The role of new green construction in neighborhood change and gentrification

Abstract

Recent research has highlighted the potential for green certification to contribute to gentrification in urban areas. This occurs as the adoption of a reductionist sustainability planning language can turn green-certified houses into luxury goods that attract primarily White, college-educated, and pro-environmental households, who may replace existing long-term residents, particularly lower-income residents and racial minorities, in core urban areas. This study aims to assess the extent to which the supply of green-certified units affects neighborhood change and gentrification. Using housing market transaction data from Central Virginia’s Multiple Listing Service and socioeconomic data from the U.S. Census Bureau, we employ a difference-in-differences approach to analyze the differential effect of new construction of market-rate, EarthCraft-certified units in Richmond Metro Area. Our results show that neighborhoods with new green-certified units experience statistically significant increases in population growth, new construction, and house prices. We observe trends that suggest potential negative impacts on minorities. However, these observed trends have not reached statistical significance. Our study provides evidence that green housing can contribute to the conditions that make residential zones ripe for gentrification, thus, highlighting the need to balance the benefits of green certification with the potential negative impacts on disadvantaged groups.