Gentrification Occurring in More Than Cincinnati’s Center City Neighborhoods

Like many cities across the United States, the City of Cincinnati is gentrifying, but it is doing so at a faster rate than most of its Midwestern peers – ranking fourth only behind Chicago, Minneapolis and St. Louis. When compared with the primary city in each of the nation’s 55 most populated metropolitan areas, Cincinnati is in the middle of the pack. Those cities that are gentrifying most quickly are located in the Northeast and along the West Coast.

The information comes from a new report published by the Federal Reserve Bank of Cleveland, which also dove into the financial implications of what is often generally considered a bad thing.

Gentrification is generally understood as the rise of home prices or rents in a particular neighborhood. In Cincinnati this has most vigorously been discussed as it relates to the transformation in Over-the-Rhine from what was one of the city’s poorest neighborhoods, to now being one of its trendiest.

Clifton Heights
The Clifton Heights neighborhood, which continues to see a surge of private real estate investment, was found to be one of several Cincinnati neighborhoods that gentrified between 2000 and 2007. Photograph by Randy Simes for UrbanCincy.

“Gentrification is sometimes viewed as a bad thing. People claim that it is detrimental to the original residents of the gentrifying neighborhood,” stated Daniel Hartley, a research economist focusing on urban and regional economics and labor economics for the Federal Reserve Bank of Cleveland. “However, a look at the data suggests that gentrification is actually beneficial to the financial health of the original residents.”

What Hartley’s research found is that credit scores for those living in a neighborhood that gentrified between 2000 and 2007 were about eight points higher than those people living in a low-price neighborhood that did not gentrify. He also discovered that delinquency rates, as represented by a share of people with an account 90 or more days past due, fell by two points in gentrifying neighborhoods relative to other low-price neighborhoods during the same period.

Some, however, caution against drawing conclusions about the data presented in Hartley’s report.

“I don’t see any reason why gentrification would affect the credit scores of existing residents – those who lived in the neighborhood prior to gentrification occurring,” commented Dr. David Varady, a professor specializing in housing policy at the University of Cincinnati’s School of Planning. “It was my impression that banks and other financial institutions were not supposed to take the neighborhood into account but rely on the family’s financial characteristics.”

The practice Dr. Varady describes of banks and financial institutions taking neighborhoods into account is called redlining. It is a practice that was rebuffed by the Fair Housing Act of 1968 and the Community Reinvestment Act of 1977, but some believe the practice persists in more abstract forms today.

One of the biggest concerns shared by those worried about the gentrification of neighborhoods is that it is particularly those that rent, rather than own, who are affected most. This too, however, is challenged by Hartley’s research.

“Mortgage-holding residents are associated with about the same increase in credit scores in gentrifying neighborhoods as non-mortgage-holding residents,” Hartley explained. “This result suggests that renters in gentrifying neighborhoods benefit by about the same degree as homeowners.”

Cincinnati Gentrification (2000-2007)
The Federal Reserve Bank of Cleveland noted gentrification in a wide variety of Cincinnati neighborhoods between 2000 and 2007. Map produced by Nate Wessel for UrbanCincy.

What is even more intriguing about the report’s findings is that original residents who moved from the gentrifying neighborhood, who many would consider displaced residents, experienced a 1.5 point higher credit score improvement than those who did not move.

The Federal Reserve Bank of Cleveland provided UrbanCincy with the data broken out by Census tract for Cincinnati. Approximately 72% of the city’s 104 Census tracts are defined as low-price, and of those 75 Census tracts with home valuation data, nine were found to have gentrified between 2000 and 2007.

When examined more closely it becomes clear that the neighborhoods experiencing the biggest gains in home value and income in Cincinnati are those that are in the center city. Specifically, and perhaps not surprisingly, five of the nine are located in the neighborhoods of Clifton Heights, East Walnut Hills, Fairview, University Heights and the East End. Outside of the center city, Pleasant Ridge, Oakley, Columbia Tusculum and Mt. Airy also experienced gentrification over the past decade.

Community council leaders for these neighborhoods did not respond to multiple requests for comments from UrbanCincy.

