New Study Shows the Huge Impact Gentrification Is Having on Residents in These Cities

Gentrification is the influx of a group of wealthier people into an existing urban area, which causes an increase in property values and rental rates, as well as possible changes to the area’s culture. Although the improvements and revitalization efforts that come with gentrification can have positive effects, such as making the area more attractive and hospitable and bringing more money into the city, these changes often mean the displacement of lower-income residents who can’t afford to keep up with the pace of progress and are effectively squeezed out of the area.

To find the most gentrified cities in the U.S., GOBankingRates analyzed changes in home values and incomes over the past five years. Keep reading to find out the impact of gentrification on these locations, including the sometimes rapid and dramatic cost-of-living increases in some cities.

• 5-year home price change: 74.7%
• 5-year median income change: 15%

Median home prices have increased by over $100,000 in Nashville over the past five years, with over $20,000 of the increase happening within the last year. It’s no wonder home prices are climbing: Nashville ranked No. 7 on Forbes’ America’s Fastest-Growing Cities 2018 list, up from the No. 20 spot in 2017. But the city has growing pains: The rapid gentrification of Music City has created an affordable housing crisis for seniors and low-income residents who can’t afford the increased prices due to the boom.

• 5-year home price change: 45.8%
• 5-year median income change: 13.8%

The median income in Ann Arbor has risen from $53,814 in 2012 to $61,247 in 2017 — and both figures are higher than the U.S. median income. Part of this might have to do with the fact that the city is home to the University of Michigan, according to Forbes, which employs many of Ann Arbor’s residents as university staff and personnel at its medical center. Ann Arbor also ranks No. 9 on Verizon’s recent study titled “The Most Innovative Metro Areas in the U.S,” which identifies the top 10 areas of the country with the highest numbers of U.S. patents being issued to tech innovators. These higher-earning professionals coupled with university students from affluent families who require housing have likely influenced the gentrification efforts here.

• 5-year home price change: 40.3%
• 5-year median income change: 19.9%

Home prices have jumped notably in Bentonville over the past five years, from $162,00 to $227,300, largely due to the presence of Walmart’s headquarters and the executives who live there, which make it a more desirable place to live. Bentonville has come a long way from its humble beginnings as a small Northwest Arkansas town where Walmart founder Sam Walton first set up shop, mostly due to the Walton family’s investments into the community over time.

Since then, a great effort has been made to elevate the city’s infrastructure, education and community amenities, including the addition of a world-class art museum, an 83,000-square-foot community recreation center, an extensive park system containing 23 parks and over 50 miles of trails and the revitalization of the downtown area, including the opening of a boutique hotel and restaurant.

• 5-year home price change: 62.8%
• 5-year median income change: 11.1%

Home prices have risen from $221,400 to $360,400 in Thornton, which is a suburb north of Denver. Plus, there’s a new commuter rail in the works that originates in Denver and plans to have stops in Thornton, which will likely further gentrify this city. If you’re wondering what a rail system has to do with the issue, a recent study from the University of Colorado Denver found that access to jobs, proximity to transit stations and the quality of housing stock are all good indicators of neighborhood’s likelihood of gentrifying.

• 5-year home price change: 35.6%
• 5-year median income change: 20.8%

In the nation’s capital, the most significant increase in median income within the past year and the past five years has been in households earning $200,000 or more, which signals that there’s a population with money to spend. And Washington, D.C. has made headlines for being one of the most gentrified cities as it has redeveloped and revitalized many of its neighborhoods in a big way to attract those from the “creative class.” As part of these efforts, in 2017, a $2.5 billion development on the Southwest Waterfront opened for business, complete with luxury hotels, upscale residential buildings, music venues, shops, eateries and more. But things haven’t always gone so swimmingly. In 2018, a $400 million gentrification plan directed at one of the city’s largest housing complexes was shot down in the D.C. Court of Appeals after low-income residents filed a suit in an effort to avoid being displaced.

• 5-year home price change: 46.2%
• 5-year median income change: 18.7%

Over the past five years, median home prices in Royal Oak have risen from $167,200 to $244,500, indicating that homebuyers like what the city has to offer enough if they are willing to buy there. One of the biggest gentrification efforts in Royal Oak is focused on the downtown area, which includes the city’s central business district. New shops, restaurants with patios and convenient, outdoor resting places are making the downtown area a popular place among residents. Plus, the city’s Rethink Royal Oak Development is already underway with plans to construct a downtown park, a parking garage, a new city hall and a new police station.

• 5-year home price change: 67.7%
• 5-year median income change: 22.4%

Five years ago, the median home price in The Mile High City was right around $250,000; now, it’s approaching to half a million bucks, which indicates a booming housing market. One of the perks of living somewhere like Denver is the beautiful mountain scenery that surrounds the city, but Denver’s popularity due to gentrification is threatening those priceless views. In an effort to address the shortage of housing, Mayor Michael Hancock believes that building up — instead of out — is the answer. Specifically, the mayor is in favor of constructing skyscraper apartment homes as an economically and environmentally sound move, citing that the city is “roughly 40,000 houses and apartments short of meeting demand due to growth in recent years,” reported The Seattle Times.

• 5-year home price change: 30.0%
• 5-year median income change: 14.9%

With the median home price in Costa Mesa at $808,600 and the median income at just over $75,000, it’s no wonder that low-income residents filed a lawsuit against the city for its law prohibiting motel stays over 30 days, as well as over the plans to redevelop the motel they were living in into a 224-unit apartment complex. Unfortunately, living in a motel was the only affordable solution for these people due to the severe affordable home shortage in the city caused by the effects of gentrification. The lawsuits have now been settled and the city is planning to include nine low-income units within the new apartment complex, as well as seeking out affordable housing opportunities to help people who struggle financially in the community.

