Home Buying on a Budget? 7 Telling Signs of an Up-and-Coming Neighborhood

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87798262When Dustin Knoop, 34, and his wife first began scoping out apartments three years ago in some of the more established neighborhoods in Brooklyn, they were surprised at how little their budget of $500,000 got them.

So when their realtor suggested that they check out a new building in the under-the-radar area of East Williamsburg, they thought: Why not?

The neighborhood wasn’t as hopping as others they’d checked out, and it was a farther commute from Manhattan—but they were immediately sold when they saw the apartment. The one-bedroom had a large terrace and city views, was more spacious than anything they’d previously viewed, and it came in under budget.

Plus, after spotting a number of under-construction buildings nearby, they figured the purchase would also serve as a smart investment. “We were on the perimeter of the new developments,” Knoop says. “But we had a strong notion that this neighborhood was going to continue to get better.”

They were right: Between 2013 and 2014 the median home value in their area jumped more than 31%, according to stats from Zillow.com.

Getting a lot of bang for your buck is one of the benefits of buying in a so-called transitional neighborhood, and for the Knoops, settling in East Williamsburg was a no-brainer.

But that doesn’t mean the decision will come easily for everyone. After all, buying a home is as much an emotional investment as it is a monetary one. “You can’t simply look at a neighborhood in a financial light,” explains Greg McHale, a realtor with Urban Compass. “You also need to really believe in it as a place to live—to hang your hat and to grow.”

So once you’ve landed on a home that hues to your determined budget, how do you also ensure it’s situated in an area that will offer more than just affordability—but will actually grow with you?

To find the answers, we tapped three real-estate pros from across the country to clue us in on how to sniff out an affordable neighborhood on the rise.

RELATED: 6 Home-Buying Deal Breakers—and How to Troubleshoot Them

  • Anna

    I read LearnVest every day but this really rubs me the wrong way. These neighborhoods are not “up-and-coming” – they are long established neighborhoods. Just because rich and/or white people are moving in does not mean that the neighborhood has now “made it.” People have lived in, grown up in and enjoyed these neighborhoods for decades – they are not just getting “discovered.”

    • sam_the_cat

      I agree. This read like the Yuppy Gentrifiers’ Handbook. While I think it’s good advice to look beyond trendy neighborhoods, you should move to a neighborhood because you like the way it is now, not because you’re hoping it will turn into something completely different. You should look at yourself as not just making a real estate investment but as making an investment in a community.

    • YemiLibretti

      I am so grateful for your commentary, Anna. I am very disappointed in LearnVest, as a venture dedicated to empowering people through financial education, considering itself a vehicle for gentrification advocacy. Financial empowerment is very much dependent upon financial inclusion. Encouraging people to cash in on the deleterious effects of sub-prime lending, systematic disrimination in mortgage lending based on the race of the applicant a/o the ziip code of the residence, and economic vulnerability is the antithesis of encouraging empowerment or inclusion.

      Quite frankly, LearnVest assumes readers who follow their advice are not impacted by racial segregation or the macroeconomics of inequality. This iw wholly untrue because women are disproporitionately impacted by systems that perpetuate economic discrimination and inequality. The drive to create a financial literacy tool for women, ie LearnVest, completely depends on this truth.

      Sadly, they also assume that the communities made vulnerable by economic and racial segregation are not the homes/home communities of readers and, compounding this, that no one has a stake in community reviltalization (which is a far better alternative than gentrification) in these communities. Trying to codify calling places ghettoes or the wrong neighborhoods to choose for homebuyers by being cutesy with the term “hood” said it all. Using “‘hood” that way tries to seem urbane and intelligent, but it is codifying the dichotomy of “hood” or “ghetto” versus “neighborhood” by signaling racialized language about desirable communities, and therefore, conjuring demographic illusions about what worthwhile communities look like. Places that are not “up and coming” are communities the article has tacitly maligned as irredeemable hoods/ghettoes beyond the immediate reach of the “creeper effect”, making their investment in the racial and economic dichotomies that power gentirifcation and community erasure pretty clear. It’s obvious which side of the debate —and the affordable housing crisis— they are on.

      On safety—how do they think communitie demographics change and, with them, statistics on crime: an uptick in aggressive policing. These are the kind of tactics that don’t exclusively sweep criminality but encourages tactics that make police appear to disappear solicitors, people standing in large groups of 3 or more, people “seeming out of place” vis a vis the emerging socio-economic landscape, especially people doing any of these things at night. And let’s be clear about the fact that these people are largely less economically mobile than gentrifiers as well as disproportiately targeted by aggressive policing vis a vis the fact that they are “Black and alive”. I don’t think I need to say more about how that sign of neighborhood change wrecks havoc on the lives of people being priced out of their long-time residences.

      Lastly, gentrifiers aren’t immune to the cycles they perpetuate and they will eventually be priced out too. Then we’ll be seeing abhorrent LearnVest articles on “Signs You’ll Never Afford a Decent Place to Live Again”.

  • beth98

    I agree with Anna — and I’m so tired of these real estate articles focusing on homes that are really unattainable for most of us. Most of us are not looking to live in densely populated areas as the article suggests. I would never have a $500,000 budget for a home. Maybe a $150,000 at the most. And I’m very happy with my $79,000 home with 3 acres in mid-Michigan thank you, though granted, it was purchased in 1989. Still, it would probably sell in the low $100,000s now. It’s a short drive to a major university and a bit longer drive to another major university with quite a bit of culture. My husband and I DO feel that we have “made it.”

  • dee

    We lived here for over 40 years. Now my kids are priced out. I would appreciate also if those people think they are up and coming they should respect the law in regards to noise levels at night and to dress respectfully according to the rest of the people who are there.

  • Lyle

    Personally, I think that anyone looking to revitalize and/or “make-over” a neighborhood that may need it, is ok by me. Yes, there may have been others who have lived and grown-up there; however, many areas need revitalization in order to move forward economically. Unfortunately, this sometimes means that an area that’s been made over becomes unaffordable to those who have lived there for many years. I do think something more needs to be done in that respect, but who would argue with a run down, crime ridden area that’s free from prospering businesses being turned into one that becomes a place where people want to move and spend their money. Some of the commentary about race is off base, in my opinion. Whether inner city or out in a rural area, there all different classes and colors, and all different classes and colors that may move in heavier concentrations, at some point. The bottom line of the article is that it sometimes takes vision to see an area that may go from one that is not economically sound to one that will bring a return, if you ever decide to make some money from it. Yes, it’s a home and that’s great. Live life, raise kids, buy a dog or whatever you do, but at some point, you may want to move on from that home. When that day comes, you’ll be glad you spent the time investing into a home and area wisely – If that’s your goal.

  • Michael

    I hope you’re having a great week. My name is Michael, I’m the Brand Ambassador for Compass. I wanted to personally thank you for mentioning us in your article http://www.learnvest.com/2014/12/up-and-coming-neighborhoods/ and providing a link back to our website as a resource.

    We’ve recently rebranded our company to Compass, and we want to help make sure your readership and website has the most up to date, relevant and accurate information. I was wondering if you would mind changing the link from Urban Compass to Compass and linking it to our new web address compass.com?

    Thank you for your help and time in advance. Please let me know at your convenience and I look forward to hearing from you.

    Best,

    Michael Stern

    Brand Ambassador

    Compass, Inc.