By Thomas Spahr
If I had a nickel for every time I’ve heard someone lament, “if only I bought in <insert neighborhood> back in <insert date>,” I would have a few nickels. Unfortunately, there is no DeLorean and no Doc Brown to take you back to 1955 to buy up all of the mid-century modern homes. There is also no crystal ball to predict the future. Yet, with prices skyrocketing throughout the metro area, there is a demand to look toward neighborhoods that don’t have the brand name recognition of a Wash Park or Highland. Whether you are looking for an investment or a neighborhood to live in with great upside, here’s how you can read the tea leaves and ride the winds of change into the next up and coming neighborhood.
Location, location, location
Well, duh. While the popularity of the suburbs remains just fine, data reflects growing interest in living in urban locales. The suburbs continue to grow at a much more rapid rate than the city, but studies show that more and more well-educated, higher-income young adults have become more likely to live in dense urban neighborhoods. Denver has added more people to its population than any other county in the state, due to a recent development surge. More than ever, buyers want to live closer to their jobs and the hustle and bustle of the city. As a result, close-in neighborhoods have exploded in value. A big indicator in finding what’s next in Denver is looking at neighborhoods that have easy access to jobs in the urban core—places with a dramatic convenience factor over the parks, schools, and lot sizes of suburban living.
In-demand architectural styles
In Barbara Kingsolver’s novel, Animal Dreams, narrator Codi Noline states “I’d seen Denver once. It had endless neighborhoods of sweet old brick houses with peaked roofs and lawns shaded by huge maples. It would be a heavenly place to walk a dog.” This is the Denver that I fell in love with many years ago and is the similar to the vision I hear many new buyers dream about. While the days of buying an affordable Victorian in Baker, a Denver Square in Whittier, a Bungalow in Park Hill, a Classic Cottage in West Wash Park, or a Mid-Century Modern in Virginia Village have passed, you can still find interesting pockets of classic style homes in lesser known neighborhoods. Architectural styles can drive a surge in pricing, even for homes nearby that are not of that style. A great example is Harvey Park, where interest in Cliff May designed homes has seen the entire neighborhood leap in value. In January 2012, the average home value was $163K and today, home values come in at $290K, with some Cliff May homes fetching well over $400K.
Restaurants, breweries, boutiques, and other trendy businesses
Twenty years ago, most people referred to Highland as the Northside, a quiet neighborhood with some great taquerias. Ten years ago River North (or RiNo) contained an odd collection of industrial buildings surrounded by railyards. Today, both neighborhoods practically have more restaurants than residents and boutiques you never knew you needed. You can hardly ride your fixed-gear bicycle through these areas without crashing into a microbrewery or a shoppe selling artisanal mayonnaise. Its an exaggeration but… you get the idea. To no one’s surprise, these neighborhoods are quite popular and, as a result, quite pricey.
Walkable amenities are highly valued, which is why many real estate listing search websites now include some variation of data from walkscore.com (including the Metrolist website, recolorado.com), which quantifies the walkability of neighborhood based amenities such as parks, restaurants, grocery stores, etc. In a 2009 study commissioned by CEOs for Cities, it was determined that homes with above average walk scores commanded a $4-34K premium over similar homes with only average walk scores. In 2015, the CEO and Chief Economist from Zillow wrote in their book, Zillow Talk, that a 15 point increase in walk score translates to an average of 12% increase in home value, which overall increases ranging between 4-24%, based on the metro area. What this signals, as you are looking for a home, is any neighborhood that is adding or has the potential to add major walkable conveniences, is likely to see an increase in value. While no single retailer can usher in this level of neighborhood change—I’m not buying into the because these businesses typically ride the winds of change—a mix of trendy businesses is definitely a positive sign that you may have found the next IT neighborhood.
Public infrastructure improvement and investment
With the opening of four new rail lines in the metro area this year, RTD’s FasTracks project has been stirring up buzz, promising to decrease the distance and hassle of traveling from far-flung neighborhoods into the center of the city. Recent studies show that the values of homes near transit facilities are up to 41.6% better than comparable homes that are further away. The data indicates that the new rail lines opening this year are likely to spur increased values for homes within proximity of a rail stop.
Transit isn’t the only way public resources positively affect a neighborhood. Neighborhood improvement plans, the development of parks, improvement of roads, the addition of sidewalks, or other projects making an area more livable have positive results on an area. In RiNo, plans to build pedestrian bridges over rail lines, sidewalks, landscaping and bike lanes along Brighton Blvd, and the addition a new centerpiece park for the neighborhood will soon transform the neighborhood. The city’s commitment to invest in neighborhood improvements is a tremendous opportunity make the area more inviting, connected to the rest of the city, and overall, more livable.
This concept is simple. Are homes being renovated? Have homes been well-maintained? Anytime you can spot a neighborhood where the neighbors are investing heavily in their homes, it is a positive sign of things to come. The easiest way to identify this change is to drive around looking for dumpsters rented for larger renovations. If one was really motivated, they could go to the city offices and check for permits.
In conclusion, shopping for a home in an up and coming neighborhood takes long-term vision and it isn’t necessarily everyone’s cup of tea. While the market is hot today, conditions can change and increases in value can take a long time to materialize, if ever at all. Like I said, there is no crystal ball to predict the future. But if you pay attention to the signs, you might be able to uncover a gem. If want to read about some legitimate up and coming neighborhoods in Denver, check out our post on Denver’s emerging neighborhoods. If you want to find your next home today, contact Thomas Spahr at [email protected] or 720-989-1065.