Signs of an Improving Neighborhood

Read Time: 4 minutes

One of the reasons you buy a home is as an investment, so part of your strategy must entail buying one that will help you maximize your long-term returns. As the old saying goes, “Location, location, location” matters, so part of your home buying due diligence is making sure you’re buying in an area with improving prospects.

Here are some things to look for that can help influence whether to buy in a particular area.

Lower Crime Rates

This is obvious, but you may need to dig to find out if burglaries, larcenies, auto thefts, and other types of property crimes are rising.

Either go to the local police department for statistics or look it up online at a crime mapping site that shows a less safe area in red and a safer area in green. The “yellow” zones can be more of a bargain if crime rates are dropping.

Renovations and Rebuilding

If property owners or investors are rebuilding homes or doing significant upgrades such as new roofs, room additions, adding second stories, or significant landscaping upgrades, that’s a sign that existing owners have faith that a community is on an upswing. It’s easy to drive an area and look for dumpsters, lots of construction vehicles, and other signs of home rehabs taking place.

Building permits are required for home expansions and renovations, so another strategy is to check with the city building department to get a read on permit activity for the area you’re interested in.

Local governments are also another good indicator. If you see infrastructure improvements such as repaved streets, new sidewalks, street lights or public area landscaping improvements, that’s also a positive sign. 

Current Activity and Projected Rising Home Prices

Real estate experts often track historical and projected data based on several factors, including past sales, inventory levels, and days on the market before a sale takes place. With enough data, they can spot trends that will remain trends unless there is a significant shift in conditions.

Neighborhoods in high demand typically see smaller inventories of homes for sale or for rent. Examining the amount of inventory is a great indicator and looking at how long homes were on the market before a sale took place. If several homes sit on the market for a long time, that’s a red flag that demands more attention. 

Improved Transit

Walkability is important in a neighborhood, but so is good transit. A city adding transit to link neighborhoods and reduce dependence on cars could help raise home prices in those areas.

Nearby Job Creation

A neighborhood close to a major employer, such as an airport, hospital, major manufacturer, or high-tech businesses needs suitable housing for those employees.

Home prices will rise when a major business announces plans to build near an improving neighborhood. It can also signal the start of several employers who might find the area attractive and a good value for keeping business costs low.

Additionally, local government incentives may trigger growth, so ask a real estate agent or check with the local economic development authority to see what is currently taking place or what might be in the works.

An Influx of New Small Businesses

Major employers are critical but in some ways the lifeblood of a community is new small businesses that pop up with regularity. A quick drive through commercial and retail areas will tell you if new businesses are coming, or it can be a red flag when there are a lot of vacancies and no signs of revitalization in the works.

Non-chain restaurants are a good sign of local vitality. A kitschy restaurant or art gallery opening and staying for a year or more can show that businesses are ready to open in areas where people have disposable income.

Even something as basic as a Starbucks opening can result in a higher appreciation of homes around it. Real estate experts will tell you that economically distressed areas have no coffee shops and spotty wireless service.

Talk to the local Chamber of Commerce to gauge the health of the small business community and real estate agents who farm a particular neighborhood to gain insights. 

Frequent and Well-Attended Community Activities

Pick up an activities or cultural events guide from a local library branch or city hall, and chances are you’ll get a great overview of street fairs, concerts, art shows, farmers markets or other family-friendly events that are well attended throughout the year.

Are There Neighborhood Organizations and HOAs?

HOAs and neighborhood organizations enforce specific standards related to curb appeal as a means of protecting home values. Some only cover small developments such as in condo associations.

Others may cover larger neighborhoods and are often put in place by a builder when a development is first built. You should investigate these organizations to see if they are overly stringent or have a history of levying assessments that can burden residents financially.

Are the Schools Improving?

One of the most important ways to gauge the health of a neighborhood is by the quality of schools. Are test scores consistently high, or are they at least on the upswing?

Desirable schools make an area more desirable for families with young children, and that can lead to increased demand and rising prices. Check with the school district administration offices for details or visit websites that rank K-12 schools, such as Niche and U.S. News and World Reports.

Kara Johnson

Kara is a Rye, New York-based author and contributing writer for Refi.com. She is a graduate of Hampshire College.

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