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Re-Measuring Gentrification

Project Members
Engagement Method
Economics, Finance, Policy
Action Area
Housing
Livelihoods
Strategic Priority
Achieving Racial Justice
Closing the Wealth Gap

Gentrification is typically measured by long-term changes in neighborhood composition, I argue that we should examine the relationship between relative house prices and incomes to assess gentrification.   Incomes reflect who lives there today, house prices reflect who is buying and selling there—and their expectations about future changes, and a gap between these (as shown in the data) provides information about future changes. I use this model to examine the rise in Black/White “integration” is due to an increase in the number of neighborhoods that are gentrifying.

Re-measuring gentrification

We develop an expectations-based measure of gentrification. Property values today incorporate market participants’ expectations of the neighbourhood’s future. We contrast this with present-oriented variables like demographics. To operationalise the signal implicit in property values, we contrast the percentile rank of a neighbourhood’s average house price to that of its average income, relative to its metropolitan area. We take as our signal of gentrification the rise of a neighbourhood’s house value percentile above its income percentile. We show that a gap between the house value and income percentiles predicts future income growth. We further validate our metric against existing approaches to identify gentrification, finding that it aligns meaningfully with qualitative analyses built on local insight. Compared to existing quantitative approaches, we obtain similar results but usually observe them in earlier years and with more parsimonious data. Our approach has several advantages: conceptual simplicity, communicative flexibility with graphical and map forms and availability for small geographies on an annual basis with minimal lag.

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