How Gentrification Really Changes Cities

A surprising case study out of Philadelphia
Photographer: Jahi Chikwendiu/The Washington Post via Getty Images

First there's a precious coffee bar. Then a "bagel pub" replaces a store that used to sell "urban wear." While some signs of gentrification are obvious, it takes years of data to know what exactly happens to residents as their neighborhood becomes more expensive. New research is finding that gentrification, contrary to popular belief, doesn't actually force poorer residents to leave areas at atypical rates—though that doesn't mean the changes don't have negative consequences.

A new paper from the Federal Reserve Bank of Philadelphia looks at census data from 2002 and 2014 to compare three kinds of neighborhoods in the city: those that were gentrifying, those that were poor but not changing, and those that were already relatively wealthy. They also considered residents' credit scores as a proxy for how vulnerable they may be to being forced to leave. (An easier-to-read version is available for readers who don't enjoy academic lingo.)   

Overall, residents do leave gentrifying areas at "slightly" higher rates than areas that aren't changing, but researchers found it's people with higher credit scores who are more likely to leave—a kind of "up and out" move to suburbs or wealthier parts of the city. Residents with poor credit scores tend to leave gentrifying neighborhoods at roughly the same rate as those who live in other low-income areas that aren't gentrifying—that's why the orange and gray lines below are generally close together.

The likelihood residents with no credit scores or with credit scores below 580 leave their neighborhood in a given year
The likelihood residents with no credit scores or with credit scores below 580 leave their neighborhood in a given year
Federal Reserve Bank of Philadelphia

 

Residents who are able to stay in the neighborhood see their credit scores increase, particularly in areas that are changing rapidly. That's a sign that gentrification can help the financial well-being of people who stay.

Residents in gentrifying neighborhoods typically see their credit scores improve
Residents in gentrifying neighborhoods typically see their credit scores improve
Federal Reserve Bank of Philadelphia

But among those who do leave, the effects can be disproportionate. "Vulnerable residents who are not able to remain in the neighborhood … face a higher risk of moving to a neighborhood that is worse off," the researchers write. This is particularly true for renters. They're also more likely to move to neighborhoods that are predominantly non-Hispanic black, which suggests that gentrification could reinforce economic and racial disparities.  

Although poor people may not be forced out, the demographics of gentrifying neighborhoods still change because those who move in are more well-to-do. Those new residents are, on average, 1.3 years younger than the people who left the area, are more likely to be white, and have credits scores that are an average of 5 points higher.

Philadelphia has a few unique attributes. Poor neighborhoods in the city tend to have many vacant lots, so they can gentrify by developing new buildings on empty lots, which could reduce how many people are displaced. The patterns generally fit with some studies in other cities—research in New York has found that residents can benefit from staying in gentrifying areas. 

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