Study Finds Widening Gap Between Rich and Poor Neighborhoods

A new study conducted in Columbus, Ohio, demonstrates how housing prices and neighborhood values have become polarized in some urban areas, with the rich getting richer and the poor getting poorer.

A research team at Ohio State University’s Center for Urban and Regional Analysis (CURA) used a high-resolution housing transactions database to analyze nearly 480,000 home sales in the Columbus area between 2000 and 2015 to see how housing values have changed in specific neighborhoods.

The findings, published in the journal Geographical Analysis, suggest that some of the factors long believed to affect neighborhood values such as the distance to downtown, nearby highways, or attractions such as city parks, no longer matter much to changing house prices in an area.

Rather, what drives neighborhood values are the unique, local amenities and characteristics of each area, such as local businesses, schools, crime rates and social networks.

And these features are self-reinforcing over time, said Jinhyung Lee, lead author of the study and graduate student in geography at Ohio State.

“Over 15 years, we see the divide between rich and poor neighborhoods getting deeper and wider in Columbus,” Lee said.

The results suggest that government officials need to provide direct investments in low-valued neighborhoods to break the self-reinforcing negative effects, he said.

For example, traditionally high-valued neighborhoods, which include suburbs (Upper Arlington, Grandview Heights, Bexley), became even more prosperous over the 15 years. Low-valued neighborhoods in the city (Linden, Franklinton) lost value.

The data showed the impact of the Great Recession on the value of houses in the Columbus area. Housing prices dropped significantly in all parts of the city between 2008 and 2011, as they did throughout the U.S. But recovery did not occur equally throughout the Columbus area.

“Areas that traditionally had high housing prices regained much of the recession-induced loss, while other areas did not,” Lee said. “This unequal recovery made the polarized neighborhood values in Columbus even worse.”

Overall, high housing prices were clustered near the center of the city and in suburban areas, Lee said.

“In contrast, the areas between the city center and suburban areas had low housing prices, resulting in a donut-shaped housing price landscape,” he said.

The research team calculated how far each neighborhood was from major Columbus amenities, including downtown, the nearest rivers, Ohio State’s campus, the Columbus Zoo and the closest city-maintained park.

The analysis revealed that the distance from these features didn’t shape patterns of neighborhood value over time, as some long-standing theories indicated they might, Lee said.

“This suggests that the reasons why neighborhoods are becoming more polarized has more to do with what is going on in each individual neighborhood,” he said.

The researchers found that the location of major highways in Columbus, particularly U.S. Interstate 71, shaped polarization. Many of the richer neighborhoods are clustered west of I-71, with the poorer neighborhoods to the east.

“This is consistent with work by public policy and urban history scholars documenting that highways were constructed to purposefully cut through poorer, minority neighborhoods and avoid more affluent ones,” Lee said. “It has served to further reinforce patterns of economic segregation.”

The research suggests that low-value neighborhoods are unlikely to improve over time on their own, according to Lee.

“Our research underscores the need for direct investments in neighborhoods to spark a development process,” he said.

For instance, governments can invest in job market training programs in low-value neighborhoods to offset the self-reinforcing negative effects that can make these neighborhoods worse off over time, he said.

Similar polarizing trends most likely exist in neighborhood values in cities across the nation, according to Lee. But the exact ways they get there may differ depending on factors like the size of the cities and their levels of decentralization.

The housing transactions database was provided by the firm CoreLogic.

Source: Ohio State University


Source: PsychCentral Study Finds Widening Gap Between Rich and Poor Neighborhoods