Seven signs of an up-and-coming neighborhood
It's more than just increasing home values
If you live in a town large enough for long enough, and you’ll undoubtedly be made privy to a story of the one that got away. The neighborhood that got away, that is – the neighborhood that all the locals saw as down for the count, pshawing away little sprouts of area upturn, until one day the formerly downtrodden district was teeming with new businesses, new residents, new life – and newly high property values, to the advantage of those few brave souls who decided to go all in before the place actually arrived.
Maybe you’re afirst time buyer trying to squeeze every iota of value out of your precious house hunting dollars, or you just love the prospect of being an early settler in your city’s Next Big Neighborhood. In any event, it can be daunting and even scary to try to figure out whether a neighborhood is up-and-coming or down-and-out. Home value increases are an obvious indicator, but by the time values are up it’s often too late to get in on the early advantage of buying in a neighborhood before it’s potential has been realized.
If you’re ready, willing and able to take on the challenge of buying in a diamond-in-the-rough type neighborhood, here are some signs to look for before property values shoot through the roof.
1. On-trend businesses are moving in.
In my neck of the woods, when a co-working space, a Whole Foods or a Starbucks moves into the neighborhood, it’s a sign that the nature of things might be changing. This is just as true for small, local businesses that attract people with disposable income as it is for businesses that sell the basics with flair. In fact, most large businesses do a fair amount of economic research and projections on the neighborhood before moving in. Watching big industry and business moves can be a great way to spot emerging areas with strong fundamentals way before you might otherwise be able to see them yourself.
2. Uber-convenient location in a land-affected metro.
If you live in a densely populated metro area – especially one that is coastal – or an urban setting with intense governmental restrictions on building, demand for homes will continue to grow as the population does, but the supply will remain somewhat limited. In many of these situations, neighborhoods that have been downtrodden but have very convenient proximity to employment centers, shopping, public transportation, freeways and bridges tend to be prime for whole-neighborhood remodeling in times of population growth or rapid real estate price rises in already-prime areas.
3. Downsides have an expiration date.
If there’s one major issue that has caused an area to be less desirable for decades, and that issue is being eliminated or ameliorated, it could set the neighborhood up for a turnaround. For example, striking decreases in crime or a major employer moving into the area where none were before can spark a serious real estate renaissance in an area which has some of the other desirable features on this list.
Also, keep in mind that a new generation of home buyers has a new set of values, and might simply not be concerned or deterred by things their parents might have viewed as turn-offs. Living above a commercial unit might have been a deal-killer for my parents, but my kids think it’s cool – even desirable, depending on the business on the ground floor. Similarly, gritty and urban might not be the descriptors of your dream home, but some twenty-something first-time buyers in major metros are seeking exactly that feel.
4. Architectural themes with a following.
Many up-and-coming neighborhoods find themselves pulled by aficionados of the particular type of architecture that characterizes the neighborhood. Often, down-at-the-heels neighborhoods that are riddled with Tudors, Victorians, Spanish-style homes or even Mid-Century Moderns will see a surge of revitalization when a fresh generation of frugal home buyers falls in love with the style and realizes the deals that can be had there vs. other, already prime areas in town. i.e. Queens Park in New Westminster.
5. At least one major economic development is brewing.
Never underestimate the power of a major economic development to overhaul a neighborhood’s fate. From Surrey City Hall and Century Groups 3 Civic Plaza 52 story residential tower in Surrey’s new city centre to the new Evergreen sky train going live in Coquitlam, one large-scale employer or infrastructure development can be a very early, very strong sign that an area will see it’s real estate fortunes rise. (That said, areas dependent on one near-obsolete employer or industry can see their fates decline rapidly. Look for industrywide investment in an area, vs. a single company’s investment.)
6. Fixing is in the air.
When you see that an area long known for its rundown homes has a number of homes being renovated and rehabbed from the inside out, this can be a sign of fledgling neighborhood turnaround. If you spot these sorts of projects visually, it might be worth taking a trip down to the City Planning counter to see whether the staff has seen the same uptick in individual owners’ investment in the area, and if so, ask them, what they think the story of the neighborhood might be – or might become. City staffers often have a wealth of information at the ready, everything from pending commercial development applications that could change the whole landscape of an area to projects the city itself has funded or will prioritize due to its own development initiatives.
7. Slow but steady decrease in DOM.
Ten years ago, I listed a charming, pristine home on not-so-charming busy Cambie Street, less-than pristine street – the location was its fatal flaw, and the place just lagged on the market as a result. Now, investors, speculators and even Millennials buying their first homes are salivating over that precise location, for its mix of urban feel; new trendy restaurants and yoga studios; and complete convenience to the new Canada Line. In between now and then, though, those who were watching carefully would have noticed how homes that once took 90 plus days to sell gradually were selling in 45, then down to a couple of weeks – and would have noticed that this decline in the number of days an average listing stayed on the market (DOM) occurred way before the home prices themselves increased. A slow, steady decrease in DOM is a smart, early sign that a neighborhood might be poised on the precipice of up-and-coming status.
If you are wondering where precisely some of those areas might be, drop me a quick note.
Trulia Copyright 2014.