GENTRIFICATION: WHAT IMPACT ON REAL ESTATE IN THE USA?

GENTRIFICATION: WHAT IMPACT ON REAL ESTATE IN THE USA?

Gentrification: What impact on real estate in the USA?

Gentrification is the process of improving a neighborhood to increase equity and encourage development. It typically begins with middle-class "urban pioneers" moving into neighborhoods near city centers, encouraging more and more of them to do the same. It also manifests in the emergence of new businesses, opportunities, and events. How does gentrification impact real estate in the U.S.?

Gentrification: What impact on real estate in the USA?

The impact of gentrification on residents

There are many benefits to gentrification. Who wouldn't want to see new investment and increased economic activity in their neighborhood? While new residents may benefit, existing residents also benefit from real estate gentrification. Low-income residents who decide to stay in gentrified neighborhoods enjoy the following benefits:

New job opportunities

Long-time homeowners enjoy higher property values

Credit scores of low-income residents improve in these neighborhoods

Living near the urban core reduces the cost of living. This means being able to reduce annual transportation costs, as residents can reach most places on foot or by public transportation. This means having easy access to all sorts of services such as doctors, schools, and shops. New residents will find living in a gentrified neighborhood beneficial not only for a cheaper lifestyle but also for cultural diversification.

Gentrification also contributes to improving social relations through the organization of various events. The arrival of new businesses impacts employment, thus attracting new residents. This growth allows residents to improve their living conditions, earn a higher income, and see the value of their homes increase.

Read also: The increase in the number of foreign investors in the multi-family building market

The impact of gentrification on investors

Investors, of course, find real estate gentrification to be an effective strategy. They find higher investment potential in these neighborhoods, such as a rapid increase in property values. An investment property can be purchased cheaply and rented out for passive income. During gentrification, rents will increase, and investors can generate double-digit returns. There can be very attractive opportunities depending on the city where you want to invest. Currently, Midwestern cities like Cleveland are offering very attractive returns to investors.

Several aspects of gentrification are attractive:

Rent increases

Added value of real estate

Ease of finding tenants

Indeed, gentrification contributes to economic growth and attracts more and more residents. This is a boon for investors because the demand for housing is going to be strong. It's therefore important to know how to position yourself in the right market to be able to take advantage of attractive returns.

Whether from the perspective of residents or investors, gentrification is positive. Indeed, it offers many opportunities: improved living conditions (beautification, transportation, etc.), jobs, events, added value, etc. Even if some residents may have difficulty adjusting to these changes, especially with the arrival of major projects, cities are doing everything they can to ensure that residents don't feel left out. It's therefore a win-win situation that is spreading to several places in the United States.