Urban experts have a sure-fire way of telling whether a neighborhood has turned the corner from dowdy to prosperous — it’s called the Starbucks test.
“You’re probably well past up-and-coming once a Starbucks moves in,” says Peter Tatian, senior research associate in the Urban Institute, a Washington think tank. Yoga studios and even dog parks are other anecdotal indicators that affluent homeowners and renters have begun to gentrify a neighborhood, adds Tatian.
Of course, Tatian, along with Realtors, homebuyers and homesellers look to another objective test of market interest in a neighborhood. If housing prices shoot up sharply on a year-over-year basis, the odds are that supply is constrained yet demand is high. The neighborhood has turned a corner.
The trick is to buy into a neighborhood while it is on its way up and before it has fully turned a corner. 24/7 Wall St. asked Trulia, a leading supplier of home listings, to provide us with a list of the nation’s 10 up-and-coming urban neighborhoods as measured by yearly price changes in cities. Home prices in most of these area are still considerably lower than other already established neighborhoods in their cities.
Up-and-coming sounds promising, but it may strike many potential homebuyers as a bit risky. Take a neighborhood called Anacostia in Washington, D.C. Wikipedia refers to it as “infamous” for its high crime rates, which is not a compelling real estate reputation. Tatian says that the neighborhood was one of several areas that lost population in recent decades and had some vacant lots. “In older eastern cities there’s some constraints so you have to increase the density of residents per acre to get more people in — and some places are doing that,” he says.
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