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Effects of gentrification on longtime residents are not as negative as typically perceived, Philly Fed says

The study, which examines U.S. Census data over a 10- to 14-year period, finds that longtime residents who stay in a neighborhood reap the benefits of change, including less exposure to poverty and rising homes values. Still, the study acknowledges that low-income residents are more likely to leave.

On the 1300 block of North 27th Street in Philadelphia's Brewerytown neighborhood, an older, deteriorating home is next to newer development. Many neighborhoods like this in the city often experience the growing pains associated with gentrification.
On the 1300 block of North 27th Street in Philadelphia's Brewerytown neighborhood, an older, deteriorating home is next to newer development. Many neighborhoods like this in the city often experience the growing pains associated with gentrification.Read moreTIM TAI / Staff Photographer

A smattering of Philadelphia neighborhoods within the last two decades have experienced dramatic changes, a phenomenon often known as gentrification a controversial term that can be synonymous with displacement or urban renewal depending on who is asked.

For residents who once lived in the Arvilla apartments in West Philadelphia, gentrification meant eviction last winter, as longtime renters were forced to leave when the building owner decided to sell. In Brewerytown in recent years, it has meant rising property values for longtime residents and steady work for local contractors. And in Fishtown, the term will forever be linked to the collapse in February of a family’s longtime home — 61 years of memories crumbling to the ground after a construction error next door.

Economists and sociologists have tried to study these effects, seeking to determine how gentrification affects longtime neighborhood residents when they are confronted with a steady flow of construction crews, new residents, and different — often higher-end — businesses.

A new study released Tuesday by the Federal Reserve Bank of Philadelphia finds that the consequences of gentrification for original neighborhood residents are often better than they are typically perceived.

In what the authors billed as the first “comprehensive, national, causal evidence" of how gentrification affects the well-being of a neighborhood’s longtime residents, the study found that change “creates some important benefits for original resident adults and children and few observable harms.” Specifically, the authors found that gentrification reduces “original" adult residents’ exposure to neighborhood poverty, raises home values, and increases rent only “more-educated renters” but not for “less-educated" ones. (In the study, “less-educated” residents are defined as adults with a high school degree or less; “more-educated" are residents who attended at least some college.)

Similarly, the study finds that children living in a neighborhood before it gentrified also are exposed less to neighborhood poverty and receive better opportunities for education and employment. Gentrification, the study says, increases the probability that children of less-educated homeowners attend and complete college.

“Taken together,” the study says, “the results for children and adults show that many original residents are able to remain in gentrifying neighborhoods and share in any neighborhood improvements."

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Despite these reported benefits, however, the authors of the study — Davin Reed of the Philadelphia Fed and Quentin Brummet of the University of Chicago’s NORC institution — also found that gentrification causes both less-educated renters and less-educated homeowners to leave a neighborhood at higher rates than they normally would during a typical 10- to 14-year period, the span of time that the researchers studied. Normally, the study found, less-educated renters tend to move at a rate of 68 percent over the course of 10 to 14 years. When a neighborhood gentrifies, that group tends to move closer to 73 percent of the time, according to the study.

Similarly, Reed and Brummet found that gentrification also increases the probability that less-educated homeowners will move. Ordinarily, less-educated homeowners will move at a rate of 34 percent. Gentrification increases that to roughly 37 percent.

Still, the authors said, they found no evidence that residents who leave gentrifying neighborhoods, including the most disadvantaged, move to “observably worse neighborhoods or experience negative changes to employment, income, or commuting distance.” (The employment, income, and commuting distance of longtime residents who stay in gentrifying neighborhoods are not positively affected either, the study found.) And because all renters, regardless of education, tend to move even when a neighborhood is not gentrifying, the study suggests this places “a limit on the potential for gentrification to cause displacement," and makes it possible for neighborhoods to change quickly “even without strong displacement effects.”

» READ MORE: To brag or bemoan? How differing definitions of gentrification are their own problem

The study, which takes a national look at gentrification, offers a rather upbeat portrait of neighborhood change using U.S. Census microdata — something that the researchers acknowledge cannot quantify the emotional, nonmonetary costs associated with gentrification.

