Estimating Appreciation From New Developments

[Sam Valme]

Hey BP,

I have a question about how seasoned investors estimate appreciation in a neighborhood. I am looking at an area in Southern ATL that is going to have a movie studio built at a shutdown army base. I know this is going to create a lot of jobs in a relatively depressed area. But the more I think about it. I really don't have any details on why I think the area will appreciate besides the fact more jobs will be brought to the area. 

So that begs the question. When y'all have some insider info that a new building project is coming to an area. What are the details that the pros look for to determine a prime time to buy? What are the things I should be looking for to better understand the opportunity that may be coming to this area? 

Thanks in advance!

[Russell Brazil]

@Sam Valme Buying for appreciation is always harder to predict than buying for cashflow....however I do feel that if you have the right market knowledge, buying for appreciation is not the unicorn people think it is.

I think that if we can predict the paths of gentrification, that will often given us a much clearer path to appreciation than other factors. Let's take DC for instance since it is the market I am most familiar with.  Gentrification here has followed a very linear path throughout most of the city.  Looking over the course of the last decade or so, we have seen that path follow H Street NE going slowly eastward, then turning north into Trinidad, and now moving northwood through Brentoowd and Ivy City, and onward to Brookland.

In another part of the city, we can see how it started in downtown/Chinatown, then moved northward through Shaw and Logan circle, then up to Columbia Heights, then to Petworth and now we see it moving into Brightwood and Takoma. As they redevelop the old Walter Reed campus, that should further create a gentrifying affect.

I think you can also look at what subdivisions appreciation has been trailing the appreciation around it...if it is trailing...is there a reason? If there is no reason, then that might then create a more attractive lower price point for people looking to live in that general area, thus pushing up prices faster than those around it which have already been pushed higher.