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How Gentrification Works

        Money | Economic Concepts

The Gentrification Process

Why do certain neighborhoods become gentrified and others don't? There is no definitive answer, but experts agree that before an area can be gentrified, it must go through a period of disinvestment, during which older buildings are left to languish, median income levels decline steadily and businesses move out [source: Slater]. Some neighborhoods still maintain a vibrant social culture and sense of community, while others devolve into urban wastelands.

Then the "urban pioneers" arrive. Urban pioneers are usually young, educated, adventurous, predominately white, often artistically minded individuals who don't fit the traditional demographic of the neighborhood. They build artist lofts in abandoned industrial spaces, open underground music venues and begin to leave the imprint of their alternative tastes and bohemian lifestyle on the neighborhood [source: Hampson].

Once a few pioneers have staked their claim, the neighborhood begins to earn a new reputation in the minds of real-estate developers and upper middle-class folks who used to consider the area unsafe or unwelcoming. As home prices increase in the nicer parts of the city and the suburbs, more adventurous investors are attracted to the character of some of the buildings in the neighborhood (crumbling Victorian mansions, stately brownstones with stoops) and their low sales prices [source: Hampson]. They begin to snatch up bargain properties and make attractive, modern renovations. Developers follow suit, buying up old apartment buildings and converting them into luxury condos.

For a short period of time, there is an uneasy balance in the neighborhood. Long-time residents are nervous about the infusion of outsiders, but admit that the new playground makes the park a lot safer for the kids and all of the new restaurants and construction work mean better-paying jobs. But then the lease expires on the apartment and the new landlord wants to raise the rent by 50 percent. Long-time homeowners have sold off and left town and rumors abound that some developer bought five apartment buildings on one block and evicted everyone. And then the inevitable happens -- the first Starbucks opens.

At least this is the standard story of the gentrification process: invasion of the rich and displacement of the poor. However, recent research shows a more nuanced reality. Census data shows that low-income urban residents move out of gentrifying neighborhoods at the same rate that they move from non-gentrifying neighborhoods. The difference in a gentrifying neighborhood is that higher-income people move in to take their place. Instead of displacement, some experts are calling it succession [source: Kiviat].

All of this brings up a fair question: Is gentrification really that bad? After all, what's wrong with economic growth? We'll explore the pros and cons of gentrification next.


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