You’ve probably heard the saying that you shouldn’t buy the best house on the block. But everyone’s always looking for a deal, and in a fast-moving housing market, buyers especially are looking for a ‘diamond in the rough’: a good home in a not-so-good neighbourhood that they can buy for a steal and then sit back as the area – and value – improves over time. But how do you tell if you’re getting a bargain in a soon-to-be gentrified neighbourhood, or whether you’re just buying the best house on a crappy street?
Figuring out which schools are ‘good’ and ‘bad’ can be tricky even in well-established areas, let alone areas that are transitional. School rankings are publicly available, although there is much debate as to what they actually tell you (and what they don’t). The only way to truly know whether a school is improving is to talk to local parents whose children are in the schools, and to even visit the schools yourself. Demographics of the school and of surrounding households will provide you with information about the local population, but also look at how that information has changed over the past few years. Are household incomes rising? What about home values and prices? Higher property taxes can translate into better funded school districts. School administrators are also a big factor in the success of an individual school, so be sure to ask how long the principal and teachers have been at the facility.
If you want to buy a home in an up-and-coming area, it’s difficult to know exactly how much that area will change over time. One way to get an idea of the future landscape is to look and see if there are any development proposals that have been approved for the area. Are there any buildings that are set to be demolished or empty lots or spaces that could be developed? What are the zoning restrictions for those spaces? This may give you an idea of what types of buildings are likely to go up in the near future. Something that’s zoned as commercial may have a very different impact on a neighbourhood than something that’s zoned as residential. Are there areas that are protected and can’t be built upon? That might be good for having green spaces nearby, but maybe not so good for amenities. Get as much information as you can as to what’s coming in the near future, as it will help you anticipate what’s likely to come down the road.
The house or condominium building that you want to buy may look just fine – but what about other properties on the surrounding streets? If they seem to be in disrepair or just look unkempt, it could suggest that homeowners or property managers don’t have an incentive to look after their property, or that the owners are absentee landlords. Neither is particularly bad, but those situations may have an impact on our curb appeal and/or property values and may be unlikely to change in the near future. A good sign would be any renovations or construction that’s taking place on other properties nearby, meaning that either owners are likely to want to improve their property or to get it ready to sell to high-caliber buyers (like you!).
Is there a Starbucks in the area? Kidding, although the types of businesses that are in an area say a lot about its clientele and where business owners think the neighbourhood is headed. If there are any businesses in the area, note the kind of businesses they are. Pawn shops, pay day loan offices and convenience stores might deter people from investing in the neighborhood, whereas sit-down restaurants, retail stores, and large supermarkets suggest long-term staying power.
How close a neighbourhood is to amenities has an impact on home values, sure, but the proximity to opportunities is just as important – namely, how close it is to places of employment. This doesn’t just mean being close to a factory or a mall, both of which only offer one type of employment, but close to enough of a hub that offers opportunities across different industries. Even when larger municipalities suffer through housing slumps, people still flock to them because of the employment opportunities available, and they need somewhere to live that’s close(ish) to work. Something else you want to check out is how close your desired area is to other good neighbourhoods. Being next to a neighborhood that has already up and come, so to speak, isn’t a guarantee of your neighbourhood’s gentrification, but it’s more likely that it will attract people who may be priced out of that area or want to be close to that particular neighbourhood. On the flip side, if you’re in a pocket of depressed neighbourhoods, it’s less likely that yours will be the one to turn around.
There are plenty of factors to consider when trying to judge whether your desired neighbourhood is on its way up. Your real estate agent will help you decode the area and look for the signs that you’re one step ahead of the gentrification game.