How to Spot an Up-and-Coming Neighbourhood Before it’s Popular

Wouldn't it be great if you could spot the next up-and-coming neighbourhood before it turns into a highly-sought after area? With a little research and by knowing what to look for, you can reap the benefits of buying in a neighbourhood on the cusp of revitalization.

Home values are always a good starting point to finding neighbourhoods that are beginning to turn the corner but several other factors go into the making of an up-and-coming neighbourhood. Here are a few clues:

1. Recent renovations

If you notice an abundance of homes under renovation and repair, it could mean formerly downtrodden or lower-valued areas could be turning around. 

If the local city government is willing to invest money into local infrastructure, it can attract other developers looking to build their next project. When government and developers are all-in on an area, homeowners often become more invested in their own homes and community, as well. 

It might be worth taking a trip down to the city building permit counter to see whether staff have input on areas that have seen investment, and what they think the neighborhood might become.

2. Proximity to other popular neighbourhoods

As real estate values increase, people can get priced out of hot markets. These folks tend to look at spill-over markets that tend to mirror the attractive characteristics of the hot market.

Proximity to a desired neighbourhood often has positive effects for areas adjacent to it. When rents and home values increase, those closely impacted – like young professionals and families – move outward, seeking more a more affordable cost of living, and the cycle of redevelopment continues. 

3. Influx of young families and professionals

When young people are priced out of established neighbourhoods, they can often help lead the way to a less popular neighborhood's resurgence. 

The movement of artists, musicians, painters, tastemakers and other creatives can help change the feeling of a location, beautifying and adding character to it. Once they move in, restaurants and bars often follow.

Job growth and quality school boards are typical incentives for home buyers. Professionals starting businesses bring jobs, or at least more business to the area. Their kids go to schools and local businesses can run efficiently as they provide services to families, which can all help create more attractive areas from a home buying perspective.

4. Business expansion 

High-end food chains and retailers possess big data on where they should invest their money next. They know where people are moving (and why) when they target a new location. They look for long-term growth in the local economy and they won't open unless they're sure the area can support their consumer base over the long haul.

There's also a follow-on effect as a result of trendier shops investing in an area. Larger chain retailers or even independent shops can follow suit when they see a big brand willing to put their money into a given area. It gives them faith that a larger pattern of spending and consuming is on the rise. 

5. Transportation 

Any development in an area that improves access to work is logically connected with housing. If a neighbourhood was once unattractive or downtrodden, its convenient proximity to employment centers, public transportation, freeways and bridges can lead to whole-neighborhood remodeling. 

Adding transit and transportation to any area will almost always benefit property values. If an area going through transition has plans to implement a transit system, this is a reasonable indication values will go up considering the area is now more accessible to a larger population base.

In southern Ontario's Greater Toronto Area, the bedroom community of Milton shot up from a population of 35,000 to 110,000 over ten years. Its close proximity to downtown Toronto, easy access to commuter transportation and aggressive residential development paved the way for the town's significant transformation.

6. Decrease in crime rates

Much of the transformation that occurs when a neighbourhood changes from worse to better fall under the umbrella of gentrification. People with higher incomes from neighbouring areas move in while local investments and infrastructure increase. Economic development follows and typically (but not always) crime rates fall. 

A neighbourhood with steadily falling crime rates is a good sign. Whether this indicates increased police presence, crime being pushed elsewhere or more law-abiding folks moving in and law-breaking folks moving out, it's a positive indicator. So how hard is it to find that gem home in a soon-to-be hot neighbourhood? It takes diligence, research and a willingness to get out and explore. Consider contacting your local REALTOR® to tap into their unique knowledge of the neighbourhoods where they work – a result of living and breathing these areas for years, or even decades. They also have access to in-depth data so know typical property values and are well-equipped to predict which areas are primed for change.