Powering Smarter Market Decisions™     Toll Free 877.944.4AGS

Changing Income Patterns in Urban Areas

Posted by on Sep 3, 2020 in Blog | No Comments

In the pre-automobile era, the pattern in most cities in the western world was quite similar – the wealthier you were, the closer to downtown you lived. In the twentieth century, the automobile made it possible for wealthy families to move far away from downtown and still enjoy the economic and cultural benefits of the city, especially as the freeway network was built to connect the new suburbs to downtowns. By the 1950’s, most major cities were suffering from substantial population declines in inner city neighborhoods as the upper- and middle-income households fled for the rapidly growing suburbs.  The downtown cores of most urban centers were largely abandoned by all but low-income households. Within a few decades, the curve of distance versus income had for most cities changed dramatically – in some cities nearly reversing.

In the 1990’s, led by developments in many of the largest cities, a new generation of young and affluent households began moving back into the city, displacing the lower income households who had moved into the vacuum left two generations before. This process, labeled as gentrification, became well established over the past three decades. Most cities now have an affluent downtown core which has been spreading into those areas which were once affluent parts of town but had become low income. This change has not come without resentment and conflict, as the people in those neighborhoods increasingly feel like they are being forcibly pushed out by these new affluent residents.

The gentrification of inner cities has certainly resulted in areas where income varies sharply – the edge of the redevelopment zone where one side of the street is now high income, the other side low income. The income differentials, once mitigated by distance, are now obvious to the residents of each side of the street.

We looked at the relative change in income between 1990 and 2020 by applying a one mile radius filter at the block group level to reduce noise. Specifically, we indexed local income against the national average for both dates, then computed the ration in order to see what parts of cities had relative increases in income, and which have relative declines.

The results are striking – core areas of many cities both large and mid-size have had tremendous relative increases in income, while suburban areas have had declines.

Atlanta, Georgia

 

Detroit, MI

Nashville, TN

Portland, OR

With recent news of people moving out of Manhattan, we do wonder aloud what cities will look like even ten years from now. Will the inner cities be once again abandoned by the affluent? Or will this be a short lived COVID-19 interruption?

%d bloggers like this: