Although rare, rapidly gentrifying neighborhoods share the common theme of having experienced large home value appreciation rates over the past decade
Last week, we covered an article by The Washington Post about the inequalities in the recovery of the U.S. housing marketand how, while on a national level, home values have appreciated 14 percent since 2004, that number covers up some of the massive variances occurring within the recovery. While some zip codes are seeing home prices that have appreciated over 90 and 100 percent since 2004, others have seen major losses around -30 and -40 percent. Now, The Washington Post is focusing on the zip codes that have seen the biggest gains in home values to determine what is fueling these massive increases.
For example, the zip code among the 300 largest metro areas in the country with the single biggest gain since 2004 is the 11216 zip code in the Bedford-Stuyvesant neighborhood of Brooklyn, where home prices have increased by 194 percent. These massive price increases have led to some very interesting and vexing data; the median single-family home value is over $1 million but, according to the most recent five-year American Community Survey data, the median income is only $44,000. Something doesn’t add up, no matter how thrifty you are, or even if you are the Michael Jordan of couponing, that salary cannot afford a home at that price.
But this contradiction of super-high home values with relatively lower incomes is something that is common among the zip codes that are changing the most and experiencing home values appreciating at the fastest rates. In Bedford-Stuyvesant, while home values have been skyrocketing, the area is still home to many lower-middle-class retired homeowners and renters in rent-stabilized apartments, but for how much longer is anyone’s guess.
In the 78702 zip code near downtown Austin, the second largest home appreciation levels in the country since 2004 at 172 percent, the pattern is similar. Around 10 years ago the neighborhood was mainly Hispanic families with aging single-family homes. Now, new condos, homes, art studios, and good restaurants are being constructed, all contributing to the 172 percent home value increases.
Overall, gentrifying neighborhoods are relatively rare, and the majority of the zip codes that have experienced large home value increases had more expensive homes to start with, but in the areas where rapid gentrification does exist the zip codes tend to be clustered near the very top of The Washington Post’s list.
The 97227 zip code in Portland (117 percent), the 37206 zip code in Nashville (108 percent), the 70119 zip code in new Orleans (108 percent), the 20002 zip code in Washington, D.C. (91 percent) and the 15224 zip code in Pittsburgh (86 percent) are all zip codes at the very top of the list for home-value appreciation and are all neighborhoods that are rapidly changing.