Gentrification / NextCity

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For the sake of argument, let us define gentrification as the replacement of low-income households by higher income households. (Race being associated with income, it is also associated with racial shift). Low income households are almost universally renters. Renters move far more often than owners. Hence, as an area becomes more desirable (for whatever reason) low income renter are replaced by higher income renters. Low income is also associated with youth--incomes tend to rise over time. So as the incomes of low income renters rise, they start buying houses, in the neighborhoods in which they rent. Homeowners typically outbid investors for houses, so owner occupied housing tends to rise. This further displaces renters, as new owners tend to buy the cheapest houses (which are the most run-down, and thus have the cheapest rents). Over time, the existing stock of depredicated (older, run down) housing available for purchase is exhausted. Only nicer, newer, more expensive houses are available for rent--at higher rental costs. The 'climax ecosystem' consists of expensive homes (either owned or rented). The only thing that prevents this dynamic (keeps rents/cost low) is the production of new housing. Initially, it serves to blunt the demand for expensive housing (rented and owned), and reduce the conversion of depreciated properties (for rent or purchase) to restored/new properties.