Gentrification: Why is it a Problem?

Old to new: Residential building facades before and after renovation.
Old to new: Residential building facades before and after renovation. iStock / Getty Images Plus

Gentrification is the process of more affluent people and businesses moving into historically less affluent neighborhoods. While some urban planning professionals say the effects of gentrification are purely beneficial, others argue that it often results in harmful social consequences, such as racial displacement and loss of cultural diversity.

Key Takeaways: What is Gentrification?

  • Gentrification is a term used to describe the arrival of more affluent residents in an older urban neighborhood, with a related increase in rents and property values, and changes in the neighborhood’s character and culture.
  • The process of gentrification is often blamed for the displacement of poor residents by wealthy newcomers.
  • Gentrification has been the source of painful conflict along racial and economic lines in many American cities. 

Definition, Causes, and Problems

While there is no universally agreed-upon definition of the term, gentrification, is generally considered to be the process by which traditionally lower-income neighborhoods are transformed—for better or worse—by an influx of higher-income residents and more profitable businesses.

Most scholars point to two interrelated socio-economic causes of gentrification. The first of these, supply and demand, consists of demographic and economic factors that attract higher-income residents to move into lower-income neighborhoods. The second cause, public policy, describes rules and programs designed by urban policymakers to encourage gentrification as a means of achieving “urban renewal” initiatives.

Supply and Demand

The supply-side theory of gentrification is based on the premise that various factors like crime, poverty, and general lack of upkeep will drive the price of inner-city housing down to the point where affluent outsiders find it advantageous to buy it and renovate it or convert it to higher-value uses. An abundance of low-priced homes, coupled with convenient access to jobs and services in the central city, increasingly make inner-city neighborhoods more desirable than the suburbs to people who are more financially able to convert inner-city housing to higher-priced rental property or single-family homes.

Demographics have shown that young, wealthy, childless people are increasingly drawn to gentrifying inner-city neighborhoods. Social scientists have two theories for this cultural shift. In search of more leisure time, young, affluent workers are increasingly locating in central cities near their jobs. The blue-collar manufacturing jobs that left the central cities during the 1960s have been replaced by jobs in financial and high-tech service centers. Since these are typically high-paying white-collar jobs, neighborhoods closer to the inner-city attract affluent people looking for shorter commutes and the lower home prices found in aging neighborhoods.

Secondly, gentrification is driven by a shift in cultural attitudes and preferences. Social scientists suggest that the growing demand for central city housing is partially the result of a rise in anti-suburban attitudes. Many wealthy people now prefer the intrinsic “charm” and “character” of older homes and enjoy spending their leisure time—and money—restoring them.

As older homes are restored, the overall character of the neighborhood improves, and more retail businesses open to serve the growing number of new residents.

Government Policy Factors

Demographics and the housing market factors alone are rarely enough to trigger and maintain widespread gentrification. Local government policies that offer incentives to affluent people to buy and improve older homes in lower-income neighborhoods are equally important. For example, policies that offer tax breaks for historic preservation, or environmental improvements encourage gentrification. Similarly, federal programs intended to reduce mortgage loan rates in traditionally “under-served areas” make buying homes in gentrifying neighborhoods more attractive. Finally, federal public housing rehabilitation programs that encourage the replacement of public housing projects with less dense, more income-diverse single-family housing have encouraged gentrification in the neighborhoods once blighted by deteriorating public housing.

While many aspects of gentrification are positive, the process has caused racial and economic conflict in many American cities. The results of gentrification often disproportionately benefit the incoming homebuyers, leaving the original residents economically and culturally deprecated.

Racial Displacement: De-Facto Segregation

Originating in London during the early 1960s, the term gentrification was used to describe the influx of a new “gentry” of wealthy people into low-income neighborhoods. In 2001, for example, a Brookings Institute report defined gentrification as “…the process by which higher-income households displace low-income residents of a neighborhood, changing the essential character of that neighborhood.”

Even more recently, the term is applied negatively to describe examples of “urban renewal” in which wealthy—usually white—new residents are rewarded for “improving” an old deteriorating neighborhood at the expense of lower-income residents—typically people of color—who are driven out by soaring rents and the changing economic and social characteristics of the neighborhood.

Two forms of residential racial displacement are observed most often. Direct displacement happens when the effect of gentrification leaves current residents unable to pay increasing housing costs or when residents are driven out by government actions like forced sale by eminent domain to make way for new, higher-value development. Some existing housing may also become uninhabitable as the owners stop maintaining it while waiting for the best time to sell it for redevelopment. 

Indirect residential racial displacement occurs when older housing units being vacated by low-income residents cannot be afforded by other low-income individuals. Indirect displacement can also occur due to government actions, such as discriminatory “exclusionary” zoning laws that ban low-income residential development.

Residential racial displacement resulting from gentrification is often considered a form of de-facto segregation, or the separation of groups of people caused by circumstances rather than by law, such as the Jim Crow laws enacted to maintain racial segregation in the American South during the post-Civil War Reconstruction era.

Loss of Affordable Housing

The lack of affordable housing, long a problem in the United States, is made even worse by the effects of gentrification. According to a 2018 report from the Harvard University Joint Center for Housing Studies, nearly one in three American households spend more than 30% of their income on housing, with some ten million households spending more than 50% of their income on housing costs.

