Gentrification: Impacts and Potential Policy Solutions in Chicago

By: Yitong Zhang
Edited by: Eliana Aemro Selassie and Lauren Kim

Chicago boasts many neighborhoods loved by young adults for their abundance of vintage stores, coffee shops, and eye-catching architecture. Many of these settings have only recently developed as a result of great investment in the city’s neighborhoods. Unseen behind the colorful facades of trendy stores, however, are the ways these developments have affected the low-income communities that previously lived there. 

Gentrification describes the displacement of long-term residents by higher-income outsiders who move into the community. Buildings, often the housing units of low-income families, are renovated to increase property values, attracting even more affluent newcomers. As property values rise, property taxes and rents follow until the area becomes unaffordable for its original residents, who are forced to relocate. The majority of gentrification involves an influx of white individuals who move into an area that was previously dominated by minority communities. This demographic shift changes the economic character of the area, raising property taxes and often driving out small businesses in favor of larger, corporate establishments. 

Gentrification has emerged as a common phenomenon in major city centers within the US. In Chicago, this process has accelerated over the past few decades, particularly along the northern lakefront and in the Loop. [1] More recently, development has spread westward into neighborhoods such as Logan Square, West Town, and Avondale. In contrast, while investments are continuously funneled into property in the north, many neighborhoods in the South and Southwest Side of the city are experiencing serious decline, underscoring the uneven distribution of urban development. 

Scholars have proposed multiple explanations for why gentrification occurs. Sociological theories center around catalyzing factors that make the area seem more appealing. For example, historical preservation of old homes in neighborhoods such as Lincoln Park makes the area seem more unique and thus attractive to buyers. [2] Similarly, cleanups that address environmental problems that previously kept rents low may prompt outsiders to begin moving in, after concerns of water contamination and air pollution have been mitigated. [3] Legal scholars instead emphasize the impact of local zoning laws, which regulate the types of development allowed in each area of a city. Zoning laws greatly influence developer behavior. For instance, low-density regulations incentivize developers to build luxury apartments to make up for the lost profits, thus raising housing values in the area by a much greater amount. [4]

Trends of gentrification bring great negative impacts to marginalized communities. In Chicago, the Urban Displacement Project finds that over 200,000 low-income households live in neighborhoods that are either already experiencing or at risk of gentrification and displacement. [5] As the residents of previously low-income neighborhoods are displaced, they then move into areas inhabited by impoverished residents, further destabilizing urban dynamics. [6] This has particularly affected Latino communities throughout Chicago, as Professor John Betancur shows in his research at the University of Illinois at Chicago. [7] Displacement also causes negative social impacts for communities that relocate. Professor Robert Sampson finds in his research that moves within the city are “associated with declines in academic performance and educational attainment as well as with increased levels of drug use, sexual activity, and other risky behaviors” for adolescents. [8]

When gentrification drives out local residents and breaks communities, it clearly causes reverberating negative effects. At the same time, some scholars warn against the vilification of gentrification, arguing that it also creates benefits for the community.[9] Gentrification brings economic development to a neighborhood, increasing salaries while also raising the cost of living. Higher property taxes could increase the quality of public schools, fostering the development of younger generations. The installation of new businesses stimulates the service sector, potentially creating jobs for low-income residents. However, the reality is that these benefits are felt only by those who move into the area, not by the original residents.

Ultimately, the key question is whether it is possible to preserve the positive impacts of gentrification while mitigating the negative ones. How can lawmakers protect local communities and insulate residents from the negative effects of gentrification while still reaping the benefits of economic development?  Several policy interventions and community-based initiatives within Chicago point towards possible answers.

EXAMPLE 1: AFFORDABLE REQUIREMENTS ORDINANCE

The City of Chicago attempted to increase flexibility in zoning laws through the 2021 Affordable Requirements Ordinance (ARO), which mandates a minimum level of affordable housing construction for property owners and developers. [10] This policy change relies on the importance of zoning laws and their great potential to influence the effects of gentrification. As attorney Megan VanGilder explains, rigid zoning laws promoting low density increase the risks of negative impacts of gentrification by lowering the supply of housing in the area. [4] On the other hand, flexible zoning structures that allow for multi-family housing and mixed-use structures can preserve local communities while still allowing for revitalizing development. The city-wide ARO aims to promote this flexible zoning structure and maintain the supply of affordable housing. However, policy reports from the Illinois Institute of Policy suggest that the ordinance has actually decreased the supply of affordable housing by disincentivizing the construction of multi-unit buildings altogether. [11] Clearly, this problem remains very complex and difficult to control through policy.

