(Guest post.)
Anyone can find an area where homes are already pricey, and spotting areas to avoid is equally easy. However, the real challenge is finding homes with the potential for appreciation in the housing market. How do you know where home values will increase if the areas are so cheap now?
Naturally, this is the dream of every investor and homeowner. If you enter a local market at the right time, you can get ahead of the price curve and net a profit.
However, this is easier said than done. If you wait for the most obvious signs, others will beat you to the punch, and increased sales will raise local prices to the point where you can’t make a huge profit. So, let’s look at some signs that show a local area might be headed to a property boom!
Future Infrastructure Projects
Wanting to save money on a home purchase is only natural. After all, we all want to buy the most affordable home in the best neighborhood. However, doing the latter will require some forethought on how home prices develop.
Regardless of location, property prices will always depend on the local transportation — access to major highways, public transportation systems, etc. It’s only natural, as homebuyers always look for the most conveniently placed home. In that regard, great transport links can do wonders for local property rates.
Of course, you can’t look for places with a solid transportation infrastructure. In those areas, access to quality transport is already priced into the local housing market.
Instead, you need to identify areas near future infrastructure projects that improve local transport. Properties along the route of major transport works generally increase in worth by the time the project is completed.
Remember that you want to find these projects in their early stages. When infrastructure projects are near completion, local home prices may already rise. To find great hotspots for future growth, check out maps of local public transport — subways, bus stops, train stations, etc.
Then, research plans or try to arrive at logical conclusions about where these lines of transport might be expanded. Naturally, a tip from an expert always helps, so always ask around.
When you find the perfect place and are ready to relocate, remember to get the best moving quote by comparing several options and factoring in cost and service quality. This careful planning can help you stretch your budget further, both for your new home and your move.
Successful Local Businesses
When a specific area starts developing, you’ll see more and more successful businesses pop up.
For instance, real estate agents in the UK have known about the Waitrose Effect for years. This phenomenon, named after a British supermarket chain, shows that local house prices increase once a supermarket opens up nearby — sometimes by thousands of pounds or dollars.
However, this won’t be worth much if you want to get in on the ground floor. Once a premium supermarket opens up, along with other franchise establishments, it’s probably too late. These high-level businesses already look to home prices when determining where to open a new location. So, the local prices have probably already gone up.
Instead, you need to look for areas that are just beginning to thrive — but their potential hasn’t been fully realized yet. With that in mind, search for areas with new local coffee shops, florists, bakeries, and similar boutique establishments. Ignore places where tons of national or international chains have already set up shop.
Major Home Improvements
To gauge whether an area has fixer-upper houses and homes with potential for appreciation, check out how many recent home improvements the locals have done. If the residents invest in their homes en masse, they will probably want to stay there long-term.
That doesn’t just mean it’s a great location. Any improvements that the locals make to their homes will increase their house prices. And if enough people do this, the price will go up on average for the entire area. So, check out local home improvements to see where prices might increase significantly in the next few years.
Dropping Crime Statistics
Everyone wants to live in a safe neighborhood — it doesn’t take a real estate genius to conclude that. However, already safe areas probably have that safety priced into the housing market.
In other words — completely safe areas are already expensive. You need an area that used to be less secure but where crime rates are continuously dropping. Luckily, checking out local crime rates for any area has never been easier. You can access tons of online databases that collect this information for you and present it in an easily digestible format. However, remember that you may need to pay for some of these.
Demographics
Always consider the local demographics if you want to find homes with potential for appreciation. To select up-and-coming areas, always choose places where young people move in droves.
When many young people appear somewhere, you can bet that local house prices will increase fairly quickly. There are a couple of reasons for this.
For starters, young professionals can quickly gentrify an area. Unlike folks who move with families, they have plenty of disposable income. As a result, plenty of local businesses pop up to provide the amenities young people need.
Consequently, the growth of the local economy reduces crime rates—the locals have less of a need to turn to a life of crime. All of this results in higher home prices, but over time. It’s crucial to spot this trend early on and invest while prices remain low.
Conclusion
There are plenty of ways to gauge homes with potential for appreciation. Sure, you can always find a shabby house and try to flip it, but the factors that show its potential rarely have much to do with the house itself.
Instead, you need to consider all the realities of the local housing market and how other people and processes affect home prices nearby. When you take these factors into account, you’ll be able to make the smartest investments.