Visitors reading a row of estate agent signs outside a newly-renovated apartment building.
Visitors reading a row of estate agent signs outside a newly-renovated apartment building. iStock / Getty Images Plus

As part of the gentrification process, older affordable single-family housing is either improved by the incoming residents or replaced by high rent apartment projects. Other aspects of gentrification, such as government imposed minimum lot and home sizes and zoning laws banning apartments also reduce the pool of available affordable housing.

For urban planners, affordable housing is not only hard to create, but it is also hard to preserve. Often hoping to encourage gentrification, local governments sometimes allow subsidies and other incentives for affordable housing construction to expire. Once they expire, owners are free to convert their affordable housing units to more expensive market-rate housing. On a positive note, many cities are now requiring developers to build a specified percentage of affordable housing units along with their market-rate units.

Loss of Cultural Diversity

The gentrification of the once largely Hispanic area of East Austin, Texas.
The gentrification of the once largely Hispanic area of East Austin, Texas. Larry D. Moore/Wikimedia Commons/Public Domain

Often a byproduct of racial displacement, cultural displacement occurs gradually as the departure of long-time residents changes the social character of the gentrifying neighborhood. As old neighborhood landmarks such as historically black churches close, the neighborhood loses its history and its remaining long-time residents lose their sense of belonging and inclusion. As shops and services increasingly cater to the needs and traits of new residents, remaining long-time residents often feel like they have been dislocated despite still living in the neighborhood. 

Loss of Political Influence

As the original lower-income population is replaced by upper- and middle-income residents, the political power structure of the gentrifying neighborhood can also change. The new local leaders begin to ignore the needs of the remaining long-time residents. As the long-time residents sense their political influence evaporating, they further withdraw from public participation and become more likely to physically leave the neighborhood.


While gentrification occurs in towns and cities across the United States, perhaps the starkest examples of how its effects can be a “problem” can be seen in Washington, D.C., and the California Bay Area.

Washington, D.C. 

For decades, many Black Americans affectionately referred to Washington, D.C. as “Chocolate City” because the city’s population was predominantly African American. However, U.S. Census data shows that the city’s Black residents dropped from 71% of the city’s population to just 48% between 1970 and 2015, while the white population increased by 25% during the same period. More than 20,000 Black residents were displaced from 2000 to 2013, as Washington underwent America’s highest rate of gentrification.

Of the Black residents that have remained, 23%, nearly 1 in 4 live below the property line today. By comparison, only 3% of Washington’s white residents live in poverty—the lowest white poverty rate in the nation. Meanwhile, homeownership and the number of available affordable rental units for long-time Washington residents continue to decrease.

California Bay Area

In the Bay Area of California—the cities of San Francisco, Oakland, and San Jose—the rapid replacement of old blue-collar industries and jobs with technology, medical, and financial services firms has largely displaced the pre-existing residents. As gentrification progressed, housing costs and land values soared. To maximize their profits, developers built ever more units on ever less property to the point that the Bay Area is now the second densest urban area in America after Los Angeles.

Row of large old Victorian style detached brick houses with gables.
Row of large old Victorian style detached brick houses with gables. iStock / Getty Images Plus

Due to gentrification, skyrocketing housing costs in the Bay Area have driven many people of color, the elderly, and people with disabilities from their homes. From 2010 to 2014, the number of area households with annual incomes of $100,000 or more grew by 17%, while households making less decreased by 3%.

A large majority of the area’s new wealthy, well-paid residents are white, while those being displaced are people of color who have less income to spend on housing. As a result, “affordable housing” has become virtually non-existent in the San Francisco-Oakland area. The average rent for a one-bedroom, 750-square-foot apartment in San Francisco is now almost $3,000 per month, while the median price of a single-family home has topped $1.3 million, according to Zillow. 

Tied directly to the soaring cost of housing, another consequence of Bay Area gentrification has been a sharp increase in the number of evictions in San Francisco. Increasing steadily since 2009, evictions in San Francisco peaked between 2014 to 2015 when more than 2,000 notices were issued—a 54.7% increase over the previous five years.


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  • Zuk, Miriam. “Gentrification, Displacement, and the Role of Public Investment.” Urban Planning Literature, 2017,
  • Richards, Kathleen. “The Forces Driving Gentrification in Oakland.” East Bay Express, September 19, 2018,
  • Kennedy, Maureen and Leonard, Paul. “Dealing with Neighborhood Change: A Primer on Gentrification and Policy Choices.” Brookings Institute, 2001,
  • Zukin, Sharon. “The Death and Life of Authentic Urban Places.” Oxford University Press, May 13, 2011, ISBN-10: 0199794464.
  • Herber, Chris. “Measuring Housing Affordability: Assessing the 30-Percent of Income Standard.” Joint Centers for Housing Studies, September 2018,
  • Rusk, David. “Goodbye to Chocolate City,” D.C. Policy Center, July 20, 2017, 
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Longley, Robert. "Gentrification: Why is it a Problem?" ThoughtCo, Apr. 23, 2021, Longley, Robert. (2021, April 23). Gentrification: Why is it a Problem? Retrieved from Longley, Robert. "Gentrification: Why is it a Problem?" ThoughtCo. (accessed June 9, 2023).