Rust-Belt Cities Exhibit Reverse Gentrification, Says Cleveland Fed Researcher

But in a tale of four cities, Pittsburgh and Buffalo fare better than Cleveland and Detroit

Most major Rust-Belt cities have experienced large declines in population and average income since 1970. However, the losses have not been uniform across neighborhoods. According to a study by Federal Reserve Bank of Cleveland economist Daniel Hartley, neighborhoods with the lowest housing prices experience the steepest declines in population, while income falls more sharply in neighborhoods with middle-tier house prices.

Hartley says this “reverse gentrification” involves the inward contraction of higher-income neighborhoods, as the areas bordering those neighborhoods become low-income. This type of urban decline occurs when low (citywide) housing demand leads to population loss in the lowest-price neighborhoods, and falling home prices allow lower-income households to move into formerly middle-income neighborhoods. As this happens, the average income in those neighborhoods falls and housing prices also fall, or rise less than in other neighborhoods. Hartley says the impact of income on housing prices is likely driven by changes in the features of neighborhoods that are associated with the income of the residents, such as school quality, crime rates, restaurants, and entertainment options.

Hartley says reverse gentrification occurred to some degree in all four of the cities he examined: Cleveland, Pittsburgh, Detroit, and Buffalo. But there were some distinct differences across the cities. All experienced large population losses, declines in income in mid-tier neighborhoods, and little change in median home prices from 1970 to 2006. But incomes in higher-income neighborhoods grew much faster in Pittsburgh and Buffalo than in Cleveland and Detroit, which Hartley attributes to large gains in educational attainment in those neighborhoods, which are close to these cities’ major higher education institutions.

Read Urban Decline in Rust-Belt Cities

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