What effect can gentrification have on local real estate markets?

Gentrification primarily leads to an increase in property values and a shift in demographic characteristics within a local real estate market. This process often occurs when wealthier individuals move into a previously lower-income area, leading to renovations and improvements in housing and local amenities. As demand rises due to the influx of new residents who may be willing to pay higher prices, property values in the neighborhood tend to increase significantly.

This rise in property values can also result in changes to the demographic landscape of the area. New businesses may move in to cater to the new population's preferences, which can alter the cultural fabric and social dynamics of the neighborhood, potentially displacing long-time residents who can no longer afford rising rents or property taxes. Thus, the statement that gentrification increases property values while simultaneously changing demographic characteristics accurately captures the typical outcomes observed in gentrifying neighborhoods.

In contrast, other options describe scenarios not typically associated with gentrification. For example, the notion of decreasing property values and displacing residents contradicts the essence of gentrification, which is characterized by increasing values. Similarly, stabilizing prices and maintaining demographics doesn’t align with the transformative nature of gentrification. Finally, the option denoting none of the above does not apply, as