Collaboration in Civic Spheres

U.S. Fed: Seattle a Gentrification Hub – And That’s Good

by December 4th, 2013

Could much-maligned “gentrification” actually be a rising tide that lifts all boats economically, including in Seattle? A recent report from the Federal Reserve Bank of Cleveland suggests so. It says that out of the 55 largest cities in the U.S. in 2000, Seattle ranks second in the percent of central city, low-priced-housing Census tracts that based on data from the 2005 to 2009 American Community Survey subsequently gentrified, or moved overall into the top half of median home price in the broader metro area. Moreover, says the study, gentrification is associated with higher credit scores for residents whether they own their homes or not, and even if they move elsewhere.

A striking 55 percent of low-priced Census tracts gentrified over that stretch within Seattle’s city limits, exceeded only by Boston at 61 percent. Rounding out the top ten are New York City, San Francisco, Washington D.C., Atlanta, Chicago, Portland, Tampa, and Los Angeles. Low-priced-housing urban Census tracts are defined as those where home values overall fall below the median of the broader regional MSA, or Metropolitan Statistical Area.

Contrary to what many critics believe, the study’s author, Fed of Cleveland research economist Daniel Hartley, asserts that the gentrification of these neighborhoods has more upside than not.

He states, “Gentrification is sometimes viewed as a bad thing. People claim it is detrimental to the original residents of the gentrifying neighborhood. However, a look at the data suggests that gentrification is actually beneficial to the financial health of the original residents. From a financial perspective, it is better to be a resident of a low-price neighborhood that is gentrifying than one that is not,” whether or not they’re homeowners or move out of the changing locale or not.

Specifically, Hartley reports that in the 55 biggest cities, and compared to residents of urban non-gentrifying tracts, residents of urban gentrifying tract were on average associated with an eight point higher increase in creditworthiness as measured by the widely used Equifax Risk Scores system.

As well, two percent less of the gentrifying urban tracts cohort had delinquent bills more than 90 days past due, compared to residents of non-gentrifying areas. More expectedly in the gentrifying city tracts home prices, rents and incomes grew more robustly than in non-gentrifying parts of the cities, as did percent of population with a bachelor’s degree and percent of housing that was owner-occupied.

There’s a kicker. Hartley adds that residents who moved out of gentrifying city tracts had even slightly greater growth in credit scores – 1.5 percent more – than those who stayed. “So it appears that, on average, movers are even slightly more positively affected by gentrification than non-movers,” Hartley observes.

While the percentage of low-priced tracts gentrifying in Seattle proper was high, the overall supply was relatively low, at 17 percent, according to the report.

Hartley writes there is one limitation to the data, which is that because it only goes back to just before the 2000 Census, it’s not possible to do comparisons between residents who arrived in a tract right around that time, versus much earlier.

Public Data Ferret is a news knowledge base program of the 501c3 public charity, Public Eye Northwest. Ferret In The News. Donate; subscribe (free)/volunteer.

Comments are closed.