EXAMPLE 2: Pilsen Affordable Housing Requirements

On a more local level, community members in Pilsen have contributed to housing policy in advisory roles through the Pilsen Land Use Committee, a committee of neighborhood leaders that meets directly with the alderman. Pilsen, an area in the Lower West Side with a long-established Latino population, has recently seen an influx of white and middle-class residents. However, the neighborhood has managed to deter large-scale developments through an affordable housing requirement of 21% for large buildings, double that mandated by the ARO. These efforts have contributed to preserving the local character of the neighborhood and maintaining housing costs below the citywide average. Nevertheless, rents have still risen a significant 20% since 2020, after adjusting for inflation, indicating the continued effects of gentrification. [12]

EXAMPLE 3: Here to Stay Community Land Trust

An alternative model for preserving affordable housing has been developed by several non-profit housing organizations that united to form the Here to Stay Community Land Trust. [13] Instead of focusing on promoting policies related to affordable housing, the Trust uses its funds to buy pieces of land and build housing that families can then purchase and own. The Trust maintains ownership of the land, but the families stay in possession of the house and are prohibited from selling it for a profit. [14] In effect, these housing options are essentially taken off the market and held at affordable prices by the Trust. This model provides a more community-centered approach to preserving local communities, but one that may be difficult to scale up beyond operating on a case-by-case basis. 

EXAMPLE 4: Green Social Housing Ordinance

The Chicago City Council recently enacted a Green Social Housing ordinance that operates on a similar principle, but with a broader scope, made possible with the resources of the city government. Passed in May of 2025, the ordinance addresses the shortage of affordable housing in the city, exacerbated by gentrifying encroachments into previously low-income neighborhoods. [15] It creates a non-profit organization, the Residential Investment Corporation (RIC), that will be created and initially funded by the city but run independently. The RIC will invest in and operate new developments that are made of at least 30% affordable housing units, offering interest rates below the market rate in exchange for ownership. [16] Units owned by the RIC will be kept permanently affordable, with the repayments from the loans used fund future projects in a cyclical model. The RIC will work with private developers in order to harness the efficiency gained by participating in the market, while presenting a new solution to expand the supply of affordable housing in Chicago. 

In conclusion, gentrification has greatly contributed to the displacement of low-income urban residents in disproportionately Black and Latino communities, thereby increasing segregation in cities. In Chicago, this dynamic is evident in many neighborhoods, as communities in the North Side grow wealthier while those in the South Side remain neglected. At the same time, a range of policy interventions offer potential avenues to counter displacement and preserve the positive impacts of economic development. Chicago has enacted many, including affordable housing mandates and innovative financing plans to either bypass or leverage the private market. Although these approaches are not without limitations, they provide a positive effort to address serious housing inequalities in Chicago.

Notes:

1. Jackson, April, Andrew Greenlee, and Patrick Alcorn. Rep. Gentrification Index, 2025. 

2. Grevstad-Nordbrock, Ted, and Igor Vojnovic. “An Analysis of Diverse Gentrification Processes and Their Relationship to Historic Preservation Activity in Chicago.” Urban Geography 46, no. 2 (June 25, 2024): 377–415. https://doi.org/10.1080/02723638.2024.2354669. 

3. Sarah Fox, Environmental Gentrification, 90 U. Colo. L. Rev. 803 (2019).

4. VanGilder, Megan. The Good, the Bad, and the Gentrified: How the Historical Misuse and Future Potential of Zoning Laws Impact Urban Development, 92 U. Cin. L. Rev. 1258 (2024) 

5. “Chicago – Gentrification and Displacement.” Urban Displacement. Accessed February 12, 2026. https://www.urbandisplacement.org/maps/chicago-gentrification-and-displacement/. 

6. Dudley, Kelly. Without Due Process of Law: Deprivation and Gentrification in Chicago, 9 Pub. Interest L. Rptr. 11 (2004).

7. Betancur, John. “Gentrification and Community Fabric in Chicago.” Urban Studies 48, no. 2 (June 29, 2010): 383–406. https://doi.org/10.1177/0042098009360680. 

8. Sampson, Robert J. “Moving to Inequality: Neighborhood Effects and Experiments Meet Social Structure.” American Journal of Sociology 114, no. 1 (July 2008): 189–231. https://doi.org/10.1086/589843. 

9. “Gentrification and Neighborhood Revitalization: What’s the Difference?” National Low Income Housing Coalition, April 5, 2019. https://nlihc.org/resource/gentrification-and-neighborhood-revitalization-whats-difference. 

10. “Affordable Requirements Ordinance.” City of Chicago. Accessed February 12, 2026. https://www.chicago.gov/city/en/sites/affordable-requirements-ordinance/home.html. 

11. “Mandating Unaffordability: How Chicago’s Housing Affordability Requirements Decrease Supply and Increase Costs.” Illinois Policy Institute, October 1, 2025. https://www.illinoispolicy.org/reports/mandating-unaffordability-how-chicagos-housing-affordability-requirements-decrease-supply-and-increase-costs/. 

