Email Post to a Friend: 6 Ways to Spot the Next Hot Neighborhood

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April
4

Do you dream of living in one of the area's hottest neighborhoods, but find that all the homes are out of your price range? If you want to live in a trendy area, but also want to get the most out of your real-estate-dollar, the trick is to buy an inexpensive home in a neighborhood that's destined to be the next new hotspot.


Cities and urban areas across the country are going through a revitalization, also known as gentrification. Formerly run-down, lower-income regions are experiencing an influx of affluent residents, causing the neighborhoods to become desirable and home prices to rise. This trend is growing year-over-year as buyers have been placing more value on locations close to city centers and near their places of employment. 


Up-and-coming neighborhoods tend to start as neglected and run-down areas that might have high crime rates. Purchasing a home in these areas can be risky, so you'll want to do your homework first. 


How can you tell a neighborhood is getting ready to pop? Start with these six pro tips.

  1. Start with the Current Hotspots
    If you take a close look at some of the hottest local areas, you'll likely find neighborhoods just on the outskirts that need some love and attention. Purchasing a home in these neighborhoods will guarantee you're close to the amenities you want, and it's likely just a matter of time before your new neighborhood catches on.
  1. Keep an Eye Out for Construction
    An increase in construction is a good sign that a neighborhood is up-and-coming, but by the time you see the equipment, it's often too late. Instead, pay attention to the news to see what projects are in the works and attend city council meetings. If the city or large private investors are willing to put money into a neighborhood, it's a good sign that you might want to invest there too. 
  1. Listen to the Press
    If the news outlets begin reporting on revitalization in an area or referring to it as up-and-coming, home prices often start to climb. If you hear these reports and are ready to jump on a purchase right away, you might be able to get in before prices skyrocket.
  1. Follow the "Cool" People
    Historically, areas, where artists and musicians choose to live, have become some of the hottest neighborhoods in the country (think SoHo in NYC). This is because they typically search out less-desirable areas looking for cheap rent, then significantly improve it by bringing their creative energy.

    Also, look for areas where younger people are flocking. It's almost guaranteed that trendy bars, restaurants, and other cool amenities will follow. 
  1. Consider a Historic Area
    Areas designated as "historic" are prime for revitalization. Not only is the city or local government likely to invest in improvements, but many also offer significant tax breaks for buyers willing to spend in the area. If you're ready to put the time and effort into a restoration, you can turn a diamond-in-the-rough into a gorgeous dream home. 

  2. Talk to Your REALTOR®
    A good REALTOR® will have his or her finger on the pulse of the local area and know which neighborhoods are destined to be the next hotspots. Together, you can also examine real estate trends like days on the market (DOM). A decrease in DOM quarter-over-quarter is an excellent indicator of a neighborhood's popularity. 

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