Gentrification — the influx of a group of wealthier people into an existing urban area — causes an increase in property values and rental rates, as well as changes to the area’s culture. And it’s a major problem in the nation’s capital. In a study conducted by the National Community Reinvestment Coalition (NCRC) from 2000 to 2013, Washington, D.C., was found to be “the most gentrified city by percentage of eligible neighborhoods that experienced gentrification.” The study found that 40 percent of Washington, D.C., had experienced gentrification, which was an alarming 11 percent higher than San Diego — the city with the second-highest percentage of gentrification.
Although some see revitalization efforts as positive, they often come at the direct cost of displacing lower-income residents who cannot keep up with the rising costs and are squeezed out of their neighborhoods. A recent GOBankingRates study found the nation’s most gentrified cities by analyzing changes in home values and incomes over the past five years. Washington, D.C., was featured as one of the worst examples.
Median Income on the Rise, but Disproportionately for the Wealthy
In Washington, D.C., the most significant increase in median income within the past five years has been in households that make $200,000 or more annually. D.C.’s wealthiest have seen a median household income increase of 1.2 percent since last year and a 3.9 percent increase in the past five years. These two figures outpace the growth seen by households with smaller annual incomes. For example, a household in Washington, D.C., earning $150,000-$200,000 annually saw its income grow by only 0.5 percent since last year and 1.6 percent over the last five years. And it gets worse for households earning $100,000-$150,000, which only saw household incomes increase 0.4 percent in the past year.
With home prices in Washington, D.C., rising at a steady clip of 5.9 percent since last year and 35.6 percent in the past five years, it is a classic case of cost of living rising and wages not keeping up. This squeezes out those who cannot keep up with the rapid rise in the cost of housing and are forced to find a more affordable place. In the case of Washington, D.C., those affordable places seem to keep dwindling as more and more native Washingtonians move to the cities east neighborhoods.
The Factors Behind Gentrification in the Nation’s Capital
When a city in dire housing straits chooses to spend over $2 billion on a new waterfront development — as D.C. recently did — instead of on affordable housing, it’s not hard to see why there is a problem in the nation’s capital.
One reason the city might feel the need to constantly “revitalize” so many neighborhoods with luxury housing is the influx of high-paid workers. With a median household income nearly $20,000 over the national average of $57,652, many residents are in a position to afford higher-priced housing that’s out of reach for many of the city’s lower-income residents.
Finally, while Washington, D.C., can vote in presidential elections, they still have no voting member in the U.S. House of Representatives or U.S. Senate. Since the passage of the District of Columbia Home Rule Act, Washington, D.C. has been allowed to seat a nine-member city council and mayor to pass local ordinances and laws. But all legislation passed by the D.C. government, including the city’s local budget, remains subject to the approval of Congress, according to the Home Rule Act. This lack of statehood for D.C. has time and time again led to the city’s severe housing problems being swept under the rug.
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Chris Jennings contributed to the reporting for this article.
Methodology: GOBankingRates compiled list of 500 U.S. cities by household number, sourced from the U.S. Census Bureau. The study then analyzed these cities along the following factors: (1) one-year home value change, from December 2017 to December 2018, sourced from Zillow; (2) five-year home value change, from December 2013 to December 2018, sourced from Zillow; (3) one-year change in median household income(4) five-year change in median household income, (5) one-year change in percentage of households earning $100,000 to $149,999, earning $150,000 to $199,999, and earning $200,000 or more, all sourced from the U.S. Census Bureau’s 2017 American Community Survey. Each factor was given a score, combined and then ranked.