional access to public housing, protection from property tax increases, loan funds for small business owners, and other sensitive strategies, it can be beneficial for current residents. This theory may prove that if done correctly and thoughtfully, current residents can survive the gentrification process without having to move out of their neighborhoods.

Gentrification is a complex issue affecting thousands of residents and areas. Since both positive and negative effects are caused by gentrification, it’s a difficult problem to solve and it can be tough to decide whether this process is good or bad.

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