Unfortunately, the two neighborhoods where many expect gentrification has occurred most – Downtown and Over-the-Rhine – did not have median home value data available for the Federal Reserve Bank of Cleveland to study.

While the report has generally positive findings about the impacts of gentrification, Cincinnati is at a disadvantage when it comes to improving the financial health of its neighborhoods.

According to the report, the percentage of low-price Census tracts in Cincinnati beneath the median home value of the metropolitan area is 14 percentage points higher than the national average, and the rate at which Census tracts are gentrifying in the Great Lakes region is approximately 4.5 points lower than the national average.

“I don’t have a clue what Hartley meant by the phrase ‘neighborhoods with a potential for gentrification’ but the assertion that 95% do in Baltimore is rather ludicrous given the high rate of abandonment,” Dr. Varady scoffed. “Baltimore certainly can use more gentrification but how the city can promote this is an open question.”

With the nine identified neighborhoods in Cincinnati spread throughout a mix of expected and unexpected locations, it is probably safe to say that the Census tracts in Downtown and Over-the-Rhine also gentrified during this period, or have since 2007.

Change in cities is inevitable, but whether these changes sweeping Cincinnati are good, bad or indifferent is probably still open for spirited discussion among those most interested.

“In general I think that gentrification presents benefits and costs,” Dr. Varady concluded. “Anyone who says it is all bad or all good is not contributing to the debate.”

This story originally appeared in the December 20, 2013 print edition of the Cincinnati Business Courier. You can view that story online for additional comments and discussion. UrbanCincy readers can take advantage of an exclusive premium digital Business Courier subscription that includes access via the web, smart phone or tablet applications for just $49 per year.

  • Eric Douglas

    Ohio State has an online resource on redlining in Ohio cities. Residential security “redline” map for Cincinnati

  • Steve Weide

    My first thought is if these results are even statistically relevant? They are discussing credit scores being 1.5 points higher. Since the don’t refer to percentage points, I assume this is on the FICO score. But FICO ranges from 300 to 850 so this different would be a quarter of a percent. Even the hihger difference of 8 points would be about 1.4%. Is this enough to even be statistically significant or does it fall in the accuracy range of the numbers?

    • http://www.UrbanCincy.com/ Randy A. Simes

      Even they are not statistically relevant, I think the main message from this study is that the nearly universal beliefs of gentrification always being bad are not necessarily always true or accurate.

  • charles ross

    I like the original definition of gentrification, which is when housing that was built for working class people is bought by higher class folks and upgraded. Or replaced – like lots of Mt Adams. Or even when lofts in a zone like Soho are upscaled and the original bohoneers that adapted them for residence are priced out.

    But when nice old buildings and homes in places like Walnut Hills, Corryville, Mount Auburn or Avondale are brought back to original finish and drug dealers and slumlords become scarcer, it’s re-gentrification. Two different kinds of things. Harder to chart, of course.

    I read a book about the transformation and segregation of Chicago that pointed out that the beginning of the decay of inner ring U.S suburbs was the Great Depression, when lots of the rich lost their large houses. These were bought cheap and subdivided into substandard tenements. Plenty of examples in Cincinnati.

    • Eric Douglas

      The 1920′s led up to that. Of the 6 million new homes built between 1922-1929, more than half were sf houses and most in the suburbs. Car ownership reached 8 million in 1920 and use of streetcars and buses peaked in mid-20′s.

    • charles ross

      “The suburbs” in 1930 are “The City” now. At least in US cities that grew.

      I wonder if anyone has managed to pull off anything like Brand’s “How Buildings Learn” on the neighborhood or metro scale. By that I mean visual essays, not academic papers. I am sure that if you go by “suburb rings” some cities have more rings than others. and that’s just horizontally speaking.

    • Eric Douglas

      I meant as far as the general rise of outer areas and fall of inner areas. I believe the majority, if not all, of today’s city neighborhoods were annexed before 1930, Kennedy Heights being the last village annexed in 1914.

