How to Preserve Minority Communities in Metro Areas

Vibrant community centers. Row houses. Local eateries. Taquerias. Streets lined with residents of different nationalities, different races and different mindsets. These are the things that make up the social and cultural fabric of many lower-income, inner-city neighborhoods, and they are the things most at risk of being eliminated by gentrification — the process of investing in and “renewing” a historically disinvested neighborhood.

Demand for centrally-located housing by higher-income earners has grown significantly over the past decade, and the low-income minority residents who have historically occupied these neighborhoods are paying the price. Real estate developers are snatching up properties in low-income, inner-city areas across the globe to make way for expensive new condos, high-dollar high-rises and trendy art or social hubs. These shiny new buildings price out many of the longtime, low-income minority residents, who are forced to flee the neighborhoods they once called home.

Gentrification has already displaced a countless number of minority residents from their neighborhoods, and as the demand for centrally-located housing grows, even more people are at risk of being forced out of the places they call home. But what can be done to help resolve the issue and preserve inner-city spaces for lower-income and minority residents? Let’s take a look.

How gentrification damages minority populations

The majority of high-income white earners in metro areas have historically opted to live in the suburbs and other outer-lying areas around major cities, while a large percentage of inner-city, lower-income neighborhoods were made up of minority residents. That has changed over the last decade, mainly due to high-earning residents opting for centrally-located real estate instead. To accommodate the demand, large portions of many inner-city neighborhoods are being sold off to developers by landlords or homeowners at a premium, and the developers — who want to maximize land use and profits — often raze the structures and build high-dollar condos or townhomes on the land instead.

These changes generally take place under the guise of “urban renewal planning” or “investing,” but there isn’t much renewal happening — at least when it comes to affordable homes, which drew low-income residents to the areas in the first place. The new developments erase most traces of the neighborhood’s origins and the high price of new construction boxes out the Black and Latino residents, many of whom have resided in their neighborhoods for generations.

The former residents are then forced to seek more affordable housing in other areas that are often well outside the city limits, which limits access to the social support of their former neighbors, the collective cultural identities of their neighborhoods. It also makes access to things like public transportation or social service hubs more difficult, as these resources are often centrally located in inner-city areas.

The effects of these losses can be harrowing. Not only does gentrification help to maintain the racial inequality and segregation structures that harm Black and Latino communities, but it also has severely detrimental health and psychological effects on the minority groups affected by it.

According to a recent article written for American Academy of Family Physicians by Marie Ramas, M.D., the “unintended consequences from gentrification affect the condition of a community and can thus serve as indicators of social determinants of health. For instance, sparsity of affordable resources will affect one’s access to healthy food and education. Increased stress resulting from displacement or conversion of communities can lead to metabolic disorders that are already prominent in lower socioeconomic cohorts.”

Displacement by gentrification can also vastly impact the political representation of minorities, as noted in a recent study on gentrification by Cambridge University, entitled, “From Barrios to Condos: The Effects of Gentrification on Minority Descriptive Representation.”

The study found evidence that gentrification:

  • Negatively impacts minority descriptive representation, specifically black descriptive representation
  • Results in a growing white population that negatively affects the election of black councilmembers, and the effect is particularly pronounced when the black population is close to losing its dominance (i.e., it comprises roughly half of the area’s population)

According to UrbanDisplacement.org, being forced to relocate due to gentrification can also lead to:

  • Depression and stress by displaced residents
  • Relocation to even lower-income neighborhoods
  • Increase in poverty conditions
  • Inhibition of economic mobility
  • Less political power as voting blocs are diluted and communities become less organized, inhibiting their ability to advocate for needed changes
  • Disruption in academic performance (for children)

If you’d like more information on the effects of gentrification, there are plenty of other studies available that offer proof of the wide swath of detrimental effects it has on minorities, including this recent study on how gentrification may play an important role in influencing health outcomes.

Examples of gentrification in metro areas

All one needs to do is look at a city like Houston for clear evidence of gentrification. Houston is gentrifying more quickly than the other major Texas cities, according to a Federal Reserve Bank in Dallas analysis of American Community Survey data from 2013-2017. Row houses in historic 3rd or 4th Ward have been razed to make way for condos or high-rise buildings, and corner stores or neighborhood hangouts have demolished for the prime land value. These changes are clearly reflected by an increase in median income, which went up by 67% from 2000 to 2015 in areas less than 3 miles from downtown Houston.

