Affordability and location are the two of the most important factors for home buyers. For this reason, many buyers look to up-and-coming neighborhoods for their home search. Not only are housing costs more manageable in transitional neighborhoods, but there’s a huge potential for growth and development in the community.
Identifying an up-and-coming neighborhood before the prices jump can be tricky, but you’ll see the signs if you look closely enough. Here are eight early indicators of an improving neighborhood:
1. Building Renovations
Renovations of both commercial and residential real estate are a classic sign that a community is on the rise. You might see old or previously empty commercial spaces being remodeled with signs announcing new businesses are coming soon. New apartment buildings with retail space on the first floor are another common sign of growth.
Residential properties may get upgrades like a new roof, fresh exterior paint, or professional landscaping because homeowners realize the potential value in the neighborhood. If a lot of homes in the area are being flipped, property values are probably increasing. You can also search building permits in the neighborhood to confirm if development projects are on the rise.
2. New Small Businesses
Small, local businesses love up-and-coming neighborhoods for many of the same reasons that homeowners do. Any increase in commercial development can be a sign of an improving neighborhood, but businesses that cater to young professionals are especially common in transitional communities. Here are a few types of establishments to watch for:
- Coffee shops
- Co-working spaces
- Bars and breweries
- Fitness studios
- Salons
- Art galleries
3. Investment in Public Transportation
Cities tend to invest money in neighborhoods they believe have the potential for growth. A new bus or train route is a major sign that an area is undergoing improvements. Most people value good public transportation, so once the project is complete, the neighborhood will attract home buyers and property values will rise.
You can learn about upcoming public transportation projects through the local news or on your city’s website. These improvements can take years to complete, so they’re a great way to predict which neighborhoods will be trending in the future.
4. Upgrades to Community Infrastructure
In addition to public transit projects, you’ll also see improvements to other community infrastructure. For example, walkability and bikeability are key factors in the popularity of urban and suburban neighborhoods. Plans to introduce bike lanes, pedestrian crossing lights, sidewalks, and other safety features indicate that the city is investing in the community.
New parks are another sign of an improving neighborhood. Homes located near parks, especially in densely populated cities, are highly desirable.
5. Improving School Metrics
Good schools attract families, so neighborhoods with improving school metrics will see a rise in property values as more and more families move to the area. You can look up information online about school performance, including test scores and graduation rates.
Plans for a new charter school or magnet school can also indicate the neighborhood is about to undergo rapid development. Families will move to the community just for their kids to have the opportunity to go to these schools.
6. Faster Home Sales
You can gauge whether a neighborhood is improving by looking at home sale trends. Even before prices rise, you might notice that houses are selling faster than they used to.
You can use real estate listing websites to research the number of days houses typically sit on the market in the area. Compare the current numbers to the averages from a year or two ago in the same community. Then, compare these numbers to the averages in nearby neighborhoods. If houses seem to be getting snatched up faster in this community, the prices will most likely be on the rise soon.
7. Nearby High-Demand Neighborhoods
Development tends to have a domino effect. One neighborhood goes through a period of rapid growth, and housing prices skyrocket as demand increases. Then, home buyers can no longer afford the neighborhood, so they look to nearby communities that are more affordable. As people get priced out of the most popular neighborhoods, the surrounding areas start to undergo the same growth and development.
One of the best ways to find an up-and-coming neighborhood is to look at the communities next door to the most recently developed areas. If a nearby community is showing new business growth or a shift in demographics, it will almost definitely be the next trendy neighborhood.
8. New Job Opportunities
When a new employer pops up, the closest neighborhoods are likely to increase in popularity. People will move to the area for work, and they’ll value a short commute time. Restaurants and other small businesses will also come to the area to take advantage of the new influx in traffic. Neighborhoods near newly built factories, hospitals, or other major employment centers will thrive.
Should You Buy a House in an Up-and-Coming Neighborhood?
Transitional neighborhoods are appealing for many homeowners, but there are drawbacks as well. Before you seek out an up-and-coming neighborhood, you should weigh the pros and cons.
Pros of Living in a Transitional Neighborhood
For most buyers, affordability is the greatest advantage of living in an up-and-coming community. When you get into the neighborhood early, houses will cost a fraction of what they cost in nearby popular cities. As prices rise, you’ll see an excellent return on your investment.
Transitional neighborhoods tend to have a rich community and culture, too. They attract people from a wide range of backgrounds, leading to a vibrant and diverse network of neighbors. The food, art, music, and community events will reflect this.
Cons of Living in a Transitional Neighborhood
An up-and-coming neighborhood may not offer everything you want right away. The community is in transition, so it may be lacking in public transportation, small business development, green spaces, and other amenities. You need to have patience while the community takes steps toward growth.
Living in an area that’s undergoing widespread construction also has some big drawbacks. The constant noise from the construction of new homes, businesses, and infrastructure can take its toll.
Buying a home in a newly up-and-coming neighborhood is financially risky, too. There’s always a chance the growth will halt or fluctuate. For example, many up-and-coming neighborhoods throughout the United States saw a sharp decline at the onset of the COVID-19 pandemic.
If buying property in an up-and-coming community is the right choice for your lifestyle and finances, start looking for the signs of development in nearby neighborhoods. Getting into transitional neighborhoods early is the key to maximizing your return on investment. For the best experience with your home search, partner with a real estate agent who knows your area well and can help you identify signs of growth.