How does gentrification typically influence real estate markets?

Gentrification typically influences real estate markets by leading to increased property values and the potential displacement of long-term residents. This process occurs when wealthier individuals or groups move into an area that has historically been home to lower-income residents. As investments are made in the neighborhood—such as renovations, new businesses, and improved infrastructure—the desirability of the area increases, often resulting in a rise in property prices.

This surge in property values can make housing unaffordable for original residents, which may force them out of their homes and into less expensive neighborhoods. Consequently, while gentrification can revitalize communities and improve local economies, it simultaneously presents challenges by pushing out those who can no longer afford to live there.

The other options do not accurately capture the broader economic and social implications of gentrification. For instance, property values do not decrease significantly as overall demand tends to increase due to the influx of wealthier residents. Stabilization without change is contrary to the very nature of gentrification, which is characterized by transformation. Lastly, gentrification primarily affects urban and suburban areas rather than encouraging population growth in rural locations, which typically face a different set of challenges and dynamics.