Love it or hate it, gentrification is a factor in today’s real estate market. Generally controversial, gentrification’s often-negative connotation comes from the notion that it displaces poor people — often minorities — in favor of yuppie, middle-class types.
In 2015, Slate argued that this type of gentrification is actually a myth — that the socio-economic status of most neighborhoods is strikingly stable over time — and calling for the politically loaded, long misunderstood term to be retired at last. A noble request, but one that has not been met by the masses.
In fact, America’s obsession with gentrification continues, reflected in entire-town renovation shows like Home Town and Fixer Upper. And new research from RentCafe analyzed the 2000 Census and the 2016 American Community Survey to look for changes in 11,000 US zip codes over the past 15 years — culminating in a list of the “20 most gentrified zip codes in America.”
The methodology is as follows: The analysts looked at three data points “crucial in determining whether gentrification is present: the median home value, the median household income, and the population that holds a bachelor’s or higher degree.” Says RentCafe: “The gentrification coefficient that gave us the final ranking is a simple average of the ranks the zip codes obtained in these three categories.”
And the Winners Are…
The table below showcases the 20 US zip codes that have gentrified the most from 2000 to 2016, starting with the most gentrified:
As you can see, Los Angeles’ 90014 came in on top with a 700 percent home-value change over the past decade and a half. Meanwhile, more than half (12 out of 20) of the most gentrified zip codes belong to East Coast cities — with zip codes from Brooklyn, Philadelphia, DC, and Manhattan appearing more than once on the list.
Home Values & What it Means
The average 2016 home value in the 20 zip codes identified as “most gentrified” was $446,730, with an average increase of no less than 224 percent since the year 2000. Interestingly, this increase took place amidst a wave of supply growth — 19 of the top 20 gentrified zips experienced increases in the total number of households between 2000 and 2016. Below are the zips with the biggest increases in home value since 2000.
Let’s, for a moment, take a look at the median home value in New York’s 10044 (Roosevelt Island): It went from just over $48,000 to almost $655,000 in 17 short years. Proportionally, this equals an astonishing 1,258 percent expansion rate — a thirteen-fold increase. Even in the tenth zip code down the list (Chattanooga, Tennessee’s 37402) the median home value has more than tripled — exceeding $574,000 from less than $169,000 in just 17 years.
What does it mean? It means that if you invested in these zip codes during the past 17 years, your investments are killing it! Read more of the findings here!
What do you think about gentrification? Is it cruel and unfair or a necessary advance?
Share your points of view in the comments below!