Established neighbourhoods in any city offer reliability, stability, and a number of amenities. If you purchase a house in an already popular neighbourhood, you know you will most likely be able to sell it at a higher price in the future. If you’re on the hunt for a bargain with real potential for profit, on the other hand, it’s worth looking at up and coming neighbourhoods. These may be areas that are in the process of gentrification and are a bit rough around the edges. Property prices will be lower to start with, but if the neighbourhood continues to grow in demand, you’ll benefit from a higher resale value in the future. One of the first steps to identifying a good investment in a gentrifying area is to identify what constitutes “up and coming.”
Prevalence of Artists and Young People
One of the traditional ways to identify an up and coming neighbourhood is by its population. Artists and musicians tend to move to down and out areas first, drawn to the low prices of rent and studio space. Students and young professionals then follow this first wave of artists, drawn to their creative energy and the changing atmosphere of the neighbourhood.
Another sign of a neighbourhood in transition is the prevalence of renovations. If the city has decided to clean up a park, warehouse district, or waterfront, it’s a sign that they are making way for new residents and a cleaner lifestyle. If the city invests money into a particular area, businesses and homebuyers will follow. Similarly, look for an area where a number of homeowners are renovating their properties. It shows that they take pride in their community, and that property values will increase in the future.
Recent Increase in Shop Prices
As you take a look at homes for sale in an area, you probably compare current house prices to recent sales from the past few years. This gives you an indication of whether property values are on the rise. However, it’s also a good idea to look at how the prices of basic items have changed. Take a walk around the neighbourhood and ask employees in shops and restaurants if prices have increased recently. A change in the average price of a cup of coffee can indicate a shift in demographic.
A Mix of Old and New Businesses
A neighbourhood’s traditional businesses are part of what lend it its charm in many cases. However, if you’re looking for an up and coming neighbourhood, you’ll want to see these older businesses intermixed with new galleries, bistros, and coffee shops.
In addition to looking at these positive signs of change, you’ll also want to assess the neighbourhood to determine if you really want to live there. If you can buy property before the neighbourhood changes, you can benefit from the rise in property prices. However, you still want to choose an area that you’ll feel comfortable in. The areas with the best potential will have low foreclosure and crime rates, high walk scores, and established public transportation links into the rest of the city.
Buying into an area on the cusp of change can not only provide the opportunity to make a profitable real estate investment. It’s also a way to have a hand in the regeneration of a neighbourhood, and help form its new identity.