Gentrification, for Better and Worse

Gentrification—more wealthy people moving into lower-income communities—often faces opposition, sometimes for the wrong reasons. It is important to consider all benefits and costs when formulating urban development policies.

Read Time: 6 minutes

May 18, 2017, 9:00 AM PDT

By Todd Litman


tektur / Shutterstock

During the last century, most North American cities experienced urban disinvestment, often called "white flight," as middle-income households moved to suburbs, leaving concentrated poverty in many urban neighborhoods. This created a number of problems, both for impoverished urban communities and for suburbanites living in sprawled, automobile-dependent areas. An increasing number of households now recognize the benefits of urban living, which is attracting more people, businesses, and investment into lower-income urban neighborhoods. While urban redevelopment seems good and desirable, the same phenomena is also called gentrification, which is generally considered undesirable, and some groups actively oppose

Is urban redevelopment good or bad? Should public policies and planning practices encourage or discourage non-poor households moving into lower-income urban neighborhoods? This is an important and timely issue. On one hand, urban redevelopment can provide significant benefits to the new and existing urban residents. On the other hand, gentrification can impose risks and costs to vulnerable communities. It is important to consider all of these impacts when formulating urban development policies. This column attempts to provide a comprehensive assessment of them.

Gentrification Benefits

Let's start with benefits. Living in an urban neighborhood improves accessibility and mobility options [pdf]; that is, it reduces the distances residents must travel to reach services and activities (education, employment, shopping, recreation, etc.) and tends to offer better walking, cycling, taxi, and public transit services than in suburban, automobile-dependent areas, as illustrated by the Urban Accessibility Explorer. Urban living reduces the time and money residents must spend on travel, plus the external transport costs motorists impose on others, including traffic and parking congestion, parking subsidies, collision risk, and pollution emissions. In addition, the provision of public infrastructure and services (utilities, roads, emergency response, schools, etc.) tends to be more efficient [pdf] in compact urban areas, allowing them to be cheaper and better. Because urban neighborhoods are generally very walkable, residents tend to be fitter and healthier.

By increasing land values, gentrification can financially benefit residents who own their homes, and public policies allowing higher densities (for example, allowing parcels to be subdivided, or multi-family housing to replace single-family housing) can reduce the costs of new housing construction, which increases affordability for some households. 

Urban redevelopment can improve residents' economic opportunity by increasing local employment options and reducing poverty concentration. Urban neighborhoods have much better job access than suburbs, particularly for non-drivers. Urban redevelopment increases neighborhood business activity, which increases local economic development and employment. This can increase the number and variety of businesses in a neighborhood, for example, supporting a grocery or hardware store, that benefits existing residents. This is particularly beneficial to lower-income residents who rely on walking, cycling, and public transit, and so depend on neighborhood services.

Lower-income children benefit significantly from living in more mixed-income neighborhoods; they tend to experience less violence and crime, attend better schools, and have better role models. Most previous research on this subject examined the benefits to children who move from concentrated poverty to mixed-income neighborhoods, but the impacts should be similar if redevelopment attracts more middle-class households into impoverished neighborhoods.

Gentrification Costs

This is not to ignore the potential risks and costs to existing lower-income and minority residents that can result if more affluent households move into their neighborhood.

The most obvious risk is that increased demand by wealthier households can drive up housing prices, which increases housing cost burdens and displaces lower-income rental households. Higher property values can also increase property taxes, although for some households these costs can be deferred until the house is sold. When evaluating this impact it is important to distinguish between gentrification (more affluent residents) and displacement (fewer poor residents). In fact, it is possible to have gentrification without displacement if the total number of housing units increases while maintaining the number of lower-priced units.

Fear of displacement has created anti-gentrification campaigns that often oppose higher-density development. This confuses cause and effect, and tends to exacerbate the problem. If urban housing demand is increasing, limiting supply will simply drive up prices because wealthy households are able to outbid poorer households. This helps explain why housing is so unaffordable in cities like Los Angeles, which prohibit affordable urban infill in most residential neighborhoods. A better solution is to support more infill housing development [pdf] to create more mixed-income neighborhoods. Affordable infill housing strategies include rent controls, subsidies, affordable housing mandates (“inclusionary zoning”), and policies that allow and encourage more moderate-priced housing development. Most communities require a combination of these strategies, and in many situations, gentrification can help make these possible by stimulating the development with affordable housing mandates, and providing additional tax revenue to finance affordable housing subsidies.

If the number of lower-income consumers declines while rents increase, neighborhoods might lose businesses that sell lower-priced goods, such as cheap cafés and used clothing stores. However, this may be offset if increased demand (more total customers) makes local businesses more successful overall.

Opposition to gentrification can also reflect fear of community change. Many urban neighborhoods have distinct cultural identities and strong connections among local friends, businesses, and institutions. Many residents greatly value these relationships and fear that they will be spoiled by newcomers who misunderstand or even ridicule their traditions. On the other hand, segregation can harm a community, making it narrow and insular, and most neighborhoods can benefit from new residents, regardless of cultural background, provided that they are committed and involved in their community. Lower-income residents might fear disrespect from more affluent and educated neighbors. Fear of cultural change can be reduced if communities maintain a strong identity, for example, by establishing a neighborhood name and deciding how public facilities are designed and community institutions are managed.

The table below summarizes gentrification impacts (benefits and costs), categorized according to who is impacted, existing or new residents. Is there anything I overlooked? 

Gentrification Impacts

Existing Residents

New Residents


Improved public services

More and more diverse local shops

Reduced regional traffic problems (congestion, parking subsidies, accidents and pollution emissions

Increased property values increase homeowner wealth

Improved economic opportunity (employment options)

More cultural and income mix

Housing in walkable neighborhood

Improved accessibility and transportation cost savings

Improved economic opportunity

More diverse and dynamic community

Improved public fitness and health


Higher rents impose financial burdens and displacement on renters

Higher property values increase property tax burdens on homeowners

Reduced cultural identity and community cohesion

Fewer businesses serving low-income customers

Envy and disrespect from new neighbors

Higher housing costs compared with sprawled locations (sometimes)

Social exclusion (inability to fit in, and unfriendly neighbors)

This debate raises some uncomfortable issues. Gentrification directly benefits affluent new residents, while many of the costs and risks are borne by poor and minority communities that suffered from previous unfair development policies, such as redlining and urban highway construction. Members of those communities can reasonably argue that they deserve special protection and support to correct past inequities. On the other hand, discrimination and segregation are generally considered undesirable and harmful, and gentrification opponents may be unaware of the consequences that result from exclusionary policies and development restrictions.

An important factor in this analysis is what we assume would happen if gentrification does not occur. Households that want to but cannot live in an urban neighborhood may instead locate in another urban neighborhood, in a suburban area in the same region, or in another region. These different scenarios imply different impacts.

My research indicates that sprawl imposes large direct and indirect costs, which suggests that communities can benefit from urban infill. To be effective and fair, this requires policies that minimize costs and maximize benefits of gentrification. There is no single best policy program to do this; gentrification raises complex and emotional issues. As always, one job of planners is to help stakeholders recognize and evaluate all significant impacts so they can make informed and fair decisions.

Todd Litman

Todd Litman is founder and executive director of the Victoria Transport Policy Institute, an independent research organization dedicated to developing innovative solutions to transport problems.

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