Philadelphia’s Changing Neighborhoods

In recent years, a number of Philadelphia neighborhoods have undergone significant transformation, with higher-income residents moving in, real estate prices rising, new businesses replacing old ones, and racial and ethnic compositions changing. Such shifts, often seen as part of a trend known as gentrification, have received a great deal of attention from government officials, residents, and community leaders. For that reason, The Pew Charitable Trusts set out to determine the incidence of gentrification in Philadelphia and place it in the context of other forms of neighborhood change.

This report uses a definition of gentrification that identifies sections of the city that shifted from a predominantly low-income population to a significantly higher-income one. Our standard has three elements: In order to be considered gentrified, a census tract needed a median household income in 2000 below 80 percent of regional median income, $53,992, the threshold set by the federal government to determine eligibility for housing assistance and other programs aimed at low-income households; the tract’s median income had to have increased at least 10 percent in inflation-adjusted dollars from 2000 to 2014, a period in which the median income of the city as a whole actually fell by about 10 percent; and its 2014 median household income figure had to exceed the citywide median of $37,460.

Using this definition, these key findings emerged:

• Only 15 of Philadelphia’s 372 residential census tracts gentrified from 2000 to 2014, the last year for which data were available. These tracts were mostly in South Philadelphia and in, or just north of, Center City. More than 10 times that many census tracts—164 in all—experienced statistically significant drops in median household income during the period studied.

• Beyond the 15 tracts that gentrified, several other parts of the city underwent changes sometimes associated with gentrification—such as rising real estate prices, increases in education levels, and changing racial and ethnic composition—but without increases in income, and thus did not meet our definition. (See Figure 1.)

• The neighborhoods that ultimately gentrified were not among Philadelphia’s lowest-income areas in 2000. None of the 15 was in the bottom quarter of the city’s census tracts that year when ranked by income.

• Twelve of the 15 gentrified neighborhoods had higher percentages of white residents in 2000 than the city as a whole, and all 15 had larger proportions of whites in 2014. There were modest increases in the share of Hispanic and Asian residents as well.

• The three predominantly working-class African-American tracts that gentrified, all of which are located in the neighborhood known as Graduate Hospital, experienced the most dramatic changes in racial composition. Their total black population fell from 7,793 in 2000 to 3,450 in 2014. During the same period, the number of white residents more than tripled in the neighborhood.

• Home prices rose the most (more than 1,000 percent in one tract) in gentrified areas where there had been relatively high numbers of investor-owned and vacant properties in 2000 and where many of the neighborhoods’ housing units have been built in the years since: the old industrial and working-class African-American tracts.

The areas where gentrification did occur, according to this report’s income-based definition, fall into four distinct categories, based largely on what the neighborhoods were like in 2000. One set was characterized primarily by working-class, African-American populations, another by mixed-income, mostly white ones. A third group consisted of old industrial areas with relatively few residents. The final category comprised nonaffluent sections of Center City and adjacent neighborhoods. The pace and scope of change were different in each of the neighborhood categories.

As the data indicate, gentrification is a relatively small part of the recent story of Philadelphia’s neighborhoods. But the phenomenon, and indeed the very word, can stir intense feelings. Some residents view it as bringing vibrancy to the affected neighborhoods and much-needed tax revenue to the city. Others worry that longtime residents are being forced to leave and that those who stay no longer feel they belong. For additional exploration of the phenomenon in Philadelphia, including additional analyses and perspectives of city residents, please visit www.pewtrusts.org/PhillyGentrification.