Real-Time View of Gentrification
June 2018
Source: Professional Builder
The crowd-sourced review website Yelp can be useful for location where to eat and
shop, and for homebuyers researching what amenities a housing market has to offer.
Now Yelp and other digital platforms are being considered a useful, complementary
data tool for developers, builders, and business owners to use. New research suggests
that Yelp can predict which markets are attracting buyers. Such data tracking may help
anticipate opportunities for economic growth in a specific neighborhood by locating
gentrifying activity in particular areas in real time.
A new working paper from the Harvard Business School, "Nowcasting Gentrification,"
shows that a burgeoning field or research is dedicated to understanding how digital
platform data, including Yelp data, can measure gentrification and potentially anticipate
economic trends, financial opportunity, and business-friendly environments.
The paper suggests that Yelp's measures of local business activity, including entries
and reviews of new cafes, grocery stores, and bars in a community, provides leading
indicators for housing price changes and that, typically, home prices increase with the
arrival of such establishments.
The link between higher education levels, higher income levels, and higher housing
costs has been established. The authors assert that individuals in this group tend to be
attracted to up-and-coming neighborhoods. They point out that individuals who flock to new and popular community amenities and businesses can be an early sign of up-and-coming neighborhoods'.