Neighborhood Gentrification during the Boom and After
Daniel Hartley and Daniel Kolliner
The Federal Reserve Bank of Cleveland, 07.16.14
During the housing boom, a number of large cities in the United States experienced redevelopment in their lower-income neighborhoods as higher-income residents moved in, a process known as gentrification. Looser lending standards, which were prevalent at the time, may have contributed to the trend. Since lending standards have tightened with the onset of the housing bust and the financial crisis, we wondered whether gentrification has continued after the recession in places where it was happening before.
To answer this question, we examined how the income rankings of neighborhoods in the centers of metropolitan areas have changed relative to those in the suburbs since 2000. Looking at how average incomes have shifted in city neighborhoods compared to the suburbs allows us to see which metropolitan areas are experiencing income growth in their core relative to their periphery. We find that for the cities with the largest gains, the growth is driven primarily by lower-income city neighborhoods moving up in the income distribution of the metropolitan area. Such a pattern is consistent with gentrification, where higher-income residents move in to formerly low-income neighborhoods.