Another clear example of gentrification San Francisco, the bay area in northern California with districts that once boasted a vibrant mix of low-income minority neighborhoods, which were dotted with local eateries and locally-owned shops. Things changed over the last decade, though, as San Francisco morphed into a national tech hub and the demand for more upscale, centrally-located housing grew. These days, the 9-county Bay Area is one of the most expensive and challenging housing markets in the country, and minimum wage workers — who are statistically more likely to be minorities — would now need to work 4.7 full-time jobs to afford a two-bedroom unit to live there.

This issue isn’t just limited to Houston and San Francisco, though. Nearly every major metropolitan area has dealt with some level of gentrification, often to the detriment of the inner-city residents.

How to help preserve minority communities facing gentrification

Given that gentrification can have such devastating effects on displaced residents, it’s important to help preserve the minority communities at risk. That isn’t an easy task, mind you — money often prevails in matters of housing and development, but there are ways to help keep low-income, inner-city minority communities intact.

This can even be done while encouraging investment without displacement. It’s called gentrification without segregation, and while these “fixes” won’t happen overnight, they are a good middle ground between no fiscal investments and the displacement of minorities from their communities.

  • Focus on inclusive financing — If minority borrowers were to be afforded the same opportunities as other borrowers, they could have an opportunity to buy into their neighborhoods rather than being displaced by developers. To do this, lenders would have to be willing to extend fair credit to marginalized communities, and keen attention would need to be paid to economic business models that are designed to prey on low-income earners, including payday lenders, bail bondsmen and other predatory lending practices.
  • Offer increased protections and opportunities for renters — Renters are at risk for displacement due to the transient nature of renting; if a landlord takes a lucrative offer from a developer, their renter is displaced. Providing renters with the opportunity and financing to purchase their units would help minimize the displacement of long-term residents in areas facing gentrification, as would enforcing building codes and offering easy options for renters to report bad landlords.
  • Preserve and expand public housing — The preservation of public housing is necessary to avoid displacement of residents from low-income, inner-city neighborhoods, as is the expansion of public housing in areas that are at risk of losing affordable housing options.
  • Tax protections for low-income or elderly owners — Increased property taxes can price long-term residents out of minority neighborhoods. To protect elderly and long-term residents, they need to be shielded from property tax increases and offered payment plans if they’ve fallen behind on taxes.
  • Require developers to invest in the communities they’re gentrifying — Developers bear some responsibility for the displacement of residents from minority communities. Local residents can benefit from development, though, if community benefits agreements are established with investors on large projects.
  • Offer affordable housing subsidies to developers — One way to help preserve housing for lower-income minority residents in gentrified areas is to offer developers tax breaks or other subsidies in return for funding more affordable housing units in their projects.
  • Focus on small business owners — The heart of many inner-city communities is the small businesses that line the streets and sidewalks. It’s important to preserve these neighborhood institutions in the face of gentrification, which can be done by establishing a loan fund to help small business owners buy their buildings.

There are tons of other ways to help reduce the ramifications of gentrification on minority neighborhoods. If you want to learn more about what can be done, take a look at the suggestions and best practices offered by The Next System, an initiative that is aimed at bold thinking and action to address the systemic challenges the United States faces now and in coming decades. The organization offers information on community land trusts and other unique solutions.

It will take some work and some innovative solutions to help stop the effects of gentrification on minority communities, but it’s important to try. It’s important to preserve the communities that were built by generations of minority residents. Neighborhoods aren’t just a place to reside; they also offer crucial social supports and cultural identities to the residents who inhabit them.

Angelica Leicht

Mortgage Researcher

Angelica Leicht is a writer and editor who specializes in everything mortgage-related for Interest.com. Her work has spanned topics that include lending product reviews, interest rate trends, racial biases in mortgage lending and the role of fintech in lending practices, and has appeared in publications such as Interest, The Simple Dollar, Bankrate, The Spruce, Houston Press and VeryWell, among others.