In this article, we will discuss the 25 most gentrified cities in the US. If you want to skip our discussion on the impact of gentrification, go directly and see 5 Most Gentrified Cities in the US.
Gentrification, a complicated urban trend, has transformed the landscape of many American communities since the 1960s. The term was introduced by a renowned sociologist Ruth Glass in 1964 to describe the process of working-class communities in London being displaced by incoming middle- and upper-class residents. Since then, it has become a widely used term to describe similar processes occurring in cities around the world.
Impact of Gentrification on Communities
The inflow of higher-income inhabitants into typically lower-income neighborhoods frequently results in major changes in the area’s demographics, culture, and economic dynamics. While gentrification can bring certain benefits, such as economic revitalization and improved infrastructure, it can also have negative consequences, including displacement of long-term residents and loss of cultural variety. For instance, according to a report by the National Community Reinvestment Coalition, a large number of Blacks and Hispanics were displaced following gentrification. Gentrification has led to the displacement of 20,000 Black residents in Washington, D.C. It has also displaced 13% of the Black community in Portland, Oregon, over a decade.
Gentrification has a great impact on the real estate industry. The U.S. real estate market’s value was estimated at $3.15 trillion in 2023. Projections show that it will reach $3.78 trillion by 2030, with an annual growth rate of 2.6% between 2024 and 2030. Economic indicators also shape the real estate market’s dynamics. Interest rate fluctuations are a primary driver, with lower rates typically fueling demand for property due to more affordable mortgages. Employment rates show economic health, influencing consumer confidence and, consequently, the willingness to invest in real estate.
READ ALSO: 10 Best Residential Real Estate Stocks to Buy and 25 Biggest Real Estate Companies in the US in 2024.
In recent years, technological advancements have driven a shift in property preferences. The rise of remote work has led to a growing emphasis on quality of life over proximity to traditional workplaces. Smart home features, such as energy-efficient technologies plus automation systems, have also become important selling points, raising the demand and price of homes. Major players in this industry, especially in the housing market include NVR, Inc. (NYSE:NVR) and LGI Homes, Inc. (NASDAQ:LGIH).
NVR, Inc. (NYSE:NVR) is a U.S. homebuilder specializing in premium homes, including move-up, new-entry, and luxury options. It constructs and sells single-family detached homes, townhomes, and condominium buildings under the brand names NVHomes, Ryan Homes, and Heartland Homes. Recently, the city council of Charlotte approved the building of 319 single-family homes and 330 multifamily rental units on 151 acres of land in Northeast Charlotte. The company has really benefitted from an increase in demand for homes and a low home inventory.
LGI Homes (NASDAQ:LGIH) is another homebuilder that designs, constructs and sells homes. The company offers entry-level homes, including attached and detached homes, as well as active adult homes, under the LGI Homes brand. It is currently developing sustainable solutions; most of its communities’ homes have smart thermostats and solar panels.
Here’s what Polen Capital said about LGI Homes (NASDAQ:LGIH) in its Q4 2023 investor letter:
“LGI Homes, Inc. (NASDAQ:LGIH) is a homebuilder primarily concentrated in the southeast and Texas. To some, the addition of a homebuilder may come as a surprise given the industry has not typically been associated with quality, having been among the worst performers during the Global Financial Crisis (“GFC”) of 2008-2009. However, over the past 15 years the industry has evolved significantly (for the better). Drawing on lessons from the GFC, many of the leading homebuilders today are deploying asset-light strategies and carefully building behind demand which in turn has led to better returns, stronger balance sheets, and more disciplined capital allocation. Beyond this, another long-term driver for the industry comes from the structural undersupply that has been in place since the GFC. LGI Homes is focused on building entry-level homes in the ‘exurbs’ about 40 minutes outside of a major metropolitan area. The company has a unique operating model to profitably build affordable homes for first time homebuyers, positioning them to serve what we believe is the part of the market (first-time homebuyers) with the biggest supply/demand shortfall long-term.
Importantly, LGI has a founder-led management team that has proven capital allocation skill over time, best demonstrated by the fact that they remained profitable through the GFC. Looking ahead, we expect a low 20’s internal rate of return (IRR) through the cycle with a relatively wider range of potential outcomes, which is reflected in the position size.”
While we acknowledge the potential of LGI Homes (NASDAQ:LGIH) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than LGI Homes (NASDAQ:LGIH) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
A bird’s eye view of modern single-family rental homes in a suburban neighbourhood.
Our Methodology
We have compiled a list of the 25 most gentrified cities in the U.S. based on data from various reputable sources, including the American Community Survey and NCRC research. This analysis considers several socioeconomic factors, such as income, home values, and education levels, to assess the level of gentrification. The cities are ranked in ascending order according to the percentage of gentrification.
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25 Most Gentrified Cities in the US
25. Tampa
Gentrifying Percentage: 3.0%
Tampa is located on Tampa Bay along Florida’s Gulf Coast. The city is a major business center. Tampa is a city that has a rich history, and neighborhoods like Tampa Heights and Ybor City are known for their African-American culture, but these areas pose a completely different look now owing to urban growth in the city. More than 126,000 new residents are forecast to move to Tampa by the end of 2024. To satisfy this growing demand for homes, new construction projects are underway throughout the city, particularly in Tampa’s upgraded neighborhoods like Riverside Heights.
