Housing appreciation patterns in low-income neighborhoods: Exploring gentrification in Chicago

Abstract

Using data from Chicago, this paper analyzes different housing appreciation patterns from 1983 to 2005 depending on the initial level of income of the neighborhoods where these properties are located. Findings suggest that appreciation patterns of low-income neighborhoods are different than those of high-income neighborhoods. Moreover, appreciation of housing prices in low-income neighborhoods that have experienced gentrification is different than in other low-income neighborhoods not gentrified. To analyze this issue further, we compare the behavior of housing prices in neighborhoods experiencing different stages of gentrification with housing prices in low-income neighborhoods that have not been gentrified. Housing price appreciation is only observed in neighborhoods gentrified that had low levels of income when gentrification was measured. One interpretation of these findings is that housing prices appreciate in neighborhoods experiencing early stages of gentrification, but not in neighborhoods that have been gentrified for longer periods of time. These results could suggest that gentrification may cause displacement pressures in the early stages, but prices are stabilized in neighborhoods being gentrified for some time, reducing the probability of displacement of the low-income population.