Gentrification is defined as the process of renewal and rebuilding accompanying the influx of middle-class or affluent people into deteriorating areas that often displaces poorer residents.
Buying a property in a neighbourhood that is in the early stages of such a process is generally considered one of the best ways to build equity in terms of real estate investments. Clients of mine who purchased homes a decade ago in neighbourhoods that have undergone tremendous gentrification, such as Leslieville, have benefitted from extraordinary gains in value. The media is constantly running stories about Toronto's next hot neighbourhoods, knowing a large and eager audience is searching for future opportunities to reap the rewards of gentrification. The concept has become so ingrained in us that buyers often believe it's safe to assume that any dilapidated part of the city will eventually become gentrified, so long as you're willing to wait. Unfortunately, they couldn't be farther from the truth. The sad reality is that most neighbourhoods in this city are actually in decline.
The Toronto Star recently re-ran a graphic illustrating the changes of social classes throughout the city over a 35 year span. The key point and title of the graphic is the shrinking middle class, but the maps help us understand gentrification as well. If gentrification is defined as "the influx of middle-class or affluent people" into poorer and deteriorating areas, then this graphic should quite clearly indicate which areas have become gentrified over the last 35 years, as it in fact does.
Using the example again of Leslieville, you can see that is has gone from being predominantly low income to mostly middle income. King West, another neighbourhood that has become famous for the gentrification it has experienced, went from very low income all the way to very high income. Investors who bought land in that part of the city during '70s have literally made fortunes. In fact, the maps do quite accurately illustrate neighbourhoods that have been gentrified, but what's more startling is the number of neighbourhoods where quite the opposite has taken place.
Neighbourhood decay, the opposite of gentrification, where middle-class and affluent people migrate from a neighbourhood, is actually the most common process seen in Toronto over the last 35 years. Even pockets of the city such as Parkdale, which is often marketed as being on the cusp of gentrification (as it has been since I can remember), has actually moved in the opposite direction.
As the middle class continues to shrink, being replaced for the most part by low income earners, neighbourhoods that actually experience gentrification will become fewer and fewer. So if you're planning on buying a home in a more affordable part of the city in hopes that it will eventually become gentrified, be sure to do your homework.
The graphics have been borrowed from a report called "The Three Cities of Toronto," by J. David Hulchanski at the University Of Toronto.
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