The Impact of Gentrification in Chicago

By: Vince Parisi, AmeriCorps State & National Member

Gentrification is the process of neighborhood change that results from an influx of higher income residents. It is most often used as a pejorative to describe the displacement that can result when the original neighborhood residents can no longer afford to pay rent or property taxes on their accommodations. Displacement can occur directly through lease-non renewals, evictions, or physical conditions that make housing uninhabitable, indirectly due to rent increases, or culturally when services and shops have shifted to cater to a changed population. When higher income residents move to the city from surrounding areas, they bring valuable tax dollars that can help fund improvements, but in doing so may disrupt the lifestyle and livelihood of long-term neighborhood residents. While gentrification is a byproduct of an American capitalist economy, policy tools and strategies exist that help prevent unjust displacement and help keep urban neighborhoods places where people of all income levels and cultural backgrounds can share.

The relationship between American cities and their residents has been storied and complex. In the period following World War II, those who could afford it, often white middle class Americans, left the crowded cities for a new vision of the American Dream; a single family home, a yard, and a personal vehicle. This trend increased throughout the end of the 1900’s and was furthered by the dot com boom of the early 2000’s. However, today, as the millennial generation has begun to buy homes, a reversal of these earlier trends is becoming visible - young people want to live in cities. Citing a desire to escape from car-dependency and have access to walkable neighborhoods, public transportation, and live with a decreased carbon footprint, demand for urban housing and rentals has increased. While Chicago is still relatively affordable compared to other major American cities, this may make it a target for increased demand and gentrification in the near future. 

Pilsen is one area of the city that has experienced significant gentrification over the last three decades. The neighborhood was originally made up of Polish and Czech immigrants, but began receiving an influx of Mexican residents after World War II. Then, after the displacement of many Latino Chicagoans from the construction of UIC in the 1960’s, the area became one of Chicago’s first Latino-majority communities. Recently, from 2006 to 2020, the median household income in the Pilsen neighborhood has increased by almost 150%, primarily from the influx of white millennial residents. In response to the willingness of new residents to pay more for housing, and increased neighborhood rents, the City of Chicago has employed several strategies to preserve housing affordability in Pilsen, like the 2021 Anti-Deconversion ordinance that prohibits the conversion of multi unit buildings into single family homes. The following are additional policy tools that can be employed by city governments to preserve housing affordability and prevent displacement:

Longtime Owner Occupants Program - This is a real estate tax relief program for homeowners, or occupants of a residency for the past 10 years. If the tax assessment has increased by more than 50% in the past year, this program caps the amount of an increase to 50%. To qualify for this program you must be current on property taxes or on an installment plan, and have an income below the limit for your family size. 

Single Room Occupancy Preservation/Protection - Single room occupancies or residential hotels typically house one or two people in a single room with a shared kitchen and bathroom. Single room occupancies can provide a safe, and accessible shelter for low income individuals, or people in transition. Unfortunately, many communities have adverse reactions to the creation or preservation of single room occupancies, and as a result they can be far from the central city and disconnected from public transportation. 

Land Value Capture - When the public sector makes an investment in infrastructure or land use, the private individuals who own the land surrounding the location of the change make a much greater profit than the initial cost to build the infrastructure or make a land use change. In Chicago, examples are The 606 or the redevelopment of the Fulton Market area. Both investments created huge increases in the value of land surrounding these areas, and likely priced out many residents who lived in the area before the change. By using land value capture, the public sector can recoup a percentage of the increase in land value and reinvest it back into the public. This could mean more bike lanes in disadvantaged areas, or the conversion of an office building into affordable housing. 

Inclusionary Zoning - When an area begins to gentrify, developers soon begin to join in on the action. This often results in high rise apartment complexes intermixed with existing historic buildings. This can mean demolition, or landowners allowing their building to deteriorate into unlivable conditions so tenants are forced to move out, allowing them to sell their land to a developer for a profit. Inclusionary zoning forces new developments to dedicate a portion of their units to designated affordable housing. This allows for new development, but can provide ways for the original residents of the community to remain and reap the rewards the private sector has brought to a gentrified area.

Gentrification that results in displacement is an unfortunate consequence of urban demand. Our overarching economic system causes the real estate market to function as an investment good, and when there is a scarcity of housing, land owners can make money on their investment. If the city wants to ensure that it will remain an accessible and inclusive place for the years to come, residents should become aware of strategies to mitigate the displacement that results from gentrification, and become involved with politics at their own local level, working to be educated about future changes within the city and using their collective voice to preserve housing affordability and access. 
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References:
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Florida, R. (2023, April 14). Three years into the pandemic, the “Urban Exodus” was overblown. Bloomberg.com. https://www.bloomberg.com/news/features/2023-04-14/three-years-into-the-pandemic-the-urban-exodus-was-overblown 

Impact of gentrification | mapping global chicago. (n.d.). https://mappingglobalchicago.rcc.uchicago.edu/2023-elpaseo/gentrification/ 

Apply for the longtime owner Occupants Program (LOOP): Services. City of Philadelphia. (n.d.). https://www.phila.gov/services/payments-assistance-taxes/payment-plans-and-assistance-programs/income-based-programs-for-residents/apply-for-the-longtime-owner-occupants-program-loop/ 

The state of anti-displacement policies in LA County July 2018. (n.d.-b). https://knowledge.luskin.ucla.edu/wp-content/uploads/2018/07/The-State-of-Antidisplacement-Polices-in-LA-County_071118.pdf 
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Alliance, L. (2022, May 24). Land value capture, explained. Land Value Capture Explained. https://decentralization.net/2022/05/land-value-capture-explained/