Gentrification 101: Definition, Facts and Social Impact

Thanks to their neighborhood’s low rents, a family has lived in their apartment for years. Suddenly, people with higher incomes start moving into the apartment building. They begin buying up houses. A pricey coffee shop opens up across the street, then an expensive grocery store. The family who has lived in this area struggles as their rent increases. The places they’ve always shopped at raise their prices or shut down. Eventually, the family must make a tough decision: should they move? The process of wealthier people moving into a historically lower-income area is known as gentrification. In this article, we’ll explore what this process means, what everyone should know about it, and its social impact.

Gentrification occurs when wealthier people and new businesses move into areas traditionally occupied by lower-income communities. This drives up prices, which displaces many of the area’s former residents. Gentrification may have some benefits, but because benefits aren’t dispersed equally, the negative social impact (especially on people of color) is significant.

What is gentrification?

Gentrification describes the process of wealthier people moving into traditionally lower-income areas. The word was coined in the 1960s. A German-British city planner and sociologist noticed that London’s poor people were being displaced by wealthier people coming to buy houses. The word has origins in “gentry,” which historically referred to aristocrats. Right below the aristocracy, however, there was the “landed gentry.”  These were landowners who grew rich by charging rent to tenant farmers and taking cuts from their earnings. The sociologist used the term “gentry” to refer to middle-class people changing the makeup of working-class areas “rapidly until all or most of the original class occupiers are displaced…” As this change spread around the world, the term “gentrification” became more well-known, too.

Three things happen during gentrification: lower-income people get displaced, the neighborhood goes through physical changes, and the neighborhood’s culture changes.

Displacement

Rising costs, including increased rent, mortgages, groceries, and utilities drive displacement. The National Low Income Housing Coalition cites California’s Bay Area as an example. As the area’s technology hub grew, more college-educated, higher-paid workers moved to the Bay. These workers could spend more on housing and goods, which raised prices and attracted even more wealth. While high-income workers could keep up with the increased costs of living, everyone else – including older people and people with disabilities – couldn’t compete. Many were priced out of the houses and neighborhoods they’d called home for decades.

Physical changes

The second result of gentrification, physical changes, refers to new investments in buildings, roads, businesses, and so on. Older, crumbling buildings are repaired or rebuilt, while newer developments pop up everywhere. This can be one of the positive results of gentrification, although changes are designed to attract even more wealthy people, which continues the cycle of rising costs. Physical changes also come in the form of new businesses. Small, family-owned shops suddenly find themselves dealing with competition from larger, big-brand corporations (like Starbucks, Whole Foods, etc) and higher rents. To survive, they may have to leave the neighborhood. Many businesses simply shut down completely, leaving their rental spaces available for newer, often more expensive stores. A street that once hosted an Asian market and a family-owned bakery transforms into two gourmet cafes and a high-end grocery store.

Cultural changes

What does it mean when a neighborhood changes its culture? While we talked about businesses as a physical change, there’s also a cultural shift. Gentrification mostly refers to the wealth of new residents, but wealth and race are often closely linked. As an article in Bloomberg describes, many POC-owned businesses suffer when their traditional customers (lower-income people who’ve lived in an area for years) are replaced by white people. The intersection of gentrification and race can’t be ignored in places like the United States since segregation and redlining impacted neighborhoods’ racial makeup. New, white residents may have different tastes, and because they have the money, businesses catering to them move in while businesses geared toward people of color move out. This changes a neighborhood’s culture.

What should everyone know about gentrification?

We’ve defined gentrification, but what else should you know? Here are five of the most important facts:

#1. The causes of gentrification aren’t always clear, but there are two common ones

What makes wealthier people move to a traditionally lower-income area? It’s a complex question, but many experts believe there are at least two possible causes: supply and demand and public policy. In a ThoughtCo article, Robert Longley goes into more depth. With supply and demand, factors like crime and poverty kept the price of American housing down in certain areas, like inner cities. Wealthier people realized these properties could be a great investment. Cities also became hubs for higher-paying careers in fields like technology and finance, so wealthier people started moving to cities. The people who had originally lived there to work traditional industrial jobs no longer earned enough to stay.

