Association for Public Policy Analysis & Management

The Great Recession was marked by the collapse of the housing market and the foreclosure crisis, but many places now face a new housing crisis marked by the lack of affordable housing. Nearly ten years since the peak of the housing crisis, housing prices across the U.S. have reached unprecedented levels, while wages have continued to remain stagnant. Residential stability appears increasingly less attainable for low- and middle-income households, especially in metropolitan areas that disproportionately attract highly-skilled workers. Recent studies employing microdata have examined various aspects of residential instability associated with gentrification, but these studies have primarily focused on earlier time periods and either examine trends across the U.S. or in relatively loose housing markets. This study extends this research and assesses how gentrification affects residential stability among residents in the Bay Area in the post-Recession period. Unlike loose housing markets, the Bay Area disproportionately attracts highly-skilled populations and has experienced housing price increases far above national averages, particularly since the end of the Recession. Drawing on a unique, large-scale consumer credit database of residents in the Bay Area from 2009-2017 and US Census and American Community Survey data, we assess the degree to which gentrification is associated with the onset of new delinquent accounts, residential outmigration, and access to homeownership, as proxied by the issuance of a home mortgage. We stratify residents by credit scores and consider varying paces and stages of gentrifying neighborhoods to assess heterogeneous effects. While the Bay Area may be experiencing more advanced levels of gentrification than most regions of the country, our findings are relevant to metropolitan contexts around the country as consumer preferences shift and some areas continue to attract highly-skilled populations.