Gentrification and rent- a fuzzy connection

One common argument for allowing cities to continue to decay or de-densify is the specter of gentrification: the fear that a retrofitted city might price out the poor.

A recent Federal Reserve report on Philadelphia is relevant.  At first glance, the report seems to endorse these fears.  Rents in Philadelphia have been skyrocketing as incomes have declined; thus, affordable housing is more scarce than five or ten years ago.

But if gentrification caused the problem, then we would find that the rise of rents was concentrated in metro Philadelphia's central city (Philadelphia).  But this is not the case. 

One measure of out-of-control rents is the share of renter households spending more than 30 percent of income on rent.  In the city of Philadelphia, the percentage for all renters who paid over 30 percent of income in rent increased from 54 percent in 2005 to 57 percent in 2010- hardly good news.

But the same problems have afflicted suburbia as well.  In the entire Philadelphia metro area, the percentage of overburdened renters increased from 49 to 53 percent, and each suburban county listed (Camden, Delaware, Montgomery, and New Castle Counties) experienced similar increases.  In fact, in three of the four suburban counties, the percentage of overburdened renters increased faster than in Philadelphia.*

What about rents for the poor?  Here, the results are more ambiguous: the Federal Reserve study breaks renters out into three groups, those earning under 30 percent of median family income, those earning 31-50 percent, and those earning 51-80 percent.  In the very lowest income group, the percentage of overburdened renters actually decreased in city and metro area alike (though in both places, over 80 percent of renters paid over 30 percent of income in rent).  In the 31-50% category, the percentage of renters who were so burdened increased in both city (from 74 to 77 percent) and metro area (from 77 to 81 percent). Only in the 51-80 percent category did the percentage of overburdened renters increase faster in Philadelphia than in its suburbs.

In sum, rent did become less affordable in the late 2000s- but no more rapidly in Philadelphia than in its suburbs.

*The relevant percentages: from 49 to 53 percent in Camden County, from 46 to 50 in Delaware County, from 43 to 44 in Montgomery County, and 45 to 52 in New Castle County.