Hot neighborhoods with skyrocketing home values can be found in nearly every major metro area. In these high demand places, real estate activity is brisk, and new businesses appear regularly to cater to new residents.
The downside, of course, is that the average price of homes in the most sought-after neighborhoods can be out of many buyers’ price range. When this happens, buyers should remember that plenty of the currently hot locations were once up-and-coming neighborhoods. For those willing to do their homework, a home investment in an area on the verge of breaking out can pay off in the long run. Here are a five factors to consider when evaluating a neighborhood with breakout potential.
Location is still one of the top features homebuyers look for in a neighborhood. With traffic congestion and commute times increasing, buyers are willing to pay to be closer to their jobs or a thriving downtown area. Sometimes, if there’s simply no room to expand in a desirable area, home prices in surrounding areas will increase due to supply and demand. Fringe neighborhoods, which are neighborhoods close to better known or more desirable areas, are often viewed as spots with the potential to increase in value. As home values inflate in the wealthier areas, more residents will look for homes close by, leading to a buyers’ overflow effect.
2. Housing Stock
You can usually spot an up-and-coming neighborhood by spotting renovation activity, new real estate developments or investor interest. If big builders or experienced investors are willing to bet on the locale’s ability to attract new residents, chances are they see the same potential you’re looking for. In these neighborhoods, don’t just seek out the new housing developments but look into purchasing a larger, older home that embodies the unique character and beauty of the neighborhood to draw in home buyers. Additionally, a historic district can often serve as a focal point for up-and-coming neighborhoods.
A thriving shopping district, popular bars and restaurants or beautifully maintained city parks are just a few examples of features that can set an area apart and transform a neighborhood from good to great. Access to public transportation is another key benefit, and for young families, good schools are also a deciding factor. Depending on what you’re looking for, some amenities may carry greater weight in your decision, so be sure to research what each neighborhood has to offer.
4. Neighborhood Stats
Before buying a home, make sure to look into the neighborhoods key statistics. What’s the average home price, and how does it compare to the city as a whole? Is there at a small bump in home values in the area where you’re looking? Many neighborhood rating websites also report local crime rates. Incorporating real estate data into your home search can help narrow down your search and target certain areas in your price range.
5. Retail Presence
Another indicator of an up-and-coming neighborhood is the variety of retail establishments in the area. Major retail chains like Starbucks or Home Depot almost always research the potential customer base prior to opening. Retail stores also help to set the tone and personality of the neighborhood, which may indicate whether or not the location is a good fit for your lifestyle.
As with any real estate investment, buying into an up-and-coming neighborhood carries some degree of risk. Home values may never skyrocket, but there are many other factors that can help you to make your decision about where to live. Taking a look at the metro area as a whole, including employment opportunities and the city’s long-term plans for new transportation and infrastructure, can also help you decide if you’re ready to invest in a local home.
When you’re ready to begin your search, take a look at what’s available for sale in your city at Owners.com.
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of Owners.com, Altisource or any other Altisource® business or entity. The foregoing content is not intended to constitute, and in fact does not constitute, financial, investment, tax or legal advice by the author, Owners.com, Altisource or any other business or entity.
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