Gentrification Is Not the Same As Bidding Up

When election season isn’t on us, one of the things the chattering class likes to discuss is urban gentrification–in no small part because it affects a good number of them. While that ignores the far larger and far more difficult problem to solve of the economic unsustainability of the suburbs, high housing prices is a serious problem.

We’ll also ignore the obvious elephant in the room: you can’t have gentrification without a gentry class (for some reason, the punditocracy doesn’t want to raise taxes on anyone other than the wealthy and the rich. Can’t figure that one out…). Anyway, a very interesting report describes the patterns of gentrification–and as we’ll get to–distinguishing between gentrification and bidding up of limited resources are not the same thing.

Onto the report. Here’s how they define gentrification for a given census tract–and note this is different from ‘housing is expensive’:

The first test found that a tract was eligible to gentrify if it met the following criteria:

1. The tract had a population of at least 500 residents at the beginning and end of a decade and was located within a central city.
2. The tract’s median household income was in the bottom 40th percentile when compared to all tracts within its metro area at the beginning of the decade.
3. The tract’s median home value was in the bottom 40th percentile when compared to all tracts within its metro area at the beginning of the decade.

Basically, at the start of a decade, a census tract had to be in the bottom two-fifths of the metro area (not just the city itself), which seems reasonable. To call a census tract gentrified, the following criteria had to be met:

1. An increase in a tract’s educational attainment, as measured by the percentage of residents age 25 and over holding bachelor’s degrees, was in the top third percentile of all tracts within a metro area.
2. A tract’s median home value increased when adjusted for inflation.
3. The percentage increase in a tract’s inflation-adjusted median home value was in the top third percentile of all tracts within a metro area.

Here, a census tract had to have more college educated people, higher housing prices, and those housing prices had to be in the top third of prices in a metro area (again, not just the city itself).

Using the assumptions, I compared their results for Boston and D.C from 2000 – 2010. Boston had few tracts eligible for gentrification (31.8%), and among those eligible, only 21.1% gentrified. D.C., by comparison, had 58% of its census tracts eligible for gentrification, and 51.9% of those tracts gentrified. Across all census tracts, Boston had 12/179 gentrify, while D.C. had 54/179. That’s a big difference.

Even though prices are comparable between the two cities, there’s a lot more gentrification happening in D.C. When we look at wealthy neighborhoods in Boston (e.g., Back Bay), what’s interesting is that the population has remained relative stable for decades. Meanwhile, in neighborhoods like D.C.’s Shaw/U Street or Logan Circle, there was a massive depopulation in the 1970s and 1980s (this was largely black middle class flight, though we will follow mainstream progressive convention and ignore the Identity That Shall Not Be Named, economic class), and only have begun to recover in the last decade (and are still below their 1960s levels–though some of that could be lower household size).

In Boston’s relatively stable, but gradually growing neighborhoods, housing prices appear to be a result from bidding over a limited resource. But in places like Shaw or Logan Circle, there’s room. What I think happened is that the massive emigration from these neighborhoods made these neighborhoods–which still had ‘good bones’, such as mass transit and nice-looking houses–amenable to developers. They bought up and renovated these properties, and that renovation increased prices, and property taxes, in the entire neighborhood. At some point, lower-income people can’t afford rents or property taxes–even though these neighborhood are still not crowded. That, combined with the change in racial composition, makes this a very explosive issue in D.C.–there are cultural and political ramifications to the demise of ‘Chocolate City.’ In Boston, however, the largely ‘white-on-white’ gentrification that has occurred has received very little attention nationally.

Put simply, in Boston’s Back Bay, there is little room to put more people, while Shaw and Logan Circle are still ‘filling in’, yet prices are comparable. This suggests a very different dynamic, and probably requires a different policy response than in already-crowded locations.

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