Rent Gap Theory

Rent Gap Theory is a concept in urban geography that explains how property values change over time. It suggests that a gap exists between the current rent prices of a neighborhood and the potential rent prices if the area were to be redeveloped or revitalized. When this gap widens, it often attracts investors and developers who see an opportunity to profit by improving the area. This can lead to gentrification, where existing residents may be displaced as property values and rents rise. Essentially, it highlights the economic forces that shape urban development and housing markets.