Does Condominium Development Lead to Gentrification?

Many politicians and voters believe that condominium development hastens gentrification. Indeed, there is a strong positive correlation between the presence of condos in a neighborhood and resident socio-economic status. We leverage the introduction of municipal regulations to study the causal effect of condo conversions on neighborhood attributes. Cities that restricted condo conversions experience a persistent decline in the condo share of the housing stock, relative to their neighboring suburbs and compared to metropolitan areas without such restrictions, even at city/suburb borders. Yet, areas with a higher condo share due to local regulations do not have residents with higher income or education levels.