12. Newsham, Bridget. “Who Pulls the Strings on the PLUC?” South Side Weekly, February 9, 2018. https://southsideweekly.com/pilsen-land-use-committee-pluc-solis/. 

13. Engleman, Joe. “Fitting a Square Peg in a Round Hold.” Chicago Reader, February 18, 2025. https://chicagoreader.com/news/land-trust-logan-square-here-to-stay/. 

14. Malis, Victoria. “New Answer to Gentrification in Chicago.” Latino News Network, April 11, 2025. https://latinonewsnetwork.com/economy/new-answer-to-gentrification-in-chicago/. 

15. “Chicago City Council Passes Mayor Johnson’s Landmark Green Social Housing Ordinance.” City of Chicago. Accessed February 12, 2026. https://www.chicago.gov/city/en/depts/mayor/press_room/press_releases/2025/may/Green-Social-Housing-Ordinance-Passes.html. 

16. Harvey, Donovan. “Green Social Housing: A Sustainable Approach for Permanent Affordability > Metropolitan Planning Council.” Metropolitan Planning Council, May 2, 2025. https://metroplanning.org/green-social-housing-a-sustainable-approach-for-permanent-affordability/. 

Bibliography:

“Affordable Requirements Ordinance.” City of Chicago. Accessed February 13, 2026. https://www.chicago.gov/city/en/sites/affordable-requirements-ordinance/home.html.

Betancur, John. “Gentrification and Community Fabric in Chicago.” Urban Studies 48, no. 2 (June 29, 2010): 383–406. https://doi.org/10.1177/0042098009360680.

“Chicago City Council Passes Mayor Johnson’s Landmark Green Social Housing Ordinance.” City of Chicago. Accessed February 12, 2026. https://www.chicago.gov/city/en/depts/mayor/press_room/press_releases/2025/may/Green-Social-Housing-Ordinance-Passes.html.

“Chicago – Gentrification and Displacement.” Urban Displacement. Accessed February 12, 2026. https://www.urbandisplacement.org/maps/chicago-gentrification-and-displacement/.

Dudley, Kelly. Without Due Process of Law: Deprivation and Gentrification in Chicago, 9 Pub. Interest L. Rptr. 11 (2004).

Engleman, Joe. “Fitting a Square Peg in a Round Hold.” Chicago Reader, February 18, 2025. https://chicagoreader.com/news/land-trust-logan-square-here-to-stay/.

Fox, Sarah. “Environmental Gentrification.” University of Colorado Law Review 90, no. 3 (2019).

“Gentrification and Neighborhood Revitalization: What’s the Difference?” National Low Income Housing Coalition, April 5, 2019. https://nlihc.org/resource/gentrification-and-neighborhood-revitalization-whats-difference.

Grevstad-Nordbrock, Ted, and Igor Vojnovic. “An Analysis of Diverse Gentrification Processes and Their Relationship to Historic Preservation Activity in Chicago.” Urban Geography 46, no. 2 (June 25, 2024): 377–415. https://doi.org/10.1080/02723638.2024.2354669.

Harvey, Donovan. “Green Social Housing: A Sustainable Approach for Permanent Affordability > Metropolitan Planning Council.” Metropolitan Planning Council, May 2, 2025. https://metroplanning.org/green-social-housing-a-sustainable-approach-for-permanent-affordability/.

Jackson, April, Andrew Greenlee, and Patrick Alcorn. Rep. Gentrification Index, 2025.

Johnson, Olatunde. Unjust Cities? Gentrification, Integration, and the Fair Housing Act, University of Richmond Law Review 53, no. 835 (2019).

Malis, Victoria. “New Answer to Gentrification in Chicago.” Latino News Network, April 11, 2025. https://latinonewsnetwork.com/economy/new-answer-to-gentrification-in-chicago/.

“Mandating Unaffordability: How Chicago’s Housing Affordability Requirements Decrease Supply and Increase Costs.” Illinois Policy Institute, October 1, 2025. https://www.illinoispolicy.org/reports/mandating-unaffordability-how-chicagos-housing-affordability-requirements-decrease-supply-and-increase-costs/.

Newsham, Bridget. “Who Pulls the Strings on the PLUC?” South Side Weekly, February 9, 2018. https://southsideweekly.com/pilsen-land-use-committee-pluc-solis/.

Sampson, Robert J. “Moving to Inequality: Neighborhood Effects and Experiments Meet Social Structure.” American Journal of Sociology 114, no. 1 (July 2008): 189–231. https://doi.org/10.1086/589843.

VanGilder, Megan. The Good, the Bad, and the Gentrified: How the Historical Misuse and Future Potential of Zoning Laws Impact Urban Development, 92 U. Cin. L. Rev. 1258 (2024) 

Weinstein, Hannah. “Fighting For a Place Called Home: Litigation Strategies for Challenging Gentrification.” UCLA Law Review 62, no. 794 (2015).