How can you tell if a neigborhood is appreciating?

[Benjamin Blackburn]

Good evening everyone,

I just had a quick question.  I'm wondering how people usually tell if properties are appreciating in certain neighborhoods?

There's probably an easy way so excuse me if this is such an easy question to answer.

Thanks

[Tyson Taylor]

@Benjamin Blackburn,

This is not an easy question, but it's a good one, and one I think about often.  I only really know Denver, so forgive my ignorance of other areas.

My opinion on the matter is a little tricky to discuss because it deals with primarily race and income.  Frankly, most people aren't comfortable discussing it as we have become very averse to talking about anything that may be offensive. I'm going to throw my opinion and real life observations out there, please consider it my view of the world as it is, not as I want it to be...

15-20 years ago the easiest way to get ahead of the gentrification curve was to follow the artists and homosexual couples into the less desirable neighborhoods.  In Denver, 20 years ago, this was 80211. At the time is was predominately Hispanic with lots of non-owner occupied homes.  The block I bought my house on had about 12 homes, at least 3 were gay couples.  They were the vanguard into the new neighborhood, pushed into areas where they could make their own space because they weren't accepted into traditional neighborhoods. Now, 80211 is still a very hot Denver zip code, but most of the gay couples have left (or nobody notices anymore really), and most of the Hispanics have been pushed out.  Now it's full of stroller-pushing white folks, and oh yes, @Flavio Zanetti is correct, the Starbucks began to show up in 2003-2004. 

Today, I think it's the hipster culture leading the charge into new neighborhoods.  They transformed RiNo (80205) in Denver.  Since 2010, land prices have increased 4-5X. This comes at the expense of displacing the existing Black population, a group that's occupied  the 5-points neighborhood since the 50's.  5-Points had a negative and scary connotation up until a few years ago.  Now white people are tripping over themselves to run into that neighborhood and property value is skyrocketing. Zillow Link Sort this chart to the bottom tier of home value...

Gentrification is an ugly process, generally displacing low income minority families. It's also not really possible to stop it (or start it for that matter).  It happens organically when there's an unsatisfied demand. When all the existing places are filled and expensive, economics push people to the next most desirable option.  Eventually, these neighborhoods hit a tipping point and the whole thing flips.  6-7 years ago, even at the height of the market, pre-crash, you could buy homes in Sunnyside for $200k, today the median home price is $344k.

So now I look at the map of Denver and try to evaluate where the rich white people will want to move next.  People will call me a cynic and a racist, but I feel like you have to consider race when evaluating a neighborhood.

I hope and expect that there will a date in the future when the race of a neighborhood will not correlate to it's value. In the mean time, if you ignore it, you will be missing an important piece of the puzzle.

In the burbs' I'd just pay attention to school districts. Parents lose their damn minds over school ratings.  Buy land in a neighborhood with a poorly rated school that was improving, when it was finally satisfactory, I think you'd make a killing. 

As always, I'm open to hearing other folks opinions, especially if they're contrary to mine, that's how we learn.

Good luck.