The paper presents some characteristics of the socio-economic composition of mid-sized towns in the central region, and shows how they are shaped by market forces and government policies. The role of housing prices in the process of social segregation is explained. Housing prices filter the people who move into a neighborhood or town, while the social composition of the town affects the prices of its housing. Finally, the paper discusses how this affects the success of urban renewal under ."Tama 38" and "clearance and rebuilding "plans.