Since the 1970s, cities have been experiencing a slow return of increasing work hours and higher paying jobs, thus attracting higher-income workers back to city centers.
However, as Ryan Severino, senior economist and director of research at Reis, writes in this editorial for Multifamily Executive, this concentration of highly skilled, highly paid workers in the city centers is causing problems such as gentrification. These higher paid workers have the ability to pay for their preferred location, driving up home prices and rents wherever they go. And slowly, the lower and middle class earners are pushed out.
Some demographers are predicting Millennials will slowly go back into the suburbs looking for space, justifying higher new-home prices. However, if the trend continues and the wealth stays concentrated in urban locations, suburban communities could experience a struggle to meet the pricing needs of lower earners.
If many high-end jobs hadn’t relocated from the suburbs starting in the ’90s, we wouldn’t have observed the widespread migration and gentrification (and concomitant increase in rents and home prices) that’s occurred over the past 20 or so years.
Given that this trend is unlikely to reverse anytime soon, expect gentrification to continue for the foreseeable future.