Rust-Belt Cities Exhibit Reverse Gentrification, Says Cleveland Fed Researcher

But in a tale of four cities, Pittsburgh and Buffalo fare better than Cleveland and Detroit

Most major Rust-Belt cities have experienced large declines in population and average income since 1970. However, the losses have not been uniform across neighborhoods. According to a study by Federal Reserve Bank of Cleveland economist Daniel Hartley, neighborhoods with the lowest housing prices experience the steepest declines in population, while income falls more sharply in neighborhoods with middle-tier house prices.

Hartley says this “reverse gentrification” involves the inward contraction of higher-income neighborhoods, as the areas bordering those neighborhoods become low-income. This type of urban decline occurs when low (citywide) housing demand leads to population loss in the lowest-price neighborhoods, and falling home prices allow lower-income households to move into formerly middle-income neighborhoods. As this happens, the average income in those neighborhoods falls and housing prices also fall, or rise less than in other neighborhoods. Hartley says the impact of income on housing prices is likely driven by changes in the features of neighborhoods that are associated with the income of the residents, such as school quality, crime rates, restaurants, and entertainment options.

Hartley says reverse gentrification occurred to some degree in all four of the cities he examined: Cleveland, Pittsburgh, Detroit, and Buffalo. But there were some distinct differences across the cities. All experienced large population losses, declines in income in mid-tier neighborhoods, and little change in median home prices from 1970 to 2006. But incomes in higher-income neighborhoods grew much faster in Pittsburgh and Buffalo than in Cleveland and Detroit, which Hartley attributes to large gains in educational attainment in those neighborhoods, which are close to these cities’ major higher education institutions.

Read Urban Decline in Rust-Belt Cities

Also check out Employment Growth Slows in Ohio.

Federal Reserve Bank of Cleveland

The Federal Reserve Bank of Cleveland is one of 12 regional Reserve Banks that along with the Board of Governors in Washington DC comprise the Federal Reserve System. Part of the US central bank, the Cleveland Fed participates in the formulation of our nation’s monetary policy, supervises banking organizations, provides payment and other services to financial institutions and to the US Treasury, and performs many activities that support Federal Reserve operations System-wide. In addition, the Bank supports the well-being of communities across the Fourth Federal Reserve District through a wide array of research, outreach, and educational activities.

The Cleveland Fed, with branches in Cincinnati and Pittsburgh, serves an area that comprises Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia.

Media contact

Doug Campbell, doug.campbell@clev.frb.org, 513.218.1892