Gentrification – the influx of wealthier people to an existing urban neighborhood – is happening in select regions across the nation. The process brings changes to neighborhood character and culture, along with increases in rents and property values. In Washington, D.C., gentrification is happening at a faster pace than in almost all other U.S. cities, according to a report from “Governing” magazine. The publication used Census Bureau data to determine which neighborhoods in D.C. and 50 of the country’s largest cities are gentrifying – along with those that could gentrify, but haven’t yet.
In the report, a Census tract was considered eligible for gentrification if its median home value and median household income both fell in the bottom 40th percentile of all tracts within that metro area. Next, to determine if that area had gentrified, "Governing" determined each tract’s inflation-adjusted home values and percentage of college graduates to see if both were now in the top one-third percentile, compared to other tracts in the area.
The results showed that out of 179 total Census tracts in D.C., 51.9% of eligible tracts had gentrified. The only city to have a higher percentage of eligible tracts gentrify was Portland, Ore. (58.1%). Rounding out the top five (behind D.C.) were Minneapolis (50.6%), Seattle (50%) and Atlanta (46.2%). By comparison, fewer than 5% of D.C.’s then-eligible tracts gentrified between 1990 and 2000.
7 Newly Gentrified Neighborhoods
D.C. is home to some of the fastest gentrifying neighborhoods in the country. Here are seven that “Governing” recognized as recently gentrifying, along with each neighborhood’s median home sales price, median rent per month and median household income, according to market overviews on the real estate aggregator website Trulia.com (as of Feb. 15, 2017). The range of median rents and median home prices give you a sense of how much choice there still is in the Washington, D.C., housing market.
- Median Home Sales Price: $716,000
- Median Rent per Month: $3,347
- Median Household Income: $59,146
- Median Home Sales Price: $667,500
- Median Rent per Month: $1,150
- Median Household Income: $50,542
- Median Home Sales Price: $617,500
- Median Rent per Month: $2,300
- Median Household Income: $26,033
- Median Sales Price: $715,000
- Median Rent per Month: $3,200
- Median Household Income: $95,729
- Median Home Sales Price: $650,000
- Median Rent per Month: $3,000
- Median Household Income: $62,462
- Median Home Sales Price: $450,000
- Median Rent per Month: $3,097
- Median Household Income: $85,453
- Median Home Sales Price: $565,000
- Median Rent per Month: $2,875
- Median Household Income: $75,977
D.C.’s Urban Renewal
Gentrification in the District started accelerating in the early 2000s, when then-Mayor Anthony Williams set a goal of reversing decades of population decline and bringing in 100,000 new residents. The city drafted and implemented neighborhood investment strategies, based on the belief that walkable, mixed-use development attracts working adults and boosts city tax revenues. By 2014, the population had increased by nearly 90,000, according to the Census Bureau.
The city invested $138 million in a civic plaza, parks, a recreation center and new (or remodeled) schools in Columbia Heights, a neighborhood in D.C.’s Northwest quadrant that had already received a bump from a newly built metro station in 1999. Between 2000 and 2010, the neighborhood’s population increased by 6%, and it has continued to grow – albeit slowly – ever since. In 2012, the Fordham Institute named Columbia Heights as one of the most quickly gentrifying neighborhoods in the country.
The Bottom Line
Overall, D.C. has a median sales price of $655,000, with median rent running $3,000 per month. With a median household income of $65,609, many of the city’s residents continue to be burdened by high housing costs, which will continue to rise if gentrification expands into new neighborhoods throughout the city.
Buying early in a gentrifying neighborhood can make your real estate investment grow quickly (see Why You Should Buy in Gentrifying Neighborhoods.). But there are some definite downsides.
The PBS film "Flag Wars," produced in 2003 but still relevant today, 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. While gentrification 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. Established residents often end up “economically and socially marginalized,” according to the film, which summarized the end result this way: “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.”