  • http://www.UrbanCincy.com/ Randy A. Simes

    Here’s a fascinating read on gentrification from back in 2005: http://usatoday30.usatoday.com/news/nation/2005-04-19-gentrification_x.htm. From the article:

    “Freeman and Vigdor say skeptics who view gentrification merely as ” ‘hood snatching” should remember three things:

    • Many older neighborhoods have high turnover, whether they gentrify or not. Vigdor says that over five years, about half of all urban residents move.
    • Such neighborhoods often have so much vacant or abandoned housing that there’s no need to drive anyone out to accommodate people who want to move in. A quarter of the housing in one section of Boston’s South End was vacant in 1970; the population had dropped by more than 50% over 20 years. Today, the population has increased more than 50%, and the vacancy rate is less than 2%.
    • Rising housing costs in gentrifying districts may ensure that poor residents who do move leave the neighborhood, rather than settle elsewhere in it. Since their places usually are taken by more affluent, better educated people, the neighborhood’s character and demographics change.

    Vigdor argues that hatred of gentrification is largely irrational: “We were angry when the middle class moved out of the city,” he says. “Now we’re angry when they move back.”

    He asks whether Detroit, which in 50 years has lost half its population and most of its middle class, would not have been better off with gentrification than it has been without it.”

    • charles ross

      Rationality is not always relevant. I think if you look at the history of African Americans in the US from slavery through the northward migrations, you can see there’s no place called home for many. So a roughed up ghetto neighborhood becomes a homeland. This is a situation different from a lot of American immigrant experiences. So I think this can explain some of the feelings at play.

    • http://www.UrbanCincy.com/ Randy A. Simes

      I don’t disagree with what you’re saying. To me one of the things Freeman and Vigdor discuss is that many city dwellers move often and thus move out of neighborhoods at a high frequency…approximately half of all urban residents within five years.

      I can only go off of what they studied and what my anecdotal evidence tells me, but I would think this is a reasonable statement. The question that remains with all that movement is whether it is person’s choice or not to move. I would suspect that it is a choice made by more affluent residents and a decision made for someone who is less affluent.

    • Eric Douglas

      He can’t use it in a historical context. Detroit lost population simply because of growth outside of the city. Who’s gentrifying whom if the growth is into farmland? Maintaining stable urban neighborhoods over time is obviously a better strategy than decline and gentrification later.

  • http://zacharyschunn.wix.com/ Zachary Schunn

    It’s hard to tell how relevant or accurate the data is, but I’m still glad to see you posting on gentrification as it has certainly become a bigger issue. Dr. Varady’s point that there are costs and benefits is certainly accurate. Obviously, property values rise with gentrification (this is a very part of the definition). And while displacement of residents may not occur on large scales (though I do think it is occurring to some extent downtown and in OTR), shuffling around of the homeless may be the more important negative effect to study.

    What’s unfortunate is that the majority of those screaming against gentrification believe people are being displaced to outlying neighborhoods, and these neighborhoods are going down in value because of it, creating a counter-balance to gentrification. I don’t believe this to be entirely accurate. In fact, I believe the cause of these declining neighborhoods may partially be a perception of higher numbers of the poor and homeless, as communities turn their backs to those in need and many wealthier residents move to outlying suburbs. As communities refuse to build affordable housing, it seems like the burden just gets shifted to other communities. And even worse, where large-scale government-assisted housing isn’t an option, Section 8 slumlords often take their place. (The entire west side seems to be a great case study on this issue.)

    The Enquirer had a good piece on the homeless man who has been in and out of jail 200+ times. The piece points out that the city has likely spent more money on resources for this man through police hours, court time, and food and shelter in jail than it would have had it simply provided government-assisted housing. Affordable housing options are not the burdens on local governments everyone thinks they are, as they are typically counter-balanced by benefits (lower crime, for example), and tax credits usually ease the pain significantly for developers. These options, when spread logically (ie, not concentrated in a few select neighborhoods), do not harm surrounding property values–and arguably may help them as they’re often better options than homeless wandering the streets, or, as mentioned earlier, Section 8 slumlords.

    In light of the Alaska Ave. controversy, among others, this is becoming a large issue in the city, and Randy I hope you report more on it in the future.

    • charles ross

      New Jersey? Mount Laurel.
      Ohio? Indian Hill.
      Jersey had the conversation. Ohio needs to talk about it.