Gentrification is the process of changing the characteristics of a neighborhood, its culture, and income, to suite wealthier residents. In Baltimore City, 22% of the residents were gentrified. The map above, in dark blue, shows households that were replaced.
According to government research, the study included Census Tracts [households] with low-income and significant growth in both home values and educational attainment. To be eligible to gentrify, a tract’s median household income and median home value need to fall within the bottom 40th percentile of all tracts within a metro area at the beginning of the decade. Tracts with less than 500 residents or missing data were also considered not eligible.
NOTE: Fair Market Rents (FMRs) are set at either the 40th or 50th percentile rent—the dollar amount below which the rent for 40 or 50 percent of standard quality rental housing units falls. The 40th or 50th percentile rent is drawn from the distribution of rents of all units that are occupied by recent movers.
Findings: Tracts considered to have gentrified recorded increases in the top third percentile for both inflation-adjusted median home values and percentage of adults with bachelors’ degrees.
Is Gentrification good?
YES! Although the characteristics of the neighborhood change and people are displaced, gentrified areas reduce poverty in income and property. Also, it encourages educational obtainment.
Poor neighborhoods that don’t gentrify decline. Neighborhoods lose population and experience declining incomes.
The National Community Reinvestment Coalition [NCRC] created the CRA (Community Reinvestment Act) of 2016 to address the issue of resident replacement. Partnerships between banks and community-based organizations can encourage equitable development, limited-equity co-ops, and community land trusts. Also, financial institutions can provide existing tenants with the right of first refusal in apartment conversions coupled with low-income and first-time buyer financing programs; inclusionary zoning regulations; and split tax rates for the incumbent residents of gentrifying neighborhoods. Bank regulators should recognize pro-integrative bank finance as responsive to the needs of the community,
Also, they recommended that HUD’s Affirmatively Furthering Fair Housing (AFFH) process provides an opportunity for community groups to engage with municipal leaders in the planning process. AFFH provides a mechanism for identifying areas that are vulnerable to, or maybe in the early stages of, gentrification. Community groups can then work to develop strategies to avoid displacement of incumbent residents by attracting investment and providing affordable housing.
References: City Observatory, Governing, National Community Reinvestment Coalition
