In last Friday’s The Week Observed, we flagged an exhaustive literature review from the Federal Reserve Bank of San Francisco, summarizing what we know about gentrification and neighborhood change over about 40 pages. We focused on one of the takeaways Richard Florida picked out in his article about the study in CityLab, on the connection between public transit and gentrification, but it would be a shame to reduce an amazingly wide-ranging study to that one issue. (Florida has since published a second piece on the connection between displacement and gentrification.)

A building under renovation in Cincinnati's Over the Rhine neighborhood. Credit: David Brossard, Flickr
A building under renovation in Cincinnati’s Over the Rhine neighborhood. Credit: David Brossard, Flickr


So on the off chance that your post-Labor Day plans don’t involve wading through 45-page Fed Reserve PDFs, we’ve pulled out four of the most interesting findings from the report’s coverage of the academic literature on neighborhood change and gentrification.

  1. Even as racial segregation declines, income segregation continues to grow, driven by the “secession of the rich.”

From 1980 to 2010, the proportion of lower-income households living in majority low-income Census tracts increased modestly, from 23 to 25 percent. But the proportion of upper-income households living in majority upper-income Census tracts doubled, from 9 to 18 percent. Moreover, the rich aren’t just moving to wealthy neighborhoods: they’re increasingly moving to their own suburban jurisdictions.

One bright spot is that the trend towards revitalization of central cities may be some kind of counterweight to the “secession of the rich.” In cities where upper-income households tend to live in the suburban periphery, like Houston or Dallas, the rich are more segregated than in denser cities with wealthier cores, like Philadelphia or Seattle.

  1. In most contexts, people value public transit accessibility enough to pay a premium for it. (And its value can partially or entirely offset higher rents.)

The value of living near a transit station depends heavily on how useful your city’s transit network is. That, in turn, depends on a) how extensive, efficient, and reliable transit service is, and b) how (in)convenient and expensive driving is. But in most cases, the value of living near transit is clearly reflected in the fact that people are willing to pay more for that access.

This does not mean, though, that we ought to avoid making transit investments for fear of provoking “gentrification.” In fact, that’s the opposite of what a broad reading of the research suggests. To begin with, transportation costs associated with driving can eat up well over 20 or 25 percent of low-income households’ budgets—meaning that low-income residents who are able to switch to using transit may be able to absorb some rising home values and still save significant amounts of money. In fact, those savings seem to be a major reason that many low-income households choose to live in transit-served neighborhoods.

But the literature also suggests that, in general, the effect of investments like transit on housing costs and displacement depends to a huge extent on the local housing market. These sorts of gentrification-related problems are mostly an issue in places with extremely tight markets, where lots of people are competing for relatively small numbers of homes. In other words, the problem, once again, is a shortage of cities and the kind of neighborhoods that many people want to live in. The solution isn’t to further restrict the growth of these neighborhoods—it’s to make sure we have as many as we need to allow everyone who wants to live in them to do so, and to use subsidized housing to fill in the gaps.

A light rail train in Charlotte. Credit: James Willamor, Flickr
A light rail train in Charlotte. Credit: James Willamor, Flickr


  1. Despite decades of research, we are nowhere close to a consensus understanding among academics of what exactly displacement is, how to measure it, or how big of a problem it is.

Displacement has been a serious topic of research since the urban renewal programs of the 1950s, and received another big boost as gentrification became a major concern beginning in the 1990s. But conflicting definitions of such key terms as “gentrification” and “displacement,” along with varying approaches to interpreting the “significance” of findings, makes it extremely difficult to summarize any findings across the many papers on the subject.

One big issue, for example, is how to measure a counterfactual: What would have happened to people in a neighborhood without any gentrification pressures? For people like Lance Freeman, the correct comparison is poor neighborhoods that don’t gentrify. Those types of communities tend to have high levels of mobility, which makes the number of potentially displacement-related moves in gentrifying areas look smaller than if you use city-wide averages or less-mobile neighborhoods as the baseline.

Researchers do agree that rising rents predict increased displacement, though some studies suggest that the effect is lessened because existing residents are willing to pay more in rent as their neighborhood gains gentrification-related amenities. And, partly as a result of the issues outlined above, researchers differ wildly on how much displacement actually happens, and to what extent it’s a problem. Freeman’s national study in 2005 found that a household in a gentrifying neighborhood had only a 1.3 percent chance of being displaced nationally, while Kathe Newman and Elvin Wyly, using a different baseline of comparison, concluded that as many as 10 percent of all moves in New York City between 1989 and 2002 were a result of displacement. (The fact that these two measures are not actually directly comparable reflects another serious, yet typical, problem in trying to synthesize the research on gentrification.)

  1. Changing in-migration patterns can transform neighborhoods quickly, even without displacement pressures.

As we’ve written about previously, neighborhood change happens because of two types of moves: people moving in and people moving out. Often, we conceive of gentrification as reducing the number of low-income people in a neighborhood mainly because the number of people moving out increases dramatically as housing prices increase.

But a shift in the kinds of people moving into a neighborhood can also create major demographic change, even if the number of people moving out stays relatively stable. A paper by Freeman and Branconi suggests that it’s theoretically possible for a neighborhood to reduce its poverty rate from 30 percent to 12 percent in just ten years, without any “displacement,” if the pool of people wanting to enter the community changes dramatically and low-income households who would have left anyway are replaced by higher-income residents. That explains how it’s possible, as they found, that low-income households in gentrifying New York City neighborhoods are actually less likely to move than in high-poverty neighborhoods that aren’t gentrifying.

In practice, of course, it’s unlikely that there would be an influx of middle- or upper-income residents to a neighborhood without some effect on housing prices. But especially in cities with looser housing markets, or in cases of neighborhood change that don’t involve rising incomes, this suggests that we ought to be very wary of assuming that demographic shifts are always the result of displacement.