The second cause – public policy – consists of policies that incentivize gentrification and reduce affordable housing. Longley describes tax breaks for historic preservation and environmental improvements, which are only feasible for people with the money to preserve and improve housing. In the past 20 years, the federal government has also significantly reduced investments in public housing, which, according to Human Rights Watch, threatens the living situations of 2 million people.

#2. Gentrification has some benefits, but only if people aren’t displaced

Is gentrification always harmful? Not according to some studies. One 2019 paper found that for lower-income renters who stay, gentrification can increase home values and give renters more opportunities. However, these benefits only apply to people who can afford to stay, which in many areas, is not most people. If gentrification is going to be a good thing, it can’t displace long-time residents. The National Low Income Housing Coalition states that “fighting against displacement” is the goal, not fighting against development. What does that look like? It includes renter protection policies like recent control and just-cause eviction ordinances, as well as tenant option-to-purchase policies. Gentrification can be good if existing residents are protected and given as many opportunities as possible to stay.

#3. Gentrification is happening around the world

Gentrification isn’t limited to one country. London, England, where the process got its name, is still experiencing gentrification. CNN also lists New York City, Los Angeles, and San Francisco as cities with high gentrification. A 2017 Guardian article titled “Sydney’s last stand: the residents holding out against gentrification,” told the story of the government’s attempt to turn Australian public housing into private developments. In 2023, the NSW government’s public housing policy was to sell public housing to build residences with just 30% social housing and 70% private housing. Some areas are fighting against gentrification. One blog described efforts in cities like Lisbon, Berlin, and Naples, which were developing initiatives and policies to fight displacement, preserve public housing, and raise awareness of gentrification.

#4. Gentrification has links to homelessness

Where do people go when they get displaced? Some move to more affordable housing, but for others, there is no affordable housing. This leads to an increase in homelessness. A 2022 study examining the root of homelessness – “Homelessness is a Housing Problem” – found the biggest factors are a blend of high rent prices and not enough affordable housing. These are both consequences of gentrification. In Oakland, California, which is a very gentrified city, homelessness has more than doubled in the last decade. There are a variety of factors at play in Oakland, but considering gentrification’s impact, it makes sense there’s a link.

#5. Gentrification has negative health effects

Gentrification is one of the many factors that affect people’s health. According to the CDC, those most affected by gentrification (like poor people, women, children, the elderly, and Black people) also face increased health risks like shorter lifespans, higher cancer rates, diabetes, heart disease, and environmental dangers. Many risks develop because people move to underfunded, poorly-maintained buildings, which become the only affordable areas when gentrification strikes a neighborhood. The stress of gentrification impacts a person’s mental health, as well.

What are the social impacts of gentrification?

We’ve discussed some of the effects of gentrification, but the most important thing to know is that social impacts aren’t equal. According to a 2020 study by a Stanford sociologist, gentrification’s negative impact disproportionately affects minority communities. This impact even extends to residents who are moving away from gentrifying neighborhoods. The study found that residents in predominately non-Black gentrifying neighborhoods had more options compared to those moving from Black gentrifying areas. This continues the cycle of giving white people more advantages.

As for the Black people and other people of color who stay, they may experience more racism. The newer, wealthier white residents start complaining about crime and feeling threatened. The power dynamic and political structures shift into the hands of new residents, which can further alienate long-term residents of color and make it harder for them to get their voices heard. School structures can change, as well, as more private schools open. Families that can afford private schools send their kids there, which threatens the funding of neighborhood public schools. A 2020 study also found that when families opt out of neighborhood schools, the schools their kids attend usually have higher shares of white students. The study concluded that white and higher-SES (socioeconomic status) families who move to gentrifying neighborhoods “may uphold school segregation.”