24. Charleston
Gentrifying Percentage: 3.8%
Charleston is a South Carolina port city founded in 1670. The city became rich as a result of the export of rice and sea island cotton and it became the residence of many wealthy merchants and landowners. In Charleston, the upper part is quickly becoming gentrified, as young, middle-class families move into previously working-class neighborhoods. Home and land values are increasing, giving way to property taxes rising. ‘The Holy City’ was titled among the “Fastest-Growing Places in the U.S. in 2022-2023,” due to the high degree of gentrification.
23. Atlanta
Gentrifying Percentage: 4.0%
Atlanta, Georgia’s capital, has seen major gentrification since the 1970s. The city’s inner-city neighborhoods have changed dramatically as a result of a variety of factors, notably the 1996 Summer Olympics. This event initiated gentrification, resulting in higher home prices, suburbanization, and a thriving economy. As a result of these changes, Atlanta’s demographics, physical terrain, and cultural identity have transformed. According to a government survey, the city ranks 23rd in the country for gentrification, with more than 46% of its census tracts currently undergoing this process.
22. Oklahoma
Gentrifying Percentage: 4.1%
Oklahoma City, the capital of Oklahoma, is known for its Wild West heritage and the famous Capitol Complex. The city has experienced major changes, particularly in the Bricktown entertainment district, where a major revitalization project began in 1993. This initiative started gentrification in the surrounding neighborhoods. The Oklahoma City metropolitan area is the largest urban region in central Oklahoma.
21. Columbia
Gentrifying Percentage: 4.4%
Columbia is the capital city of South Carolina. Strategies of urban renewal in Columbia have led to rapid gentrification. In 2012, Columbia Heights was titled one of the fastest-gentrifying neighborhoods in the country, and today, most of the housing in the neighborhood is modernized and gentrified. Greater Morningside Heights, the area surrounding Columbia University, is now wealthier than it was just a few years ago. The percentage of families earning above $150,000 a year in Columbia, increased by more than double between 1990 and 1997 – from 4.5 percent to 11.6 percent.
20. Dallas
Gentrifying Percentage: 4.6%
Dallas, a modern city in North Texas, serves as a major commercial and cultural hub in the region. It ranks 20th among the most gentrified cities in the US. West Dallas is often seen as the starting point for gentrification in the city, experiencing the most significant increases in property values and taxes, similar to trends observed in Detroit. The influx of gentrifiers has also brought more resources, shops, and support from city officials.
19. Detroit
Gentrifying Percentage: 4.8%
Detroit, the largest city in Michigan, has been undergoing gentrification in recent years. As gentrification spreads through the city’s most popular neighborhoods, developers are capitalizing on the increased demand for downtown living by converting buildings into apartments and condos. Detroit, once an industrial city, is now emerging as a hub of modern innovation and urban renewal. While gentrification was relatively slow between 2009 and 2013, with only 2.8% of census tracts affected, the pace has become faster in recent years.
18. Philadelphia
Gentrifying Percentage: 7.1%
Philadelphia, Pennsylvania’s largest city and the sixth-most populous in the United States, has experienced major gentrification since the early 2000s. The impact of this trend has been most obvious in neighborhoods surrounding Center City, particularly in lower North Philadelphia. As new residents move into the city, gentrification is changing various neighborhoods. This process has majorly affected minority communities, as they often have fewer relocation options compared to white families.
17. Chicago
Gentrifying Percentage: 8.6%
Chicago, a major city on Lake Michigan in Illinois, is known for its modern architecture and iconic skyline. The city has experienced multiple waves of gentrification, with major phases occurring in the 1990s and again between 2007 and 2009. Gentrification in Chicago has mostly affected historically Latino and Black neighborhoods. This process has displaced thousands of low-income residents, particularly in the southern and western parts of the city. Over 200,000 low-income households (18% of the total) now reside in neighborhoods undergoing gentrification or displacement.
16. Baltimore
Gentrifying Percentage: 10.7%
Baltimore, the largest city in Maryland, has experienced significant gentrification since the early 2000s. This transformation has made Baltimore an appealing destination for real estate investors. The cost of living in Maryland is 11.8% higher than the national average, and Baltimore’s growing economy, population, and real estate market have attracted increased interest from investors looking for their next opportunity.
15. Los Angeles
Gentrifying Percentage: 11.9%
Los Angeles has one of the highest rates of gentrification in the United States. According to recent data, 10% of census tracts in Los Angeles are classified as undergoing gentrification, early/ongoing gentrification, or advanced gentrification. Furthermore, 5% of tracts in Los Angeles County, while not gentrifying, have experienced ongoing displacement.
14. San Diego
Gentrifying Percentage: 15.9%
Since 2000, a significant portion of San Diego’s census tracts has experienced gentrification. The city has a flourishing real estate market and a rapidly evolving landscape, with many homes being demolished to make way for new construction. San Diego is among the 15 most gentrified cities in the US.