“Gentrification and displacement have severe ramifications, both for those forced to move out of neighborhoods and for those who are able to stay,” said Rachel Garland, managing attorney of Community Legal Services’ (CLS) Housing Unit in Philadelphia. “Those who move struggle with the sense that they were forced out of their neighborhoods that they helped to build to make way for newcomers who have no connection or investment in the neighborhood.”

“For those who stay, there is a loss of cultural history and memory,” Garland continued. “Those who stay watch their neighborhoods change drastically around them and have to contend with new neighbors and businesses who do not share the same cultural history, nor participate in the same social and cultural fabric.”

As an attorney for CLS, which provides free legal representation to low-income Philadelphians, Garland said she has seen a “drastic increase” in landlords evicting longtime tenants “so that they can sell their houses to developers to renovate and flip to higher-income purchasers.”

Monty Wilson and Rachel Labush, two CLS attorneys who work in the organization’s homeownership unit, also noted that rising property taxes have the potential to cost people their homes. In addition, they said by email, African American homeowners in Philadelphia are often less able to access the benefits of gentrification, such as buying into improving neighborhoods, in part because the demographic tends to be denied access to loans more frequently.

Garland added that the changing racial and socioeconomic makeup of Philadelphia neighborhoods are also an important part of the gentrification conversation — both of which are emphasized less in the newly released study.

The Federal Reserve Bank of Philadelphia’s study tracked individuals who responded to both the 2000 Census and the 2010-14 American Community Survey, and analyzed the changes that they self-reported in categories including address, income, and home value. They focused on roughly 175,000 original residents of low-income central city neighborhoods of the 100 largest metro areas in the United States.

Gentrification was defined as an increase in college-educated individuals’ demand for housing in initially low-income, central city neighborhoods.

Like dozens of other cities across the U.S., Philadelphia in recent years has experienced growing pains related to gentrification — spurring both anxieties and feelings of hope among residents. Longtime Philadelphians often say they feel encouraged by the benefits that neighborhood change can bring, things such as cleaner streets, reduced crime, and growing home values. At the same time, they often fear seeing friends and families displaced from the places they grew up.

Brummet and Reed’s study finds that, compared with many U.S. cities, Philadelphia experienced gentrification to a less dramatic extent. Only 11.4 percent of the city’s census tracts gentrified between 2000 and 2010-14. Comparatively, Washington gentrified the most at a rate of 43.7 percent, followed closely by Portland, Ore., and Seattle. Boston gentrified at a rate of 22.6 percent.

“One of the things that, personally, I think is important in these debates around gentrification is keeping sight of the actual scale of the problem,” Reed, the Philadelphia-based author, said in an interview. “Yes, gentrification does create these challenges, some of which we document here. But it also creates opportunities as well.”

According to Emily Dowdall, the policy director for the Philadelphia-based Reinvestment Fund, the research presents an opportunity to discuss local policies that could be enacted to ensure that neighborhoods can remain a place for mixed incomes. In the study, the authors encouraged cities to take a “forward-looking approach” to accommodate increasing demand in some neighborhoods.

“Rather than thinking about, ‘Did this neighborhood truly gentrify in this time period?’ we should be thinking, ‘What can we do about this?'" Dowdall said in an interview. “And can the city of Philadelphia allow longtime residents, both renters and owners, to stay in neighborhoods as they change?”

Dowdall pointed to other cities, such as Minneapolis, which offers landlords a tax break in exchange for keeping some units affordable in their buildings. She also encouraged Philadelphia to find a local program for renters that could work similarly to the Longtime Owner Occupants Program (LOOP) that offers tax relief to homeowners whose assessments sharply increase.

“Mixed-income neighborhoods are a worthy policy goal,” Dowdall said. “If you could design a program [similar to LOOP] that targets longtime renters, that would really help increase equitable development for renters who are the most vulnerable to displacement.”