How Does Gentrification Affect Homeowners and Renters Differently?

Gentrification directly displaces renters, but homeowners do not face a heightened displacement risk in gentrifying areas, according to a study by Isaac William Martin and Kevin Beck. The study tested a prominent theory about rising property taxes leading to homeowner displacement in gentrifying areas and whether policies that limit property tax increases offer displacement protection.

To explore this association, the authors created a merged dataset that combines tract-level data on gentrification from the decennial census with data on residential mobility from the Panel Study of Income Dynamics and annual data on state-level variation in property tax policy. The authors define gentrifying neighborhoods as tracts in which average housing prices increased during any decennial period and the increase in the share of adults with four-year college degrees exceeded the share for the county. They defined potentially gentrifying neighborhoods as neighborhoods in which median incomes are lower than the county average and the housing is older than average. Lastly, the authors define involuntary moves as those responding to outside events, such as an eviction or divorce.

Key findings

• Gentrification had no effect on homeowners moving.
• While some evidence suggests that rising property taxes displace homeowners, the study shows no differences between the likelihood of owners making unwanted moves because of property taxes between gentrifying and nongentrifying areas.
• Displacement rates of homeowners in gentrifying areas are also unaffected by state laws that limit property tax increases.
• A renter in a gentrifying neighborhood is more likely to report a move and that the move was involuntary by 2.6 percentage points.
• Homeowners may be less likely to move because they tend to have lived in the community longer, are older, and view their home an economic asset.