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Construction, alteration, or improvement of an otherwise undeveloped geographical location. Such activities increase the value of real estate in the area.


The role of the appraiser is to understand the shifting patterns of the real estate market. One of the shifts that appraisers must recognize is the process of gentrification in certain neighborhoods. Gentrification is a real estate trend wherein wealthier consumers move into certain neighborhoods, resulting in increased property values, higher rents, and ultimately the displacement of many local residents.

Gentrification results from significant interest in a specific market either for location, opportunity, or, a combination of the two. Gentrification initially begins when entertainment or large businesses move into a town, thereby increasing demand in that neighborhood. Once the demand rises, significant capital investment moves into the neighborhoods further increasing the quality of the neighborhood. Once infrastructure is developed, the process of gentrification further increases by creating more places to live and work.


Value of property goes up

Vacant lots/housing & commercial facilities begin to be occupied

Lower homicide rates

Infrastructure/construction more advanced


A number of tenants will have a difficult time in affording rising costs of rent as well as property taxes which can lead to displacement and deepen struggles surrounding poverty. Nearby neighborhood communities will be impacted, as they could very well be next in terms of witnessing their neighborhoods falling victim to gentrification in the near future.

Reality of Gentrification

The topic of gentrification is certainly one which is tied to a wave of controversy. No matter the benefits such an act may bring about to different neighborhoods all across the country, gentrification will almost most certainly lead to some form of socio-economic rift between different classes of people. The battle between rich and poor, middle class vs lower class are all factors in determining the long term goal of gentrifying communities and neighborhoods. The term also raises the question between economic ideology vs morality.

Recent Example of Gentrification-Downtown Los Angeles

Once considered only a place to work, Downtown Los Angeles has expanded dramatically since 2005. Beginning with the creation of the Staples Center-stadium of the Lakers, Clippers, and Concerts-downtown Los Angeles shortly went from a dangerous place to walk at night to a place protected by thousands of police officers. The increased traffic and safety in the neighborhood drew the interests of other businesses including the Nokia Center, LA Live, and world-famous restaurants.

Within a few short years Downtown Los Angeles went from an exclusively work neighborhood to a world class neighborhood in one of the largest cities in the world. After the creation of the Staples Center and others, many developers began meeting new demands which included developing large living quarters, more hotels, and increased tourist attractions.