13. Washington D.C.
Gentrifying Percentage: 16.3%
Washington D.C., the U.S. capital, is a compact city on the Potomac River. The city ranks thirteenth on our list of the most gentrified cities in the US.
12. Indianapolis
Gentrifying Percentage: 17.0%
Indianapolis is the capital and most populated city of the U.S. state of Indiana. Indianapolis has a history of rapid economic development. Neighborhoods such as Crown Hill and the Near Eastside are undergoing rapid gentrification.
11. Minneapolis
Gentrifying Percentage: 17.4%
Minneapolis, along with its surrounding area, forms a metropolitan region with 3.69 million residents. Gentrification has been a key urban planning strategy in Minneapolis, leading to increased costs in housing, shopping, and transportation, while also disrupting ethnic neighborhoods and erasing cultural heritage. Downtown Minneapolis has some of the most expensive real estate in Minnesota.
10. Sacramento
Gentrifying Percentage: 17.9%
Sacramento, a prominent political and educational center on the West Coast, is the fastest-growing major city in California. Ranked as the 10th most gentrified city in the United States, Sacramento has witnessed big changes in its low-income neighborhoods. Across the entire state of California, nearly half of all low-socioeconomic status neighborhoods experienced gentrification between 2000 and 2019. Sacramento’s latest development plan places the city as a leader in modern housing nationwide.
9. Phoenix
Gentrifying Percentage: 17.9%
Phoenix, the capital of Arizona, is a metropolitan area known as the Valley of the Sun. In recent years, Phoenix has experienced significant gentrification, particularly in neighborhoods like Encanto Village and the areas surrounding Grand Canyon University and downtown Phoenix. Encanto Village, for example, saw a 91.3% increase in sale prices over just five years.
8. San Jose
Gentrifying Percentage: 18.1%
San Jose, a major city in the heart of Silicon Valley, is a leading technology hub in California’s Bay Area. It ranks as the eighth most gentrified city in the US. Today, San Jose has ten affluent neighborhoods, with the Almaden Valley being among the wealthiest, with a median income of $130,959 as of 2019.
7. New York
Gentrifying Percentage: 19.3%
New York is home to 314 super-gentrified or exclusive neighborhoods. These high-income neighborhoods form a ring around the city, causing pockets of segregation in Manhattan, Brooklyn, and Queens. The Brooklyn Heights neighborhood, in particular, has seen one of the fastest rates of “super-gentrification” in the nation.
6. Austin
Gentrifying Percentage: 19.6%
Austin is the state capital of Texas and is the 6th ‘fastest-gentrifying’ city in the US. The city is facing redevelopment pressures and rising housing costs. Over the past decade, Austin has experienced rapid growth, expanding by a third and becoming one of the fastest-growing major metropolitan areas in the United States.
5. New Orleans
Gentrifying Percentage: 20.3%
Among the largest cities in the U.S., New Orleans ranks as the fifth-most gentrified. Longtime residents are being pushed out of their neighborhoods as the city focuses on tourism and economic development. This has led to rapid transformations in neighborhoods, with homes being renovated and local residents displaced to the suburbs.
4. Miami
Gentrifying Percentage: 21.0%
Miami a coastal city in Florida, has experienced significant gentrification, driven in part by wealthy South American investors. The entertainment industry further fueled Miami’s transformation into a multicultural metropolis. However, the city’s real estate market faces two major challenges: the climate crisis and a growing population. As wealthier residents acquire more property throughout Miami, pressure on lower-income communities is increasing. Over half of Miami’s 2.6 million residents are expected to be impacted by “climate gentrification,” which poses a risk of displacement for many.
3. Boston
Gentrifying Percentage: 21.3%
Boston is the capital and among the most populated cities of Massachusetts. The city has a high rate of gentrification, ranking third in the United States. Between 2013 and 2017, over 21% of eligible neighborhoods in Boston underwent gentrification. Frontier gentrification is happening in East Boston, where developers are building condos and trying to push out low-income communities into the adjacent areas.
2. Denver
Gentrifying Percentage: 27.5%
Denver, the most populous city in Colorado with 715,522 residents as of the 2020 census, has seen significant demographic shifts in recent years. Traditionally Black and Latino neighborhoods have experienced gentrification as the city has grown both economically and in population. This trend is particularly evident in Northeast Denver neighborhoods like Mayfair, Montclair, and East Colfax, which are now undergoing “advanced” gentrification.
1. San Francisco
Gentrifying Percentage: 31.3%
San Francisco, North California’s commercial, cultural, and financial hub, has experienced the most intense gentrification in the United States since 2013. Although gentrification in San Francisco began in the late 1970s, it has intensified in recent years, leading to a rise in eviction notices citywide. Furthermore, the tech boom has attracted higher-income residents, driving up rents and displacing existing residents. Developers are drawn to areas with rising property values, making San Francisco an attractive market for new construction.
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Disclosure: None. 25 Most Gentrified Cities in the US was originally published on Insider Monkey.