How to Spot the Next Hot Neighborhood
Photo credit: Ken Lund
Neighborhood life cycles go up and down…and up. A former-well-to-do neighborhood in despair is reinvigorated by a new crop of hip home buyers, and later trendy businesses. Investment in up-and-coming neighborhoods can bring positive returns and property values usually go up. It’s important to be on the early part of the neighborhood’s rise because it can become unaffordable after investors come in. This is how to spot the next new hot neighborhood.
Go Where the Artists Go and Keep Up with New Zoning
Artists make communities cooler and investors usually follow the creative people. Unfortunately, artists and other creatives are some of the first people to be displaced when the neighborhood becomes unaffordable.
Another indicator of an up-and-coming neighborhood is when industrial areas are rezoned into residential and commercial. This sets the stage for reclaiming and transforming former industrial buildings into beautiful and pricey loft housing.
If There’s a Pocket of Revitalization, Check Out the Surrounding Area
Revitalization rarely pops up in isolated parts of a neighborhood. This is a sign that a nearby in-demand neighborhood doesn’t have enough inventory. So buyers start looking in adjoining areas.
Liane Freitas, principal broker at PEMCO Realty’s Hawaii office says, “the Puunui neighborhood has become the up-and-coming neighborhood. The baby boomers and investors are purchasing these tear downs using cash. This neighborhood is centrally located close to downtown and 20 minutes from the highly desirable Kailua and Hawaii Kai areas. Investors are capitalizing on the whole property and rebuilding the old 1942 homes or replacing with very large homes.”
Scope out Local Businesses
Where there are hip home buyers, trendy businesses will soon come. Starbucks usually comes into a soon-to-be hot neighborhood early and has been a factor in subsequent rising home values; a phenomenon called “the Starbucks Effect”.
Freitas says, “Kailua was once a sleepy town, but with the movie stars discovering the town, Kailua has turned into a mini Waikiki. Tourists love walking and biking on the world-famous Kailua Beach.”
Revitalization is a risky business and there are no guarantees when and where the next neighborhood reset will take off, with some efforts slowing and not realizing full potential. Some areas start with a bang and reach the highest potential in a matter a few years.
To get an idea of what’s going on in a community, you’ll have to do much research. Find the estimated value of the property, and compare it to others in the area, then contact a PEMCO Realty agent to help you find listings.
Eppraisal.com. Spotting Hot New Neighborhoods
Written by: Ari Meier