Over the last four decades, formerly large industrial cities have lost their economic base and a sizeable share of their population. This transformation of urban America has prompted a body of research offering different hypotheses explaining why some cities have reversed their population loss and stabilized or are growing while others continue to decline. Some theories argue that geography, climate, and industrial mix drive city growth. However, arguably the two most prominent theories—the human capital and amenities theories—state that rustbelt cities may be more affected by the skill level of their workforce and the availability of amenities.

Research to date has focused primarily on the city as the unit of analysis, and on population change as the key measure of urban decline or revitalization. Yet citywide averages can mask dramatic differences in neighborhood conditions, thereby overlooking important dynamics that help explain citywide trends. Furthermore, it is household change that reflects the local demand for housing and impacts property tax revenues, a primary driver of city financial health.

In this paper, we explore the applicability of the human capital and amenities theories to neighborhood growth, stability and decline through an empirical study of a sample of Baltimore neighborhoods. We analyze a matched-comparison sample of four pairs of neighborhoods in which one neighborhood experienced household growth or stability during the 2000s decade and the paired neighborhood lost households.  Both neighborhoods in the pair remained stably middle- or lower-middle class throughout the 2000 decade and are in close geographic proximity to one another. We use data from multiple sources including the census, city administrative records, on-site observations of each block in all eight neighborhoods, and a convenience sample of personal interviews with tract residents, business owners, and arm’s-length experts.

Strikingly, theories of city growth do not appear to drive change at the neighborhood level.  Instead, each pair of neighborhoods has a distinctive story. These include the advantages of some city neighborhoods located near the border of attractive suburban neighborhoods, the importance of anchor institutions, and lower median sales prices acting as “stepping stones” to homeownership. The challenge for policymakers is to take into account such unique neighborhood features when developing citywide investment strategies.