• 5-year home price change: 47.5%
• 5-year median income change: 20.6%

Even though the median income in Charleston has increased from $50,873 to $61,367 in the past five years, it’s still not enough to keep up with the rising cost of housing in the city, shortage of affordable homes and people working in lower-paying jobs, such as teachers, police officers and hospitality workers who are having to look elsewhere for living arrangements.

• 5-year home price change: 52.0%
• 5-year median income change: 19.2%

The median home price in Berkeley has increased from $807,900 to $1.2 million due to gentrification in the area. And high-income earners aren’t the only ones contributing to the effects of gentrification. U.C. Berkeley students are, too, due to an increase in enrollment and a shortage of available on-campus housing after freshman year. Because the search for affordable housing is so competitive here, students acquiring off-campus affordable housing with the help of their parents are squeezing out low-income residents.

• 5-year home price change: 40.5%
• 5-year median income change: 20.5%

In Napa, the five-year home price change has increased almost twice as much percentage-wise as the five-year median income change. As a result, the median home price has gone from $469,200 to $659,300. But the home price here might likely be much higher if not for the wildfires that ravaged the area in October 2017, making it one of the less desirable gentrified cities. Just a month earlier, in September of that year, the median home price in Napa County was a much higher $876,200, according to realtor.com.

• 5-year home price change: 39.7%
• 5-year median income change: 27.2%

Even though the five-year median income change in Midland is better than some of the cities on this list, it’s still not enough. The 2016 ramp-up in oil production in Midland resulted in an increase in the demand for housing and, consequently, the median price for homes also increased. Higher home prices, accompanied by a generally higher cost of living, make it hard for those making lower wages to make it in Midland during the city’s current economic boom.

• 5-year home price change: 56.6%
• 5-year median income change: 16.4%

Median home prices in Hillsboro have greatly outpaced median income increases due to the effects of a booming real estate market. But a change might be taking effect. Hillsboro, which is part of a larger statistical metropolitan area for purposes of the study, ranks No. 17 on Forbes’ America’s Fastest-Growing Cities 2018 List, down from No. 9 in 2017, which means that maybe that growth is slowing.

• 5-year home price change: 67.9%
• 5-year median income change: 22.4%

Oakland has seen a dramatic increase in median home price over the past five years — from $440,700 to $739,800 — but, like other cities on this list, the median income increase falls way behind. And it doesn’t appear the city has any plans to slow its gentrification efforts. A look at the city’s website shows that it has plans in the works to revitalize the downtown area for the first time ever.

• 5-year home price change: 67.8%
• 5-year median income change: 25.4%

Just by looking at the difference between percentages for five-year home price change and five-year median income change, anyone can see that Seattle’s real estate growth has outpaced its income levels. And Forbes recognizes it, too. Seattle ranks No. 2 on Forbes’ America’s Fastest-Growing Cities 2018 List, up from No. 7 in 2017. The catalyst that started all the growth has to do with one of the major tech players in the market today. When Amazon opened an 11-building campus in the city’s South Lake Union neighborhood a little over a decade ago, real estate values jumped and so did wages. Another change that occurred due to gentrification was that land use has become more focused on multifamily buildings instead of single-family homes, which has caused a problem in affordable housing here.

• 5-year home price change: 33.9%
• 5-year median income change: 22.9%

Vista doesn’t have near the gap between five-year median home price change and income change, but real estate prices are increasing faster than wages. And that’s a trend that might not be likely to slow anytime soon. A quick look at Vista’s city website shows that the city has plenty of revitalization and improvement plans in the works.

• 5-year home price change: 45.1%
• 5-year median income change: 18.4%

Although the median home price increase in Quincy hasn’t been as dramatic as in some other areas, only rising from $326,400 to $473,600 in the past five years, a big part of that growth has happened within the past year. Part of that growth might have to do with the fact that the City of Quincy website boasts that its new Quincy Center is one of the “largest urban revitalization efforts anywhere in Massachusetts.”

• 5-year home price change: 68.1%
• 5-year median income change: 20.2%

Home prices have radically outpaced wage increases in Hayward. The median home price here is $672,500, whereas the median income lags behind at just $74,927. With the city’s notably diverse population and over 3,000 acres of parks and open spaces, it’s no wonder people are drawn to living there.

• 5-year home price change: 37.6%
• 5-year median income change: 28.5%

To afford the average home in San Marcos, you’ll have to be able to commit to paying almost $600,000 before interest. On the gentrification front, the city has plenty of major improvement and revitalization efforts planned, one of the largest being the development of a new downtown area. Although construction has been stalled since 2015, the city plans to break ground on the community’s trails and park space this year.

• 5-year home price change: 62.6%
• 5-year median income change: 31.1%

Even though Somerville residents have seen a pretty healthy increase in median incomes over the last five years — $64,603 to $84,722 — the booming real estate market in Somerville has squeezed out working-class families to make room for grad students and tech workers. And now, the city is on the cusp of a $1.5 billion makeover project for its iconic Union Square. Some residents are not happy about it, however, for fear that the effort might push out long-standing business owners and neglect important additions such as affordable housing and public park space.

Click through to read more about the places in America where homes are still affordable.

More on the Economy

• Richest and Poorest Area Codes in the US
• Cities Where You Can Realistically Live on Minimum Wage
• These Are the Wealthiest School Districts Across America, Study Finds
• Watch: Best and Worst States for the Middle Class

We make money easy. Get weekly email updates, including expert advice to help you Live Richer™.

Methodology: GOBankingRates compiled a list of 500 U.S. cities by household number, sourced from the U.S. Census Bureau. The study then analyzed these cities using 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. 

Photo Disclaimer: Please note photos are for representational purposes only. As a result, some of the photos might not reflect the locations listed in this article.