A recent paper from the National Bureau of Economic Research “Bright Minds, Big Rent: Gentrification and the Rising Returns to Skill” reports that in 1980, housing prices in the main US cities rose with distance to the city center. By 2010, that relationship had reversed.
In 1980, the average price for a two- or three-bedroom home right in the central business district was about $100,000 (in 1980 dollars). That figure dipped a bit as you made your way out of town, but then it popped back up as you entered the suburbs. By the time you were 10 miles away, that home price was higher than it was downtown, and as you kept moving out it pretty much kept going up until you hit truly rural areas. By 1990, in America’s top cities, those average home prices were higher in the CBD than they were 10 or 15 miles away, according to U.S. Census data. By 2010 the gap was even greater, with city center prices 40 percent higher than periphery prices.
… this development can be traced to greater labor supply of high-income households and their reduced tolerance for commuting
This paper proposes that the roots of gentrification can be found in the shrinking leisure of high-income households and that time scarcity has made a central location top of the amenities list … more