There are a number of gentrifying neighborhoods in the Bay Area, which is home to some of the highest rents and home prices in the nation. While the reasons behind the inflated housing costs are complicated, gentrification, the influx of wealthier people to an existing urban neighborhood, with a correlated change in the neighborhood’s character and culture and increase in rents and property values, is certainly a factor. (For more, see The Truth About Real Estate Prices.)
Renters are typically the hardest hit by gentrification. When rents increase, tenants are pushed out – through evictions, rent hikes or natural turnover. When landlords “cash out” to take advantage of rising property values, new buyers may evict existing renters to move in themselves, renovate the building and/or bring in new tenants at a higher rate.
The reason that’s pertinent here is that the Bay Area has one of the lowest homeownership rates – and, therefore, the highest rate of renters – in the country. At 62.9%, the portion of U.S. households owning homes has reached its lowest level in 51 years. In the Bay Area it’s even lower: According to an analysis of the U.S. Census Bureau’s annual American Community Survey, the rate of homeownership in the San Francisco metropolitan area is just 53.5%.
The Urban Displacement Project is an initiative of U.C. Berkeley in collaboration with researchers at UCLA, community-based organizations, regional planning agencies and the State of California’s Air Resources Board. The project analyzes regional data on housing, income and other demographics to predict where gentrification and displacement are happening and likely to occur in the future.
Using interactive maps from the Urban Displacement Project, Cory Weinberg, a reporter for the Information and a former reporter for the San Francisco Business Times, identified some of the most-populous census tracts in the Bay Area’s nine counties that are deemed by the project to be at risk of gentrification or displacement. Here they are, along with the median sales price, median rent per month and median household income, according to market overviews on real estate aggregator website Trulia.com (as of Feb. 7, 2017).
As the above-mentioned areas undergo gentrification, now could be the time to buy property in these regions before housing prices increase further.
That said, there are disadvantages to buying in a gentrifying neighborhood. The PBS film “Flag Wars” demonstrates that a gentrified neighborhood can become a “victim of its own success.” Increasing rents and property values, along with the “upward spiral of desirability,” can erode the qualities that attracted new people to the neighborhood in the first place.
It’s important to note that while the gentrification process can lead to positive changes within the community – for example, reduced crime, increased economic activity and new investment in area buildings and infrastructure – the benefits are typically enjoyed most by the new arrivals and least by the established residents, who often end up “economically and socially marginalized.” According to the film, “When success comes to a neighborhood, it does not always come to its established residents, and the displacement of that community is gentrification’s most troubling effect.” (For more, see Why the U.S. Middle Class Is Hit Hardest by Rise in Rent.)