Richard Florida is a co-founder and editor at large of CityLab and a senior editor at The Atlantic. He is a university professor in the University of Toronto’s School of Cities and Rotman School of Management, and a distinguished fellow at New York University’s Schack Institute of Real Estate.
A new study finds that gentrification improves Philadelphia neighborhoods, but its ripple effects hurt the most vulnerable.
There is no more hotly debated issue among urbanists than gentrification and displacement. To its opponents, gentrification amounts to the colonization of poor, minority neighborhoods by affluent whites. For others, gentrification is little more than a natural process of neighborhood transformation and change. The reality, however, is that the connection between gentrification and displacement is more complex and nuanced than we like to think. (In fact, I wrote about the complicated link between the two just last month.)
A new study from the Federal Reserve Bank of Philadelphia provides important evidence of the pros and cons of gentrification. The study—by Jackelyn Hwang of Princeton University (whose research we’ve covered here before) and Lei Ding and Eileen Divringi of the Federal Reserve—uses new detailed data on the economic condition of residents to provide a closer look at who gentrifies and who gets displaced, as well as the overall effects of gentrification on neighborhoods and residents.
The authors track gentrification in Philadelphia neighborhoods from 2002 to 2014—the period spanning the economic crisis—when gentrification and the back-to-the-city movement accelerated. (This timeline is important because most existing studies have only tracked gentrification up until 2000, when it was less widespread and housing pressures on urban neighborhoods were not as severe as today.) To measure gentrification, the study uses Census data for 1980, 1990, and 2000, along with the American Community Survey’s five-year estimates for Philadelphia census tracts from 2009-2013. Neighborhoods or tracts are considered “gentrifiable” if their median household income was below that of the city in 2000, while gentrifying tracts had a median household income and median increase in college-educated residents above that of the city between 2000 and 2013. The researchers include measures of violent crime and public school quality to gauge the effects on neighborhood quality of life.
Even more interestingly, the study employs unique data on the economic and financial situation of a random sample of more than 50,000 residents based on credit profiles collected by the Federal Reserve Bank of New York Consumer Credit Panel and Equifax (along with more detailed data from Philadelphia). This enables the researchers to closely track the economic and financial situation of people who move into and out of gentrifying neighborhoods, as well as the neighborhoods in which displaced residents end up.
The geography of gentrification
Overall, about 15 percent of the city’s neighborhoods (56 of 365) and 30 percent of its gentrifiable areas (56 of 184) actually gentrified from 2000 to 2013. Not surprisingly, these neighborhoods (highlighted in pink on the map below) are mainly located in the Center City district around previously gentrified neighborhoods in West and South Philadelphia, or near the University of Pennsylvania or Temple University. (Previous research, including my own, has indicated the role of universities and knowledge institutions as anchors for gentrification.) Other areas like Society Hill have long been gentrified, and remain so to this day.
The study also separated neighborhoods into the following categories based on the stage and intensity of gentrification: “old gentrification” (neighborhoods with median household incomes above the citywide median), “continued gentrification” (those that were gentrifiable in 2000 and gentrifying from 2000 to 2013), “stalled gentrification” (those that were non-gentrifying from 2000 to 2013), as well as weak, moderate, and intense gentrification based on the pace of gentrification and the rise in rents and housing prices (see the map below).
Median home values ranged from $238,049 in neighborhoods undergoing intense gentrification, $178,044 to $126,374 in continued and moderately gentrifying neighborhoods, and just $70,316 in weakly gentrifying areas. As you can see from the map below, gentrification appears to occur in phases, with areas of continued gentrification cropping up around areas of intense gentrification, and areas of moderate and weak gentrification slightly further afield. All of these areas are surrounded by much larger non-gentrified or non-gentrifiable regions.
These findings line up with my own map of class-divided Philadelphia, which shows the creative class in and around Center City and Manayunk-Roxborough (areas that were partially gentrifying from 1980 to 2000, according to the map above).
Surprisingly, the study found that gentrifying neighborhoods do not lose residents at a substantially higher rate than other neighborhoods. In fact, residents of gentrifying neighborhoods are less than 1 percentage point more likely to move out than those in non-gentrifying ones. Residents of the most intensely gentrified neighborhoods are less than 4 percentage points more likely to move. And the majority of affluent residents that moved from gentrifying neighborhoods ended up leaving the city for the suburbs or elsewhere.
Residents of gentrifying neighborhoods also tend to benefit from gentrification across the board, experiencing an average increase of 11 points in their credit scores—and roughly 23 in neighborhoods with intense gentrification—compared to non-residents. This is partly because residents of gentrifying neighborhoods are better off to begin with, and also because these neighborhoods tend to be more advantaged.
That said, gentrification tends to divide the city into areas of concentrated advantage and disadvantage. From 2000 to 2013, the median household income increased by 42 percent in gentrifying neighborhoods, but decreased by almost 20 percent in non-gentrifying ones. Poverty rates also declined slightly in gentrifying neighborhoods, while increasing slightly in non-gentrifying ones.
Vulnerable residents are hit hardest
But the study finds—and this is a hugely important contribution—that gentrification ultimately hits hardest at the least advantaged and most economically vulnerable. Even though these most vulnerable residents (which the study defines as longer-term, less affluent residents without mortgages and with credit scores of 580 or below) are not any more likely than others to leave gentrifying neighborhoods, when they do move they are much more likely to end up in lower-income neighborhoods with more crime and worse schools. Roughly a fifth (21 percent) of all residents who moved to a different area ended up in a neighborhood with a lower median income than where they were previously, and this share was higher for low-income movers from gentrifying neighborhoods in particular.
Moving to a lower-income neighborhood takes an additional toll on residents, with their credit risk scores declining by an average of 15 points after three years. Gentrification also increases housing costs, thereby pricing out low-income residents. And this shift is taking place in Philadelphia, which has experienced nothing close to New York or San Francisco’s extreme gentrification, and where housing remains much more affordable.
Ultimately, the study shows how gentrification’s effects ripple through a city and its neighborhoods. The most advantaged residents inhabit the best neighborhoods with the best schools, lowest crime, and the highest quality of life. Middle- and working-class residents either stay where they are and benefit slightly from gentrification or move to more affordable, but still high-quality neighborhoods nearby or in adjacent suburbs. Meanwhile, the most vulnerable groups are shunted into the most disadvantaged neighborhoods across the city.
A focus on urban policy
The real task of urban policy, then, is not to try and stop the market forces that are leading to the comeback of cities and urban neighborhoods, but to improve the housing options, economic opportunities, and neighborhood conditions of those being pushed further behind in its wake. This means developing people-oriented policies that enable less advantaged groups to move to better neighborhoods, with better schools and greater economic opportunity. But it also means developing place-based strategies that improve the conditions of less advantaged neighborhoods and create more inclusive economic development for these residents.
The status quo will no longer do. The pressure on urban housing markets and neighborhoods created by the burgeoning back-to-the-city movement is just too great. While increased housing development is necessary, it is also wholly insufficient on its own, as most new housing is snatched up by affluent, younger, and more educated urbanites, while housing costs continue to increase across the board. From Bill de Blasio to Eric Garcetti, mayors and urban leaders across the country are already developing new strategies for affordable housing and economic opportunity. But the real task lies in revamping federal housing and urban development policy to meet the needs of this new era of rapid re-urbanization.